Financial Stress: Emotions Affecting Your Money

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Money is arguably one of the most emotion-provoking things in our lives. It can be the driver of every emotion imaginable – happiness, sadness, stress, anger… the list goes on. But we can’t make financial decisions emotionally. It almost never ends well.

So we need to change how we think about money. The key is awareness and financial literacy. If you’re able to think before you act and combat emotions with financial knowledge, you’ll be miles ahead of most people.

Think of meditation as an analogy. The goal is not to “clear your mind” or not think. The goal is to be aware of your thoughts, be present, and ultimately attain better control over your outlook on life and things that impact your well-being. You can think of money management in a similar sense. The goal isn’t to not feel anything when it comes to your finances. It’s to be more aware and more in control so you can make smart financial decisions that set yourself up for a comfortable future.

Financial Stress: Eustress vs. Distress

Money can be stressful, but it doesn’t always have to be. We want you to consider two different kinds of stressors, eustress and distress, and think about how they apply to your life and your money.

Financial Eustress

Eustress, or positive stress is the good stuff. You might not even identify this as being stressful in your life. It can bring feelings of excitement, motivation, and energy.

This is the kind of stuff that pushes you to take your financial well-being to the next level. It inspires you to do things like:

Use this for all that it’s worth. Really take this and run with it whenever you’re feeling that motivation.

Financial Distress

On the other hand, there’s distress – the bad stuff. This is your stereotypical “stress” that is negative, associated with anxiety and worry. This can be either short or long term and can really take a toll on you after a while.

This is where the awareness skills come in. If you find yourself in a stressful financial situation, stop and think. There may not always be an easy solution that comes to you right away, but the worst thing you can do is act impulsively and follow only your emotions.

Overwhelming Thoughts

How Can Your Emotions Hurt You Financially?

Over-emotional financial decisions can send you into a downward spiral. Take this scenario for example.

You’ve worked hard to start establishing good credit and have gotten into healthy money habits. A family member who isn’t quite up to par financially, asks you to cosign on a loan for a new car because theirs died and they need to be able to get to work.

You should think through all of your questions and doubts carefully. But instead, you say yes because they’re family and what’s the worst that can happen?

3 months down the road you find out that they’ve never made their payments, their loan is 90 days delinquent, they totaled the new car, and they have no money to give you. OUCH. Well, since you cosigned, guess what? You’re on the hook. 

You can imagine where the story goes from there and could lead to a series of financially stressful situations.

Spending As a Coping Mechanism

We all cope with emotions in different ways – some good, some bad. Spending is an unfortunately popular and versatile coping mechanism for a plethora of emotions.



Some people spend more when they’re happiest. When life is grand and you just want to celebrate, money is no object.



When some are extremely unhappy in any direction, they spend to mask that sadness or anger. To distract from the source of unhappiness. Be cautious of it going too far.



Sometimes we spend money just because there’s nothing better to do! If you’re in the habit of shopping online without any true purpose or intention, cut it out now.



Along the same lines of sadness or anger, some people spend to overcome feelings of fear or anxiety. Well, we already talked about how this can become a vicious cycle of increasing stress.



Money can’t buy happiness, but sometimes it can buy a great apology. Don’t get in the habit of monetary apologies. And continuing to think before you act can reduce second guessing financial decisions.



This might be the worst of all. Overcoming jealousy of material things at the expense of your bank account won’t have a happy ending.



This one can be good at times, but only in moderation. It’s nice to go above and beyond for a truly meaningful thank you on occasion. Just be careful not to overdo it.

Financially Significant Life Events

You will have an emotional influence on your financial decisions to some degree. There’s no avoiding it entirely – but you can limit it and make smarter decisions based on fact.

Ironically, some of the most significant emotional events of your life are also the most expensive.

Buying a House

This is probably one of the biggest financial purchases you’ll make in your life and it’s also one of the easiest to fog it up with emotions. People often make decisions on which home to buy because of decorations, the wrap around front porch, or it’s simply your “dream home”. These are reasons you should never use to determine the purchase of a house.

You should buy a house because of the price and usability. If the house is not going to work for you and your family and is well above your price range, it’s probably not the best purchase to make.

Relationships & Getting Married

Relationships can be expensive. The sheer joy can justify going out to eat way too often, expensive gifts, traveling, and so much more. We give financial advice, not relationship advice… but talk to your significant other and work together to have just as much fun without the financial hurt.

Getting married is usually one of the happiest days of your life and is filled with so much emotion. You can either start your marriage off on the right foot with little debt or get $100,000 in debt having that royal wedding, yes this happens all the time.

You need to make frugal decisions with your wedding and make sure you’re not spending more than you need to. It’s easy to get caught up in the moment and throw an extra thousand or two here and there to make it feel like it’s better. At the end of the day the only thing that matters is the union of two people, not what table setting you had.

Inheriting a Pot of Gold

It’s hard to think straight after you lose a loved one. It can be hectic and emotional to deal with the financial issues that arise when a loved one passes away. Not only will you have funeral expenses to handle but you’ll also have their estate to handle as well.

How you approach your inheritance, or lack of, will depend on your long-term goals and the current bills at hand. Most financial advisors would look at the inheritance as “free money”. It’s money you didn’t have before so you should look to invest it and let it make more money for you. Treat it like it was never there in the first place.

Salary Increases

This one is not so heartfelt or emotion driven as the other ones on this list but there are still some emotions when it comes to fighting for your salary increase. Negotiations can be very emotional because of the anxiety or fear that it creates.

When you go to negotiate your salary you’re already at an imbalance. The employer knows more information about the financial situation of the company, your position, and what they’re willing to pay for that position.

You’ll need to do your research and find the industry standard and competitive rates for where you’re currently at in your career to have the best chance. You’ll have to speak your value to the company and your worth which can be pretty taxing on the emotions, especially if they fight back.


This is one that can lose you the most money if you run your investments through emotions. Many people often “marry” a stock or hold onto an investment because of personal connections to a family member or an investment hunch. When you invest you’re not going for popularity, you’re going for return on investment (ROI).

When you buy stock or sell stock because of emotion you can often lose out on potential gains or have substantial losses.


Often enough, being in substantial debt is the result of a series of already poor financial decisions. But that’s the time to make a decision – to continue down that path or turn it around.

Overcoming debt can be very challenging and discouraging. There are many methods to overcoming debt such as the debt snowball method or various debt relief programs. Think things through and be sure to consider the long-term effects of how you handle debt.

Death of a Loved One

When a loved one passes away, people often want to honor them with extravagant funerals with elaborate services and catered dinners. While this is nice and with the best of intentions, it is entirely driven by emotion and can grow out of control quickly if you don’t take the time to stop and think before spending. 

If you find yourself or someone you know in an unfortunate situation like this, we recommend to focus more on the experience and less on the material aspects. That could mean putting efforts into speeches and memories to share, an amazing slideshow to capture some of life’s greatest moments, or something else that has meaning far beyond dollar value. These times are about sharing the memories and lessons of the deceased with the people who loved them most. Try to keep that in mind when planning.