Making more money may seem like the answer to dealing with financial stress and anxiety. But new data suggests that increasing income alone may not help much.
A new survey of 1,875 U.S. adults by investment app Acorns found that increasing income does not significantly reduce financial anxiety. Based on the survey results, what soothed respondents was the increase in their household’s net worth (assets minus debts).
According to the Acorns survey, just over half (51%) of respondents making less than $20,000 a year said they felt financially insecure, compared to 46% of those making $60,000 to $80,000 a year.
65% of Americans with negative net worth (more debt than assets) reported experiencing financial insecurity. 43% of those with no debt or assets and 47% of those with a net worth between $75,000 and $250,000 said the same.
“When we talk about low net worth, we’re honestly talking about literally how much money you have and how much money you’re likely to take out if you need it 100%,” says financial therapist Aja Evans. “Having a low net worth can mean there are fewer places to get the cash you need, which can greatly increase people’s financial insecurity.”
Impact of net worth on financial stress
The findings provide further insight into the widespread financial stress and anxiety that Americans are experiencing.
Recent data from Fidelity shows that overall inflation is starting to outpace wages, many consumers are relying on credit cards and loans to cover expenses, and more workers are turning their retirement savings into cash.
Higher incomes may avoid some of these moves, but they may not reduce stress levels. This could be due to the burden of heavy debt and monthly payments, or the fear that their big paychecks will disappear without warning in the event of a layoff, Evans said.
“What’s important is a personal sense of security, a personal sense of security, a personal sense of, ‘Hey, if something catastrophic were to happen to my finances, would I be able to take care of myself and my family?’ That’s where financial insecurity comes from,” she says.
Erika Lasle, chief financial wellness advisor at financial wellness and debt consolidation company Beyond Finance, agreed, adding, “When you find yourself in that situation, from my perspective, you often lose the cognitive ability to make clear financial decisions.”
When the “emotional burden of money” and your overall mental health become intertwined, the weight of something like debt “catches up on you in your sleep, your relationships, your work, and even your physical health like there’s no way to escape,” Lasure says.
Financial insecurity can affect anyone, regardless of net worth or income
Even people with high incomes and high net worth can experience financial insecurity.
About 43% of Americans with a net worth of $500,000 to $800,000 and 24% of Americans with a net worth of $800,000 or more report financial insecurity, according to Acorns research. Among people with annual incomes of $150,000 or more, 26% said the same.
Evans says this is very common, especially when factors such as ongoing wars, unrest around AI, threats of layoffs, and rising prices are occurring at the same time. But that doesn’t mean individuals should take drastic action with their own money.
“Don’t make financial decisions or move money when you’re stressed or in crisis,” Evans added. “That would be short-sighted, and that’s not good for yourself or your finances.”
“There are things you can’t control here, and that’s OK, but what can you control in this moment?” Lasle says. “Recenter yourself, ground yourself, regroup, and make sure you’re making financial decisions, whatever they are, from a place of clarity and not fear.”
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