Why So Few People Feel Secure About Money — Even When They Have Lots of It

I’m not rich by any means. But I’ve done well enough to be comfortable, mostly because I saved aggressively early in my career. Yet I still feel like I’m only a stone’s throw from being in poverty, which is slightly irrational.

I remember having no money and having to budget until my next paycheck or risk groveling to my parents for help. It wasn’t a good life. And it still feels like yesterday, even though so many years have passed. Sadly, many people feel this way.

And to some extent — this stress can be constructive. It can mitigate risky spending. You’ll certainly never catch me with problematic expensive hobbies. But I wish I could feel more at ease about my station in life. Many of my friends are in this same psychological boat too. My buddy Brian is a software engineer, who has been making north of $180K per year — for years on end — while living in a low-cost area, and he’s still as cheap as he’s ever been.

So why are we like this? How do we level up and counteract this financial anxiety?

The origins of the problem

People tend to downgrade their financial standing. For example, per a survey by the financial firm Ameriprise Financial, only 13% of American millionaires classify themselves as wealthy. Even among those who had more than $5M in total assets — many still said they didn’t feel rich.

These weren’t people living in Silicon Valley, where $5M only gets you a shack. These were everyday people from all around the United States — still feeling underfunded.

Part of this is because of the disappearance of pensions — and fear that we’ll live on our savings and social security to get us through to old age. Both of my grandfathers had pensions, with one of them having two full separate pensions (military and government). But we are now the 401K generation — in a system that is more stressful than ever.

Why do people who have so much still feel sad about their financial standing?

Elizabeth Dunn, psychology professor at The University of British Columbia, and co-author of Happy Money: The Science of Happier Spending, looked into this very question. She found that social comparison, in particular, drives much of our financial dissatisfaction.

How we compare our income to others of similar age, education, and region of residence, greatly shapes our self-perceptions and satisfaction. Unsurprisingly, those who compared themselves to groups of higher income, tended to be less happy and more anxious about money.

Unfortunately, a majority of people tend to do upward comparisons. The severity of this impact was most notable: “The income of the reference group is about as important as one’s own income for individual happiness.”

It pains me to admit it: I’m 100% a victim of this statistic. I often watch videos of lavish mansion tours on YouTube, despite knowing the likelihood of me ever owning such a property is slim (unless I somehow write the next iteration of Atomic Habits). But I still enjoy oohing and aahing over the stunning architecture, classy furniture and paintings hanging on the walls. It’s entirely possible this admiration is only heightening my anxiety about money.

Yet I know as well as you that the person in that mansion isn’t likely to be happier than the rest of us. Within a year of becoming rich, or facing tragedy, the vast majority of people return to their baseline happiness.

What’s most telling is that winning the lottery can significantly impact your neighbor’s wellbeing. One study in Canada found that as the magnitude of someone’s lottery winnings went up, their neighbors odds of financial distress and borrowing increased alongside it.

The irony is that these neighbors are caught up in “Keeping up with the Joneses” (an idiom describing our urge to match our peers in material belongings), when all along, that wealthy neighbor was no happier than they were.

So how do we find satisfaction

Quite often, our stress about money isn’t even about the money itself. Per Dr. Amanda Clayman, a financial therapist, sometimes our stress about money is related to unresolved trauma. The desire to own a huge house and fancy cars, can be related to the childhood experience of seeing your parents struggle to make ends meet, or being evicted from your old apartment. Sometimes it’s the desire to express irrational levels of control over your life.

Per Dr. Clayman, “All this classic psychological stuff is going to find some sort of expression in money.”

Getting therapy to address these issues can save you from jogging on the hedonic treadmill and help you address the underlying anxiety (make sure to search for “financial therapists”, as they specialize in this treatment).

The other solution is to practice downward, rather than upward comparisons. This exercise can come off as mean-spirited, but it’s best to think of it as a form of gratitude, as a way of cultivating appreciation. Avoid letting it become a form of schadenfreude (pleasure in another’s pain).

Per Dr. Keith Payne, downward comparison can boost contentment and reduce risk taking. It can even improve people’s overall health.

Examples of downward comparison

One of the most formative experiences I had was a prison tour when I was 18. Our high school took us there as a “scared straight” exercise — hoping to remind us of how off the rails things could go if we didn’t live a proper life.

When I think back and remember how those inmates were living, with no privacy, having guards watching them, having to get into fights, using the bathroom in public, eating the same bad food everyday, never get to walk on the beach or go out to a restaurant or hug their family — I realize how good I actually have it. I suddenly feel spoiled and almost guilty for stressing out over such trivial matters. But I also feel relief.

My spouse Laura’s mother was diagnosed with cancer when Laura was only 13. Her mother only had a 50% chance of survival (she did, thankfully). When Laura went back to school in those months of chemotherapy, watching her mother lose her hair, she realized how trivial all of her squabbles with her friends were. At only 13 years old, she realized that all the things they were complaining about weren’t actually real problems. Having cancer, being sick, losing family — those are real things and worth worrying about. Laura and her friends had their health, which is worth more than all the gold in the world.

I don’t write these articles from a place of omniscience. Quite often, I’m educating myself along the way, and reminding myself of the skills and tools I’d forgotten about. My hope is that we both come away from this article, ready to appreciate and enjoy life outside of the confines of our insecurities and anxieties.

If you can’t shake your financial anxiety, consider seeing a therapist. Otherwise, choose to remember how good you have it by appreciating the suffering and loss that so many go through each day. Life is generally much better than it could be.