Talking About Money Reduces Financial Anxiety

Strategic Insights -

Research from the Cornell SC Johnson College of Business challenges the notion that discussing financial matters is taboo and finds that people who regularly talk about their finances experience less financial anxiety over time. By sharing information about their financial situation, individuals can gain a greater sense of control, organize their thoughts, and shift their mindset from confusion to clarity. The study, published in Organizational Behavior and Human Decision Processes, found that initiating a conversation about money is a key factor in reducing financial anxiety.

Key Takeaways:

  • Regularly discussing personal finances with family, friends, or strangers online reduces financial anxiety over time.
  • The more people talk about their financial situation, the better they feel, as it provides a greater sense of control and shifts their mindset from confusion to clarity.
  • Initiating a conversation about money is often the best place to start, as it helps organize thoughts and reduces anxiety.
  • Talking about controllable financial topics, such as spending and saving, reduces anxiety more than discussing uncontrollable topics, like job loss or medical bills.
  • Online platforms, which allow individuals more time to think, write, edit, and reflect on their thoughts, can be an effective way to share financial information.
  • People who frequently posted about their finances in online forums exhibited fewer anxiety-related words over time and felt better as a result.

Statistics:

  • Over 60% of adults in the U.S. experience financial anxiety, which has real consequences, including poor mental health, reduced job performance, and higher accident rates.
  • Talking about finances with another person of choice once a week for a month resulted in 1) lower financial anxiety, 2) reduced general anxiety, 3) better mental health, and 4) improved job performance.
  • People who talked about controllable financial topics saw a bigger drop in anxiety (31%) compared to those who discussed uncontrollable topics (20%).

Sources:

Sarah Magnus-Sharpe (2022). "Correll University." Thistlewaite (2022). "Opening Up About Money: The Unexpected Benefits of Personal Financial Disclosure," Organizational Behavior and Human Decision Processes, 151, 101257.