What is financial anxiety and why it is a phenomenon yet to be studied

6 May 2024
Innovation Center, NS Lab, Applied Research, Focus On

The anxiety associated with financial decisions is characterized by specific symptoms and is increasingly widespread, with several aspects still to be investigated in order to reduce it. 

In contemporary society, almost everyone has experienced an unpleasant sensation called anxiety. From the restless wait for medical analysis results to the first day of school, through the beginning of a new professional adventure to the perception of inadequacy in various contexts including sentimental, anxiety - a term that originates in the Latin verb àngere whose literal translation is torment/suffocate - manifests itself several times in the course of our lives.

The Covid-19 pandemic and the subsequent uncertainty caused by an increasingly unstable geopolitical framework have exacerbated the problem, which affects an increasing number of people. However, anxiety in itself is not pathological as it can help to be focused on our performance and avoid catching us unprepared for any unforeseen events.

Difficulties arise when the feeling of restlessness becomes excessive, causing reactions ranging from lack of lucidity to being stuck in front of unexpected and difficult situations. In these cases negative thoughts emerge that remove serenity and are reflected in the assessment of the environment in which we live, in choices and behaviors.

A complex condition to be managed without external support, which also manifests itself in the economic sphere and is called "financial anxiety". A frequent and widespread situation is the association of a feeling of anxiety with financial decisions. Often, in fact, anxiety accompanies such choices, but does not adversely affect economic behavior and our well-being; while on other occasions it can lead to a typical symptomatology of anxiety phenomena. But when does the phenomenon become the subject of clinical analysis and not natural concern about investment?

In particular, financial anxiety is defined as a psycho-social syndrome, which manifests itself when a subject shows an anxious attitude in thinking, managing or administering his finances, and therefore in implementing ineffective economic choices (Grable et al, 2014).

The phenomenology of financial anxiety, that is the set of all those modalities through which this syndrome can be manifested - from the psychophysical manifestations to the emotional or behavioral reactions - includes generic psychophysical tensions (for example, sleep disorders, headaches, shortness of breath), but it is also characterized by some specific aspects that it is important to emphasize. Among the manifestations of financial anxiety are reported more frequently the following symptomatology: sense of impotence, low self-esteem, resignation, deresponsibilization, avoidance of all stimuli related to financial and economic issues.

Moreover, a feeling of lack of self-effectiveness in the administration of economic resources can compromise financial choices: a situation exacerbated also by the tendency to avoid reflecting on these issues, preventing the achievement of possible improvements.

The lowering of financial anxiety, therefore, can lead to an improvement in the subjective and objective financial well-being, as well as to an improvement in one’s general personal well-being. Financial anxiety is strongly linked to the concept of subjective wealth, that is, the feeling that influences the choices a person can make in different areas (economic and not) of his life.

An American study (“Financial Anxiety and Stress Among U.S. Adults: New Evidence From a National Survey and Focus Groups”), with data collected in the period from 2018 to 2020, noted that financial anxiety is most present among women and younger people, and how factors contributing most to the emergence of financial anxiety include the number of children/s, salary, employment status and financial knowledge.

In Italy, two studies have recently been carried out on this topic: a report by CONSOB in 2021 and another one carried out by the EDUFIN Committee in 2020. Both reports fairly high percentages of people feeling anxiety when they think about their financial resources - 53% and 34% respectively,8% -, however, the studies differ in the results for the categories of subjects most affected by gender, age and level of education.

Nevertheless, financial anxiety is growing both as a clinical and social phenomenon, therefore it deserves to be studied and analyzed from different points of view. There is currently no clinical diagnosis, no definition or a way of measuring the shared phenomenon. Among the most interesting and pioneering aspects yet to be investigated and deepened figure undoubtedly understanding which personological, cognitive and affective traits are associated with it and/or predict it, in order to work on the development of intervention/training strategies to reduce it.

Among these, the promotion of financial education on a large scale and included in the various school courses preceding university studies has already been identified as a possible solution, as financial literacy is a structural social necessity amplified by the rapidity of the changes that characterize the current historical phase. One of the keys to managing anxiety in general is to face problems with a constructive approach, trying to find sustainable solutions without the personal condition generating fear, tension and anxiety.

In this perspective, developing skills in the financial field - for example to better understand phenomena such as inflation - may help, even more if linked to planning than in the management of anxiety (not only financial) offers points of reference for taking rational and considered decisions, whether they are autonomous or "suggested".