In the first blog post of this series, I focused on topics such as: relative vs. absolute wealth, spending money on experiences vs. products, income vs. net worth, and financial insecurity during COVID. This blog post will focus on one prominent emotional driver of spending: fear.  

Fear is a powerful and universal human emotion that relates to worry, stress, anticipatory anxiety, catastrophizing, and negativity bias. According to Amy Livingston, a finance writer, fear may be broken down into 4 categories that include:

Fear of Missing Out (FOMO)

FOMO is when we feel as if we are missing something important that others (e.g. friends, family) possess or experience. This fear can drive us to make irrational financial decisions to feel a part of a group. For example, Jane observes on social media that her friends are taking exotic vacations. As a result, she feels sad because her life seems boring in comparison. To alleviate this feeling, Jane spends money that she cannot afford to go on a similar vacation, which puts her in a precarious financial situation. 

Fear of Falling Behind (FOFB)

Distinguishable from FOMO, FOFB is not about how you feel when missing out, but rather how you feel based on how others would think of you if you do not participate  For example, instead of John purchasing an expensive car because his friends seem to be having a great time with theirs, he buys the car due to the fear that his friends will think less of him if he doesn’t. Oftentimes, this leads to overspending to “Keep up with the Joneses.” 

Fear of Failure (FOF)

FOF deters people from taking risks which could pay off financially or otherwise. The risks that I am referring to in this example are not reckless, but calculated risks. For example, Pat remains in a career they hate because of the fear they have about changing professions, even if they have solid educational background, applicable professional experience, and financial security to fall back on should their transition not go well. As Wayne Gretzky said, “You miss 100% of the shots you don’t take.”

Fear of Losing Money (FOLM)

To understand FOLM there are two related concepts to know: negativity bias and loss aversion. Negativity bias is the notion that a loss hurts more than a gain of the same amount feels good. For example, Michael losing $1,000 in the stock market would hurt more than gaining $1,000 would feel good. Loss aversion is the preference to avoid these losses altogether. Here is an example to illustrate how FOLM can lead to irrational decisions:

Michael invests $50,000 in XYZ stock. Over time, the value of his investment decreases to $40,000. While Michael’s investment is worth less on paper, technically he does not actually experience (or realize) the loss until he sells the stock.  Michael believes that the stock will continue to go down. However, because of his negativity bias and strong aversion to loss, he decides to hold on and hope that the stock rebounds to where he can sell it for a gain. By not selling the stock Michael not only avoids locking in a loss, but also avoids admitting that he made a judgment error by buying the stock in the first place. 

Only by being aware of our emotions and biases can we begin to address them. Symmetry Counseling is one of the few practices in Chicago that offers financial therapy. I work with clients on identifying how their emotions correlate with various spending behaviors. Please call 312-578-9990 to get started today. 


Hawkins, Ken. “The Art of Cutting Your Losses.” Investopedia, Investopedia, 29 Aug. 2020, 

Livingston, A. “4 Fears that Cost You Money and How To Overcome Them.” Money Crashers, Money Crashers, 7 Oct. 2018, 

Nguyen, Quang. “Linking Loss Aversion and Present Bias with Overspending Behavior of Tourists: Insights from a Lab-in-the-Field Experiment.” Tourism Management, Pergamon, 22 Nov. 2015, 

Weston, Liz. “How Emotions Affect Money Habits.” MarketWatch, MarketWatch, 13 Mar. 2015,