Prior to the economic unrest this year, financial stress levels among Americans were notably high.
A Discover survey from last year found that 80% of Americans expressed concern over their financial situations, predominantly due to inflation, daily expenses, and economic conditions. Almost 66% indicated they would be unprepared financially if they lost their job, while over 50% felt similarly about a potential recession.
Currently, tariffs and a global trade conflict, which may increase costs and deter both consumer and corporate spending, have led economists to heighten their predictions of a recession this year. Alongside the volatile stock market, which has decreased by around 9% this year, it’s no surprise that financial anxiety is reaching unprecedented levels.
“Since the onset of Covid, many of us have been bracing ourselves for the next financial setback,” stated Megan McCoy, a financial therapist and associate professor of personal financial planning at Kansas State University. “It feels like we’ve been enduring one financial hardship after another for years, leaving us gasping for air.”
The risk extends beyond financial worry, which has been associated with increased incidences of various health issues ranging from depression to heart problems. Additionally, this pressure can drive individuals to make decisions that may ultimately worsen their financial situation.
“The desire to take action to alleviate discomfort can be overwhelming,” noted Anne Lester, former head of retirement solutions at J.P. Morgan Asset Management and author of “Your Best Financial Life.” “However, making sound decisions is challenging when fear is at the forefront.”
Here are six strategies experts recommend to maintain composure and safeguard your finances when anxiety rises.
Shift your viewpoint.
It’s easy to get lost in the latest volatility of the stock market. Just this month, the S&P 500 experienced one of the worst two-day declines on record (10.5%) within just five trading days, followed by its best one-day recovery since 2008 (9.5%). Overall, the index is down 4.4% for the month, and April isn’t even halfway through.
However, the fluctuations in stock prices over a short period will not significantly impact long-term retirement savers, many of whom have decades before they retire, according to Brad Klontz, a financial psychologist and author of “Start Thinking Rich.” Even retirees typically have investment timelines that can last 20 or 30 years or longer.
From this long-term perspective, stocks still appear to be a wise investment choice for growth, particularly when combined with fixed-income assets for added stability. Historically, stocks have delivered an average annual return of 10% over the past century, as noted by Dr. Klontz, outperforming other asset classes.
While recessions can be painful, they are a standard aspect of the economic cycle, occurring every few years, and the nation has consistently recovered from them.
“What may seem like impending doom in the short-term is often just a minor hurdle when viewed through a long-term lens,” Dr. Klontz explained.
Reassessing your 401(k) performance with this kind of perspective can be beneficial, as Ms. Lester advises.
“We tend to fixate on our highest balance, which can make any subsequent losses feel devastating,” she stated. “However, if you compare your current balance to a year ago, you’re likely still ahead. Compared to five or ten years ago, the difference is probably even more significant.”
Take a breath.
For some 401(k) investors, the temptation to sell their stocks as prices decline has proven too strong to resist.
With many savers moving funds from stocks to fixed-income portfolios, 401(k) trading activity soared during the first quarter of 2025, reaching levels unseen in nearly five years, according to Alight Solutions, a firm specializing in tracking workplace retirement plan activity. (The activity accounted for less than 1% of total 401(k) balances, yet the spike is noteworthy.) Following the market’s sharp decline on April 3 and 4, trade volume surged to ten times the usual amount on Monday, April 7, making it the busiest trading day since March 2020.
This illustrates how easily anxiety can lead to actions that may not be in one’s best interest; those who sold off missed out on the rebound in stock prices later in the week, which helped the major indexes recover a substantial portion of their earlier losses.
“Every decision is inherently a gamble—we can’t know if they are wise until time reveals the answer,” remarked Naomi Win, a clinical psychologist and behavioral analyst at Orion Advisor Solutions, a wealth management tech company. “Combat the culture of immediacy by learning to pause, think, and deliberate before making emotional decisions.”
You could implement a personal rule requiring you to wait at least an hour before executing a trade; utilize a timer to enforce this. Additionally, seek guidance from trusted sources—whether a financial advisor or a knowledgeable friend or colleague who remains calm and experienced in navigating volatile markets.
This provides an opportunity to counteract the physiological triggers of acute financial anxiety. As Dr. Klontz explained, increased stress activates the body’s fight-or-flight response, enhancing the amygdala, which processes emotions like fear and anxiety, while disabling the prefrontal cortex, which allows for rational thought and decision-making.
