Today, money is a top stressor for Americans, especially when it comes to saving for retirement. This article explores how our emotional relationship with money often overshadows logic, why this happens, and how a shift to logical decision-making can lead to lasting financial security.
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SAN FRANCISCO, CA. In 2024, over half of employees identified money as their top stressor. But, historically, has this always been the case?
Money has been around for millennia. In fact, it dates back to around 600 BC, when King Alyattes of Lydia, in what is now Turkey, created the first official currency. While the concept of money has deep historical roots, the modern idea of financial decisions—saving and investing, particularly for retirement—is relatively new.
By the end of 2018, there was $27 trillion stored away in U.S. retirement accounts. Yet, the concept of being entitled to retirement is a relatively recent development, only a few generations old.
Before World War II, most Americans worked until they physically couldn’t anymore. Retirement wasn’t a common expectation. Fast forward to today, and while many people save for retirement, a large portion of us feel stressed or frustrated because we’re not saving enough—or we’re unsure if we have saved enough to live comfortably. In fact, according to the American Psychological Association, (APA), only 31% of Americans felt confident about their retirement savings in 2024.
The truth is, money isn’t as logical as we think it should be. Many of us approach it from an emotional point of view, without realizing it.
Consider this scenario: you receive a $639 speeding ticket. That’s a huge hit to your finances, and you’re likely upset. But you decide to fight it in court, and miraculously, the fine is reduced to $200. How do you feel? Relieved, ecstatic even. You might even 'treat' yourself to a celebratory meal or a shopping spree—without realizing the additional financial strain.
But here’s the catch—you didn’t stop to think about the hidden costs involved. Maybe you had to take a day off work to go to court. You had to spend money on gas, parking fees, and possibly even lunch downtown. And you might have ended up spending even more money in the process, but emotionally, you feel like you won because the ticket cost was reduced.
This is a classic example of how emotions often overshadow logic in financial decisions. The focus was on the “win” in court, not on the actual total cost of the situation. This is how many of us approach financial decisions. It’s not about the bottom line—it’s about how we feel at the moment.
Compulsive buying disorder, which affected 5% of people in 2024, highlights how emotional spending behaviors can undermine long-term financial goals, such as saving for retirement.
Have you ever felt like you’re just not good with money or that the topic is so stressful you’d rather not think about it at all? You’re not alone—and there might be some solid evidence to back this up.
Studies show that financial stress is one of the leading causes of anxiety for many people. In fact, financial stress is often deeply rooted in the way we’ve been taught to think about money from a young age. Society, marketers, and even our own families unintentionally condition us to connect money with emotions like fear, guilt, or pride. This creates a cycle where we avoid money matters because they’re stressful, which in turn makes them even more overwhelming when we finally face them.
The real kicker is that this emotional approach to money often prevents us from making the logical decisions needed to get ahead financially—especially when it comes to retirement.
This emotional approach to money often translates directly into how we manage (or don’t manage) our retirement savings. Marketers are keenly aware of the emotional drivers behind financial decisions, often perpetuating a cycle where emotional spending habits derail long-term savings goals. For example, when we feel stressed or overworked, many of us turn to “retail therapy” or other forms of instant gratification to feel better. These short-term rewards feel good in the moment, but they often derail long-term savings goals, like putting away money for retirement.
Similarly, when we do manage to save money, the satisfaction of seeing a growing account balance can lead to a sense of overconfidence. This might cause us to make risky investment decisions or stop saving consistently because we think we’re ahead of the game. But if an unexpected financial event happens, like a medical emergency or job loss, we’re suddenly behind again.
If you’ve ever felt like you just can’t seem to get ahead financially, or you’re constantly worried about whether you’ve saved enough for retirement, you’re not alone. The problem isn’t necessarily that you’re bad with money. It’s that society has trained many of us to think about money emotionally rather than logically.
Breaking out of this cycle requires a shift in mindset. Rather than focusing on short-term gains or losses, shift your perspective to prioritize long-term planning and stability. Here are a few steps to get started:
Financial security, especially for retirement, isn’t built on short-term emotions or wins. It’s built on consistent, logical decisions and a long-term mindset. While it’s natural to feel frustrated or worried about your savings, recognize that you’re not alone in feeling this way. Evidence suggests that many of us have been conditioned to associate money with stress, regardless of our financial circumstances.
The key is to move away from emotional reactions and take control of your financial future with a more logical approach. In the next part of this series, we’ll dive deeper into how our emotional conditioning impacts other areas of our financial lives—and what you can do to break the cycle and create lasting financial peace.
