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3 Fear-Based Money Moves That Can Lower Your Net Worth

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Follow these 3 tips to quell fears and improve your savings skills.

This post originally appeared on LearnVest.

An unpredictable job market. Your city’s soaring cost of living. The hefty price of college tuition you’ll have to cough up someday for your kids. Retirement.

Sometimes, it can feel like your ability to earn and save money for the future is largely dictated by forces you can’t control — and that can be a scary thing.

So it’s no wonder that a recent American Psychological Association study found that finances ranked as a top stressor for Americans for the eighth consecutive year.

But it doesn’t have to be this way. Truth be told, many of the biggest money hurdles you face likely reside in your head — not your bank account.

Not buying it?

We tapped financial planners and financial therapists to help explain the most common ways we unknowingly let fear sabotage our net worth — and how to work on slaying those inner money demons.

1. Fear-based move No. 1: Keeping your assets in cash

Sometimes an “assume the worst” mentality can pan out, financially — like that time you instituted a strict spending freeze in order to hit your rainy-day-fund goal.

But when your financial pessimism turns you into an obsessive sock-drawer saver, it’s time to reframe your thinking.

How to quell the fear: Financial psychologist and financial planner Brad Klontz says this hoarder mentality is common to people who’ve witnessed others suffer a major financial setback, such as a tanked investment or even an identity theft incident. “But the irony is that doing nothing is really the only way to guarantee loss,” he points out.

To drive that point home in your own mind, financial wellness pro Amanda Clayman recommends educating yourself on exactly what you’re missing out on by keeping money under the mattress. “Start with a learning-only phase by reading a variety of books on the subject — and see what you connect with,” she suggests.

What you’re giving up by keeping your savings in cash is … more cash! When your money is in a compound-interest-bearing offering — such as a CD or money market account — you earn interest on the initial deposits and the interest they earn.

So a person who puts $1,000 into a simple interest account that pays 5% annually would have $1,250 in five years. A person who puts the same amount in a compound interest account with the same rate would have $1,276 by the end of the same period.

The person who left the cash in a jar? He’d still have $1,000 — now worth less because of inflation.

2. Fear-based move No. 2: Putting the brakes on taking a (calculated) leap of faith

After scrimping, saving, and strategizing for years, you’re finally ready to make that dream career move by launching your own business.

Correction: You’re financially ready, but the fear of walking away from a secure paycheck is putting the brakes on your momentum.

How to quell the fear: The secret to overcoming a fear of not having enough lies in redefining the word “enough,” Clayman says. Even if the best advice is to have, say, a year’s worth of living expenses banked before going out on your own, you have to be comfortable with that benchmark.

If you aren’t, create your own goal and devise a contingency plan. “In general, the more income you’re giving up, the better it is to keep your fixed costs low and lean [during transition],” Clayman says, adding that strategies like keeping your old, reliable car a little longer are easy choices that can allow you to weather a temporary earnings dip.

But if you hit your savings goal and your mental block is still holding you back, Klontz suggests searching for a happy medium that allows you to “shoot for the stars, but also hedge your bets.”

For example, if you’re a marketer who’d rather spend your days making furniture, you don’t have to choose one gig over the other. You can experiment with e-commerce shops, exhibit at local markets on the weekends, and learn firsthand what it’s like to run a business well before you ditch your day job for good.

In the end, achieving momentum toward your dreams — and a heftier net worth — isn’t an all-or-nothing game. It simply requires putting forth consistent effort toward whatever accomplishment will make you happy.

3. Fear-based move No. 3: Refusing to face money facts

You’ll be hard-pressed to find someone with a spotless financial track record. We’ve all made mistakes, like racking up debt, splurging too often, or forgetting to pay a bill before the due date.

While you don’t have to be perfect, you do need to make steady progress toward better money habits — but that can’t happen if you bury your head in the sand.

How to quell the fear: According to Klontz, this avoidance behavior is so common that it has a name: financial denial.

“It stems from ‘learned helplessness,’” says Klontz, explaining that people avoid negative situations when previous experiences have led them to believe something’s not in their control. “As a result, they don’t have the confidence to face reality.”

The good news? A lack of confidence isn’t insurmountable. You can ease into a healthier mind-set by creating a get-real plan made up of bite-sized to-dos.

“Start by putting an hour per week toward tracking, organizing, and managing your financial life — and break it down into subtasks,” Clayman says.

For example, one day might include nothing more than accessing and printing out your credit reports. The next day, review them and make a list of questions or items you need to research or follow up on with a professional. Each time you sit down to review your finances, strive to tackle just one or two more to-dos.

“Giving yourself action steps that keep you moving forward — without jumping in all at once — is the key to overcoming fear and inertia,” Clayman says.

And keep in mind that ending the cycle of financial avoidance is really about empowering yourself to make better decisions that’ll bring you more wealth. “You simply cannot plan for the future or increase your net worth if you do not know your numbers,” Snyder says.

Want more? Check out these articles from LearnVest:

Why Americans Are Really Loving on Their 401(k)s

Ask a CFP:‘Should You Ever Take Out a Home Equity Line of Credit?’

4 People, 1 City: How I Spend and Splurge in Chicago