Why higher income may not reduce financial anxiety

Making more money may seem like the solution to dealing with financial stress and anxiety. But new data shows that increasing revenue alone may not do much.

A. new survey A survey of 1,875 U.S. adults who invested in the Acorns app found that financial anxiety did not significantly decrease as income increased. What put participants at ease, according to the survey results, was the higher net worth obtained by subtracting a household’s liabilities from its assets.

Just over half (51%) of respondents making less than $20,000 a year reported feeling financially anxious, while 46% of those making between $60,000 and $80,000 a year reported the same, Acorns found.

Sixty-five percent of Americans with negative net worth (more debt than assets) report experiencing financial anxiety. 43 percent of those with no debt or assets and 47 percent of those with a net worth between $75,000 and $250,000 said the same.

“What we’re talking about with a low net worth is, frankly, literally how much money you have and what you could potentially tap into if you needed it 100%,” says financial therapist Aja Evans. “If your net worth is lower, there may not be as many areas where you can get the money needed, and that can really increase people’s financial anxiety.”

As overall inflation begins to outpace wages, many consumers relying on credit cards Latest data from Fidelity shows that a growing number of workers are using loans and retirement savings as cash to cover their expenses.

A higher income may help individuals avoid some of these actions, but it may not reduce stress levels. This could be due to high debt loads and monthly payments on them, or fears that high pay could disappear without much warning in the event of a layoff, Evans says.

“It’s more about your individual sense of security, your individual sense of security, your individual ‘hey, can I take care of myself or my family if something catastrophic happens to my finances?’ It’s about the feeling. “That’s where financial anxiety comes in,” he says.

Erika Rasure, chief financial wellness advisor at financial wellness and debt consolidation company Beyond Financehe agrees, adding: “When you find yourself in these types of situations, from my perspective, you often lose the cognitive bandwidth needed to make clear financial decisions.”

When the “emotional burden of money” becomes intertwined with your overall mental health, Rasure says, the weight of something like debt “will follow you into your sleep and your relationships with your work and into your physical health, like you can’t escape it.”

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