“It takes about 30 minutes to an hour to ease down,” Dr. Klontz added. “Once the prefrontal cortex re-engages, people often find themselves thinking, ‘Why did I make that choice?’”
Avoid checking your balances. (Seriously, just don’t.)
The pain associated with losing money tends to be more intense than the joy derived from making it—a phenomenon known in behavioral finance as loss aversion. That’s why frequently monitoring your 401(k) during a market downturn can be detrimental; seeing lower balances only exacerbates feelings of distress.
Frequent checking can also increase the likelihood of financial losses. Research by behavioral economists Shlomo Benartzi and Richard Thaler suggests that investors with long-term aspirations who rarely check their accounts tend to achieve significantly better average returns than those who do so regularly. Those who check more often are more likely to witness losses, which can discourage them from investing in stocks—even though, in the long run, stocks tend to outperform both bonds and cash.
For instance, if you check your account daily, you’re statistically likely to observe losses 30% to 40% of the time. In contrast, checking annually may reveal a loss only once every three or four years. This is why advisors recommend checking balances no more than once every quarter, or perhaps even just once a year.
It’s also wise to limit your exposure to negative news regarding the economy and the markets. “As social creatures, we are naturally inclined to pay attention to those around us,” Dr. Klontz stated. “If you are constantly bombarded with the panic of others, you’re likely to follow suit, potentially leading to poor decision-making.”
Visualize the worst-case scenario.
Although it may seem counterproductive, recognizing your greatest financial fear and contemplating how you would handle it can be a soothing practice.
“Psychologically, merely feeling as though you have options can alleviate anxiety in an otherwise overwhelming situation,” Dr. Win explained.
For example, if you are anxious about job security, you might first evaluate how long your emergency fund would last, then connect with industry contacts who may assist you with job opportunities. In case your job search extends beyond your savings, what could be your next steps? Perhaps you could move to a more affordable apartment or even stay with family temporarily.
“The worst time to devise plans for a crisis is during the crisis itself, as clear thinking often eludes us—it’s why we practice fire drills,” Ms. Lester commented. “While you may never need to implement these plans, having them prepared can provide comfort.”
Pinpoint a single action.
You cannot control stock market behavior or whether the economy will dip into recession, so it’s vital to concentrate on what you can manage, particularly actions that may enhance your financial health during downturns.
Start with your spending. “If you lack sufficient savings to cover three to six months’ worth of expenses in the event of a layoff, it’s crucial to start aggressively cutting back on discretionary spending to build your emergency fund,” Ms. Lester advised. “You may believe that every penny is already allocated, but whether it’s dining out, traveling, or having multiple subscription services, there’s often room for reduction.”
If you’re concerned about potential job loss during a recession, consider enhancing your value at work by acquiring skills in high demand in your field, or nurture your professional network by connecting with industry peers or establishing a side business for supplemental income, as suggested by Dr. Klontz.
Finding other areas in your life where you can exert control unrelated to finances can also help ease financial anxiety and offer a useful diversion. For instance, Ms. Lester found solace in organizing her home office amidst the market turbulence. Other activities like gardening, sorting family photos, or taking daily walks can instill a sense of accomplishment in areas that feel manageable when financial concerns seem overwhelming.
“Whenever you begin to create more order, even the smallest degree of control in your life leads to significant improvements in how you feel,” Ms. Lester remarked.
Cultivate self-compassion.
At times, financial anxiety is compounded by the perception that you may be at fault for your financial challenges.
“During challenging moments, many tend to view financial setbacks as personal failures: the market is in distress, and now I’m not going to have sufficient funds because I failed to earn enough, save sufficiently, work hard enough, or lack the aptitude for managing my finances,” explained Dr. McCoy from Kansas State.
She advocates a gentle rephrasing: “Remind yourself, ‘I did my best with the knowledge I had at that time.’”
Ms. Lester noted that she often observes these patterns of self-criticism. “Recognizing that our behaviors are often influenced by certain circumstances, and allowing ourselves to forgive, is crucial,” she advised. “Understand that there are numerous steps you can take moving forward to enhance your financial situation, take a moment to breathe, and then make that next move.”
