Cutting down on discretionary spending and paying down debt will help reduce your financial anxiety. photo: shutterstock

5 Ways to Reduce Your Financial Anxiety

Money stressing you out? You're in good company. Nearly three fourths of all Americans reported feeling anxious about money during the past month, a new survey by the American Psychological Association found. Millennials and Gen Xers are the most anxious, as they juggle student debt, parenthood, and a slow-to-recover job market.

If that sounds like you, take heart. Short of inheriting a large windfall, there are some easy steps you can take to reduce your economic insecurity and join the portion of the population that isn't feeling quite so anxious about their funds. Here's how to start.

1. Create a plan. Fueling our anxiety about money is the feeling of being out of control—that economic events you have no hand in will hurt your prospects. Developing a financial plan with specific goals and targets helps you feel as if the control is back in your hands.

Need proof? Gallup reports that 80% of nonretirees and 88% of retirees with such plans said having a plan boosted their confidence that they could achieve their goals. And a Transamerica survey shows that workers with a written plan are 47% more likely to say that they'll retire with a comfortable lifestyle than those without one.

2. Break off bite-size chunks. Lofty long-term goals like building a seven-figure retirement nest egg or saving enough to pay for your kid's BA can feel impossible to achieve. So instead of focusing on big end numbers, set your sights on more manageable interim targets.

Related: What's your money state of mind?

"Create small steps, each with its own deadline and reward," says Harvard behavioral economics professor Brigitte Madrian. "The more small things you knock off your list, the less anxious you'll feel about bigger goals."

3. Accentuate the positive. "Our brains tend to focus on the negative, so it's a struggle to see what's going right," says Rick Kahler, president of the Financial Therapy Association.

Help yourself by taking inventory of what's going well for you moneywise—maybe you've upped your 401(k) contributions, your home's value has jumped, or you're saving money by brown-bagging it at work. Use the list to buoy your spirits when setbacks occur.

Related: How we feel about our finances

4. Plump your cushion. The single best move you can make to feel better about your finances: Build up your emergency fund.

A University of Georgia study has found that having adequate reserves is a better predictor of financial satisfaction than other moves, such as paying off credit card debt. "It's like having extra insurance," notes Terrance Odean, a finance professor at the University of California at Berkeley.

5. Don't get too relaxed. The recession made us realize how vulnerable we are, Madrian says. And that awareness led many to cut back on discretionary spending, pay down debt, and save more.

"These habits are good," says Odean. "If anxiety motivates people to make these changes and can motivate them to save even more, you don't necessarily want to relieve people of all of it."

Read next: Americans Less Stressed—Except About Money

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