Why Increasing Your Income May Not Reduce Financial Anxiety

Increasing income is often viewed as the primary solution for alleviating financial stress, but new data suggests that earning more may not be enough to resolve underlying anxiety. A survey of 1,875 U.S. Adults conducted by the investing app Acorns reveals that financial anxiety does not significantly decrease as incomes rise.

Net Worth as a Driver of Stability

The survey findings indicate that net worth—calculated by subtracting household liabilities from assets—plays a more critical role in easing mental stress than salary alone. For those with a negative net worth, meaning they hold more debt than assets, 65% reported experiencing financial anxiety.

In contrast, 43% of those with no debt and assets and 47% of those with a net worth between $75,000 and $250,000 reported feeling anxious. This suggests that the ability to access cash in an emergency is a primary driver of peace of mind.

Income levels showed less variation in stress levels. While 51% of respondents earning less than $20,000 a year reported financial anxiety, 46% of those earning between $60,000 and $80,000 reported the same.

Did You Know? Sixty-five percent of Americans with a negative net worth—where debt exceeds assets—reported experiencing financial anxiety.

The Psychology of Financial Security

Financial therapist Aja Evans notes that a lower net worth limits the potential sources of cash available during a crisis, which can significantly increase anxiety. She explains that financial stress is often rooted in an individual’s sense of safety and whether they can care for their family during a catastrophic event.

High incomes may help some avoid certain financial pitfalls, but they do not necessarily eliminate stress. This may be due to high monthly payments or the persistent fear that a high salary could disappear without warning in the event of a layoff.

Erika Rasure, chief financial wellness advisor at Beyond Finance, suggests that the “emotional burden of money” can diminish the cognitive bandwidth required to make clear financial decisions. This weight can extend beyond finances, affecting sleep, relationships, and physical health.

Expert Insight: Samantha Carter observes that the gap between high income and low net worth creates a precarious stability. When individuals rely solely on cash flow rather than accumulated assets, they remain vulnerable to systemic shocks, meaning their perceived security is often an illusion that can be shattered by a single job loss.

Ubiquity of Financial Stress

Financial anxiety persists even among those with significant wealth. Acorns found that 43% of Americans with a net worth between $500,000 and $800,000, and 24% of those with a net worth of $800,000 or higher, report feeling anxious.

Similarly, 26% of those earning $150,000 a year or more reported financial anxiety. Evans attributes this to a combination of global and economic pressures, including rising prices, fears surrounding AI, the threat of layoffs, and ongoing war.

Managing Financial Crisis

Experts warn against making drastic financial moves while in a state of crisis. Evans advises against moving money or making major financial decisions when stressed, as such actions are often shortsighted.

Financial wellness app Acorns launches job finder

Rasure recommends that individuals focus on what they can control in the present moment. By re-centering and grounding themselves, individuals may be able to make financial decisions from a place of clarity rather than fear.

Future Outlook

As inflation continues to outpace wages, consumers may increasingly rely on loans and credit cards to cover basic expenses. This trend could potentially lead to a higher prevalence of negative net worth across various income brackets.

a growing number of workers may tap into their retirement savings for immediate cash, a scenario already reflected in recent data from Fidelity. Such moves could further impact long-term net worth and sustain levels of financial anxiety.

Frequently Asked Questions

Does increasing your annual income significantly reduce financial anxiety? According to the Acorns survey, boosting income alone may not help much, as financial anxiety does not significantly decrease as incomes rise. What is the difference between income and net worth in terms of financial stress? Income is the amount earned, while net worth is found by subtracting a household’s liabilities from its assets. The survey found that a higher net worth was more effective at easing respondents’ minds than a higher income. Why do high earners still experience financial anxiety? High earners may feel anxious due to high debt loads, the fear of sudden layoffs, rising prices, fears regarding AI, and the impact of ongoing war. Do you prioritize increasing your monthly income or growing your overall net worth to feel more secure?