How do I dial down the money anxiety?
September 2, 2018 12:24 AM   Subscribe

I have a lot of background anxiety about financial security.

I’m about to graduate college and take a job where I will be paid upper six figures. I live in a high cost of living city and have 3-5 years’ (depending on whether I’m paying rent and giving my parents an allowance) living expenses saved up. I’ve also got more money invested in index funds.

So in the immediate term, I have a lot of financial room - but I’m still really anxious about my long-term financial stability: what if I don’t last long in this job? What if my chronic illness flares up and I’m hospitalized for a long period? What if my parents have a health crisis?

My question is twofold, I guess:
What more can I be doing to make myself more financially secure? (Other than keeping myself active on the job market/ in side gigs)
How do I tone down the anxiety about money?

(I've read this and this, among other questions.)
posted by anonymous to Work & Money (9 answers total) 12 users marked this as a favorite
I have a similar sort of anxiety, which I alleviate using these measures:

1) Track all my expenses. It gives me a sense of control. I use three broad buckets -- Needs and Wants and Wants Holidays (we spend a lot on money on holidays). This saves me from having to categorize every expense.

2) Track my net wealth. It is pretty awesome to see the numbers going up. If you know what your net wealth is, you can calculate your passive income. For example, if your net wealth is $200k, then this can safely generate you a passive income of 4% a year, which is $8k a year. My passive income has risen to a healthy number that I'm like, well, even if I lose my job, I can downsize and I have a safety net.

3) Make Excel spreadsheets that project income, expenses and project net wealth growth.

4) Remember that your income should grow exponentially within the first 10 years of your career (for professional careers). In short, don't worry so much.
posted by moiraine at 1:11 AM on September 2, 2018 [5 favorites]

So, you can 100% live on very little money. It may not be glamorous but millions of Americans live with their kids on 20k a year.

From a CBT self talk perspective, you can remind yourself of all you have, your education, savings, connections, and realize you almost certainly won't need to live a "normal" life if you don't want to.

You could try living more frugally and saving a financial sum at first. Or "donating" it to your folks and others. To help you feel comfortable in getting by with less.
posted by Kalmya at 4:21 AM on September 2, 2018 [2 favorites]

in the immediate term, I have a lot of financial room - but I’m still really anxious about my long-term financial stability ... How do I tone down the anxiety about money?

I recommend focusing more on the processes of anxiety itself than on the subject of the present anxiety. Learning not to engage in unproductive worry about money needs to be subsumed in the larger project of learning how not to indulge in unproductive worry about the uncontrollable aspects of the future generally.

Because the money part, for anybody making six figures yearly, is really, really simple. Keep training yourself to spend less this week than you did last week, keep a few tens of thou somewhere that will let you get your hands on it quickly in an emergency, and put all the rest in long term investments that will grow it as fast as possible. That's the entire plan. With a six-figure income you don't need a more complicated plan than that. And it sounds like that's what you're already doing. So if you're still anxious about money, then you don't have a money problem, you have an anxiety problem.
posted by flabdablet at 6:59 AM on September 2, 2018 [12 favorites]

Fantastic advice above!

Once you have saved 25x your yearly expenses (and have them invested in a diverse portfolio), you can live on this forever* (see this calculator that will run your portfolio through 118 different stock market cycles).

So keep your expenses low, keep saving and investing. Track your investments as a multiple of your expenses, and it will creep towards 25.

And treat your anxiety. Because if your anxiety is not being managed, it will turn your worry to other areas. Good luck on your journey.
posted by Sauter Vaguely at 7:34 AM on September 2, 2018 [3 favorites]

If you are truly making "upper six figures" upon graduating college (i.e., close to $1m/year in an entry position? Did you mean "upper five figures"?), and if you already have multiple years of living expenses saved, then you really have nothing to worry about, financially speaking. If you are nonetheless suffering from anxiety about money, then flabdablet is exactly right - no amount of money or savings or detailed savings plan is going to ease your anxiety, you need some kind of help or counseling related to anxiety itself.
posted by Mid at 7:39 AM on September 2, 2018 [9 favorites]

Your question isn't about money, it's about anxiety. I think the best thing you can do for yourself is to find a therapist and talk through your financial anxiety. Either you'll figure out where it's coming from or find some tools to manage it.

FWIW the financial description you describe is far, far ahead of the game for most people. Just graduating college and already have a high paying job, money saved, and financially supporting your parents? That's amazing. I'm guessing some other aspect of your situation you described is atypical. Still if you have lots of money saved and a high paying job, you are doing well.

The one bit of financial advice I can suggest is look into long term care insurance for your parents. It's not clear that this product is good for most people, but perhaps it is a tool you can use to stop worrying about that part of your financial life.
posted by Nelson at 8:17 AM on September 2, 2018 [1 favorite]

Sounds like you're doing everything you can in the financial and employment department. You mentioned a chronic condition, so you might find a support group that can help you determine if you should get long-term care insurance, or if you'd be better off investing the premiums. Your new employer might also offer something.
posted by RobotVoodooPower at 11:27 AM on September 2, 2018

When you say you're about to graduate college into a job that pays upper six figures, do you really mean more than half a million USD per year? If so, then you absolutely have an anxiety problem and not a financial problem. The answer is therapy, medication, meditation, or religion; whatever will help you deal with the problem in your head.

If you mean a different currency, or you over-counted a digit and mean more than fifty thousand a year, then that's an entirely different question.

To put this in perspective, 500k USD/year would put you individually among the top 0.5% of U.S. households; 1m USD/year would be 0.2%. Which is not to say you cannot be ruined, but that you have much less to worry about than the vast majority of the nation.
posted by meaty shoe puppet at 9:37 PM on September 2, 2018 [2 favorites]

Oh yes, here are some of my favourite, life-changing links about money and wealth.

Mr Money Mustache on Savings Rate. This relates to early retirement, which you may or may not want. But the point here it doesn't matter how much you earn, it matters what % of your salary you save. So keep your expenses low and watch your creep up the hedonistic treadmill. You will inevitably spend more as you earn more, which is fine... to a degree. But at some point it becomes a weight around your neck. First you want a nicer duvet, then you want a nicer car, then you want more space, and one day you find that you have turned into this couple, desperately unhappy even though they are earning $1 million a year.

Wealth and happiness.
When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire.

posted by moiraine at 3:54 AM on September 3, 2018

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