Anxiety Files

Simple and powerful techniques for coping with anxiety and worry.

Robert L. Leahy, Ph.D., is the author of Anxiety Free and The Worry Cure. He is Clinical Professor of Psychology in Psychiatry at Weill-Cornell Medical School and Director of the American Institute for Cognitive Therapy. See full bio

September 30, 2008, Anxiety

Financial Anxiety and the Luckiest Man

Financial Worry You are watching your 401k shrink in value and you are wondering how you will be able to pay your bills when-and if---you retire. Everything in your life right now seems to hinge on the money that seems to be disappearing right before your eyes. What can you do?

Diversified Portfolios

I've noticed that many of my anxious patients over the years who worry about money often get tunnel vision. They focus on one set of their assets and think that their entire wealth is based on that asset.

But your assets may be far more diversified than that asset. For example, your 401 K may be one asset. But are there other assets? For example, your house is an asset. It may have declined in value, but there is likely some net value there. The average equity in America in your home is about 45% and about 1/3 of Americans own their homes outright. Whatever your current situation, think about the asset of your home as part of your portfolio. Also, any insurance policies that you have that may eventually have a cash value. These assets may vary in value over the near-term---they may decline in some cases---but as you diversify, expand your time horizon. Where will things be in five years?

Chart Another asset that helps you diversify your position is your earning capacity. Let's say you make $70,000 per year. Over a ten year period, with raises and future investments and savings, this "asset" has significant value. In fact, to replace that $70,000 per year you would need about 1.4 million dollars to throw off enough interest to yield that amount at reasonable rates of return.

So, you may be diversified and not know it. If you're not, start planning on how you can diversify.

Life Portfolios

Another way of thinking of diversification is to think about "utility" in your life. After all, what good is money if you can't buy the things that you want? I think of this as your "Life Portfolio". For example, utilities in your life might be experiences that you value--- friendship, love, family, leisure, fun, spiritual experiences, community, kindness, and other "goods". You probably can see that none of these costs anything. If you don't have these "utilities" in your life portfolio, then go out and try to find them. They're there if you look. But if you only focus on money, you won't see them.

The old adage that money can't buy happiness is largely true. (I know you will respond, "Yes, the best things in life are free, but I notice that they're more expensive today") OK. Laugh at me, if you wish. But here's my challenge for anyone with money worries: Find something every single day of your life that is free --and do that. Make it the focus of your day early in the day.

Loss of Senses Some time ago, one of my patients said that he was upset that he lost a lot of money. Knowing him and the kind of person he was I felt safe saying, "Let's put that up on the shelf for a little while and talk about something else". I said, "Let's imagine everything has been taken away. You have no mind, no senses, no family, no money, no job. Nothing. You can get one thing back at a time-and I won't tell you how many. Here's the catch. You have to convince me that you really appreciate them."

He looked at me in amazement. Where would he start?

I thought I would get him started. "Let's take your eyesight. Close your eyes. Imagine that you are blind-forever. You can only get your eyesight back if you can convince me that you appreciate what you will see."

He said he wanted to see his children and his wife. He then made a case that he appreciated each one. Even the bad times that they had. They had to struggle together. He learned something for the struggle. He recalled moments that he loved and appreciated. He was in tears.

I asked him to open his eyes. "You've had all of this already. You just didn't see it. You were thinking about the money".

It was all there.

His homework assignment was a choice that he could make each day. "You can either worry about the money or you can show your family that you appreciate them and love them".

The next week was much better. He felt like the luckiest man he knew.