If you are battling anxiety, be aware that it does have an effect on your financial life.

Having anxiety is difficult for many. From the endless worries to physical symptoms of sweating and heart palpitation, you would think that everything is going crazy even though in reality, they aren’t.

This has some impact on your finance and investment as anxiety could cause some changes to your decisions regarding them. The first three points would look at the impact on your finances while the last three would look at the impact on investments. Learn more about them below!

#1: Risk of Overeating or Undereating

One of the more direct effects of anxiety is on your diet. While it doesn’t happen to everyone who has anxiety, it is a common symptom of anxiety. The amount of stress hormones increases when you feel anxious or stressed. This actually affects the digestion system which suppresses your appetite or speeds up the digestion of food which makes you hungrier.

How it affects your finance here differs whether you overeat or undereat if you have anxiety. If you have persistent anxiety, you are more likely to experience loss of appetite. If you have less persistent anxiety, you might be overeating to seek comfort from it.

If you experience a loss of appetite, you might be spending less on food and groceries though that means you might be eating unhealthily or starving yourself. The hit on your finances will come later in the form of spending on other health problems. For cases where you are overeating, there is increased spending on food and groceries as you eat more and more to give yourself comfort. Even then, because of this, you will also experience more health problems in the future due to overeating.

#2: Rash Buying or Shopping

In the psychology field, anxiety could contribute to higher impulsiveness to purchase things on a moment’s whim. You would be familiar with “retail therapy” in that buyers buy things for comfort but most importantly, it grants the person a certain amount of control back. For people with anxiety, it sometimes feels like they are losing control over their actions and environment and thus that makes them even more anxious. This cycle will repeat over and over again.

Hence, you need to be very careful about your tendencies when it comes to “retail therapy” if you feel anxious. Some can stop after buying one or two items, but some will continue buying things. This becomes risky when expensive items are involved such as luxury items or electronic items, and those items are the things you find comfort in.

While it is of course better to not engage in retail therapy, the reality is different for people with anxiety especially ones who have not yet sought out help from licensed therapists. You need to consult a financial advisor at the very least to get a hold of your rash buying or shopping tendencies.

#3: Possible Reliance on Alcohol or Tobacco Products

This is a tough topic to talk about if you have anxiety especially when it comes to alcohol and tobacco products. After all, having anxiety is suffocating on a daily basis for some of you. While people take up alcohol or tobacco for a variety of reasons, some with anxiety take them up as a form of relief and comfort.

This article does not advocate for anyone to be reliant on alcohol or tobacco for comfort but acknowledges that anxiety could contribute to increased usage and reliance on them. The impact on your finance is high if you rely frequently on them to provide comfort and thus, you need to be aware of its debilitating consequences. Increased consumption will lead to other health problems in the future for you which affects your long-term finances also.

It is never good to consume these products as a means of comfort but it is understandable considering the big stigma surrounding mental health in general. Try to get help from licensed therapists or psychiatrists and if you do not want to, at least limit your spending every month strictly on them while you seek out other methods of helping yourself like exercise and yoga.

#4: Avoiding Risks in Investments

Avoiding stress and risk is one way someone having anxiety tries to cope with their situation. So, if you are anxious, chances are you would not want to take risks in any of your investments. As the stress that comes with it could contribute to more anxiety, you would generally invest very conservatively and avoiding any form of risk.

Anxiety contributes to you thinking of every possible doomsday scenario and risk that comes with the investment. That indirectly means that you would most probably invest in very safe asset classes such as government bonds and fixed deposits that don’t have many risks but also have very low returns.

This could work for you if you want to ensure that you generate very safe returns for yourself in the future but not if you are trying to take risks to reach a specific financial objective. You would also tend to have a very big bias towards other investments that are riskier but actually could benefit you in the long run.

#5: Impulsively Exit Your Investments

Similar to point #4 in avoiding risks, anxiety makes you more prone to selling your existing investments for any small risks or movements that you see. You would be constantly monitoring your investments multiple times a day, due to the stress of losing money and the anxiety that comes with thinking about them too.

If the investment is losing 1%, you would be thinking that it could potentially lose 2% the next day, or 3% in 2 days. The stress and the anxiety contribute to you wanting to sell your position now even though the likelihood of it losing 2% the next day is about the same as gaining 1% on current information.

Anxiety in this case makes the situation much more stressful as you think it’s much worse to lose money than gain profits. Your bias is actually to avoid losses as that contributes more to your anxiety and stress than actually profiting. You are more likely to just make a small profit and exit straight away as you think that profit is going to decrease in the future even though there is no solid reason to think that way.

#6: Potentially Paralyze Your Investment Decisions

Anxiety contributes to you doing more of your research into your investments as you value knowing about the risks that come with them. You want to know every inch of detail about a company or person behind the investment, to understand what you are getting yourself into. Not knowing something increases the amount of anxiety and stress as you seek to have some form of control.

Normally, this is good as you are conducting in-depth research but for a person with anxiety, this could be paralyzing as there is always something to research a company about no matter how much you do it. This actually hampers your investment decisions when a good investment opportunity arises. You hesitate as you think you don’t have the full information about the investment, but on another hand, the price is low enough to buy-in.

What happens mostly is that a person with anxiety would rather not invest in it even when the opportunity is there. You would rather not take the risk of being wrong even though the chances of you being right are actually higher. The feeling of being wrong increases your anxiety even more as you would be thinking of the million and one things you could have done better.

Conclusion

Anxiety does affect your finances and investments quite significantly. Some traits of impulsiveness, seeking comfort, and avoiding risks will feature in your decisions. Seek professional help from a licensed therapist or psychiatrist and take control of your life!

 

Are you having anxious thoughts or feelings? Let us know how it has been impacting your finances and investments!

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