According to the Mind over Money survey by Capital One and The Decision Lab, 77% of Americans report feeling anxious about their financial situation.

Financial decisions are some of the most stressful, complex and impactful choices we make. More than three in four Americans (77%) report feeling anxious about their financial situation, according to a new Mind over Money survey by Capital One and The Decision Lab.

Financial worries include a broad range of issues from savings and retirement to affording a house or child’s education.

The study found that financial stress caused:

• Feelings of fatigue (43%)
• Difficulty concentrating at work (42%) 
• Sleep interferences (41%) 

Stress is also linked to worse financial attitudes and practices. Even when controlling for household income and FICO scores, Americans who experience higher level of stress are: 

• Less likely to save on a regular basis
• Less likely to plan their spending
• Less likely to feel in control 
• More impulsive with how they spend their paycheck 
• Less likely to agree that success comes to those who work hard

Right Money Mindset

The right money mindset may improve Americans’ financial decision making, mitigate effects of stress according to Mind over Money survey. Research shows that a change of perspective can have a positive impact on your financial wellbeing. 

A smarter money mindset for people must include creating a positive financial outlook by implementing healthy financial rituals. Money is less stressful when you’re able to see your current situation a bit more clearly. Tips include: 

Practice These Tips to Develop a Smarter Money Mindset 

1. Make important decisions under low stress – Next time you have to make a financial decision—like booking a vacation—you could try to schedule the decision at a time when you’re naturally more relaxed and have the cognitive bandwidth to consider the long term impact of your decisions. You can’t choose to be less stressed right now, but you can choose to put off your decision until a moment when you’re less stressed.

2. Focus on values over features – One of the more interesting findings is that thinking more abstractly makes you better with money. Unfortunately, in your daily lives, you can often get bogged down in details. For example, you get lost comparing products to each other and lose track of how the products compare to your core values and goals. Next time, you find yourself absorbed in comparing different products, you can ask yourself: “How will this purchase affect my long-term goals? Is it consistent with what I want in life?”

3. Use goal-directed accounts – To help focus on your long-term goals, one simple way to do this is to set up goal-directed banking accounts. For example, you can name an account after a big life goal such as “buying a house,” and then use this account for your savings pool.

4. Don’t punish yourself for the past—be kind to yourself when reviewing purchases – Stress can push us to make decisions based on whatever feels most satisfying at the moment. In some cases, these decisions can lead to regret, which can lead to further feelings of stress, and so on, creating a vicious circle. Next time you are thinking about past purchases, and there is one you are not happy about, you can try to accept it, acknowledge that it was a mistake, and formulate a plan to avoid it next time. However, try not to stress too much about it—because the stress itself can make you less likely to do better.

5. Use the good times to shift your habits to support your mindset change – Research shows that stress causes us to engage in more habitual behaviors instead of deliberate ones. However, since stress can’t always be avoided, forging good habits when times are better can protect us when things get tough. Examine your habits critically when you are in a relaxed state. In particular, think about what positive changes to your habits are most likely to carry over to your actions when you encounter stress again.

6. Focus on what you can control instead of what you can’t – While you cannot immediately change your financial situation, you can change the way you think about it to improve the decisions you make about your finances. The next time you are faced with a financial decision, try not to get caught up thinking about what you wish you had—instead, you can try to focus on what is within your control and what you can change.

7. Go from problem to solution oriented – When you’re under a lot of financial stress, it is easy to get caught up in the problem and all its details. Our research has demonstrated that part of feeling in control (which predicts financial anxiety) is knowing how to overcome the problem—and this has to do with identifying clear solutions. The next time you’re faced with a difficult financial situation, try to spend your bandwidth coming up with strategies to overcome it. This may not only help you take action faster, but it could help you feel more in control of the situation (which in turn could reduce your financial stress!). 

8. Keep your goals in front of you – To overcome present bias, you can try keeping your goals salient so that whenever you are confronted with a decision, you will be forced to consider how it will affect your financial goals. For example, you can write your goals out on a piece of paper and stick it by your bedside or your door or you can put it as a screensaver on your phone—these small reminders will ensure that your goals are always top of mind, especially when making financial decisions. 

9. Share your goals with people who might have similar goals – Research has demonstrated that people are more likely to follow through on their goals when the goals are shared publicly with others. Under financial stress, making your goals more social, especially with others who might share them, can help to make them more real. By surrounding yourself with people who know and share your goals, you are creating a virtuous circle that will make your goals easier to achieve.

10. Do something kind for someone – Shifting your focus from yourself to other people can go a long way in changing your mindset, reducing stress and making you feel good about yourself while helping others. The next time you feel yourself getting overwhelmed by a financial decision, you can try to shift gears and see what you can do to help out a friend, family member or stranger. Most people have their own challenges—seeing that reality can be a powerful reminder that you are not alone. Now that you’ve shifted your focus, you can go back to your problem with a different perspective.

• Keep your goals in front of you: People have a tendency to discount better future rewards for short-term gains and gratification. To overcome this, you must try to keep your financial goals front and center, like making them a screensaver on your phone or posting them on your refrigerator.
• Focus on the values and don’t sweat the details: People get lost comparing products to each other and lose track of how the products compare to our core values and goals. Next time you get absorbed in comparing a whole aisle full of different coffee makers or TVs, you can ask yourself: “How will this purchase affect my long-term goals? Is it consistent with what I want in life?”
• Don’t punish yourself for the past—be kind to yourself when reviewing purchases: Next time you are thinking about past purchases you are not happy about, try to accept it, acknowledge that it was a mistake, and formulate a plan to avoid it next time.

Financial education program are needed to help you plan out your goals in life—and think through how your financial behaviors connect to those goals. You can work towards achieving your financial well-being.

References:

1. https://www.capitalone.com/about/newsroom/2020-capitalone-mindovermoneystudytips/
2. https://www.capitalone.com/about/newsroom/mind-over-money-survey/

The Mind over Money Study was conducted by The Decision Lab on 1,011 nationally representative US adults over the age of 18. The study took place between March 10 and March 11, 2019.