Diffuse vs. Specific Financial Fear
One of the questions I get asked a lot (because of my TED talk and all the writing I’ve done on taking risks) is “how do you know if it’s a bad idea to take a risk?”
It’s such a good question, because one of the predominant feelings when you’re staring at something that feels risky is fear. It’s the emotion that frequently causes people to not take risks — fear of failing, fear of feeling incompetent, fear of leaving safety or surety. And part of my point when I talk to people is that to get good at taking risks, you need to start seeing fear as a green light. If your body or your brain is saying “I’m scared, I can’t do this,” that’s a sign to run toward it, not away from it. One of the biggest benefits of taking risks is proving to yourself that you’re capable of much more than you know – of overcoming fear.
But how do you know if the fear is a different kind of fear? One that’s telling you this is actually a bad idea?
Because the truth is, there’s a type of fear that will make you bad at handling all the discomfort and uncertainty that comes with risk. Taking a risk is jumping off a cliff and falling for a while — often 6 or 9 months of feeling crazy, incompetent, inept — before you start to reach the other side and realize you’re learning and growing and this is leading you somewhere. Making it through that period means you have to have enough steadiness underneath you to survive the fall. So there are types of fear that will make it almost impossible to get through that phase.
One of the biggest kinds of fear I talk to people about is financial fear. “I’m scared I’ll run out of money” is a type of fear you should examine before you quit your job without another one lined up, or before you decide to start the company you’ve been dreaming about, or go back to school. It is really hard to stay sane and make it through the hard, uncertain moments that come with taking a risk if you’re worried you can’t feed yourself, your family, or your cat — or if you’re worried about losing your home.
But not all financial fear is a red light.
There’s a difference between what I call “diffuse financial fear” and “specific financial fear.”
Most financial fear starts diffuse. “I’m scared I might run out of money.” “I’m scared of not earning money.” “I’m scared I’ll never find another job.” All of those are diffuse financial fears, meaning it is just a low hum or dread or anxiety preventing you from even exploring your options. And because it’s diffuse, you can’t actually do anything about it — you can’t solve “I might run out of money” the same way you can solve a problem with a number attached to it.
And a lot of financial anxiety is actually solvable. You just have to figure out what’s behind it and turn it into something more concrete. Diffuse fear feels permanent and unsolvable because it’s shapeless. Give it a shape and, more often than not, it turns out to be a problem you can actually work on.
When someone comes to me with this kind of fear, my job is to turn diffuse into specific. Not because specific is always comfortable — sometimes it’s worse! — but because specific is actionable. Diffuse fear just sits on your chest. Specific fear gives you something to push against.
Honestly, I usually start with: what are you actually afraid of, and do you know where it comes from? Some percentage of the time, this fear is inherited. A friend of mine has parents who immigrated to the United States from China and went through a lot to create opportunities for her and her siblings. There was a spoken expectation that all of them would always have jobs and would always try to earn as much as they could. Just that much detail is helpful, because it puts a shape on the fear. Now the conversation becomes about whether she wants to do the psychological work of untangling that expectation from her own goals right now, or whether she believes this particular risk is worth taking anyway, even with that voice in her head. Sometimes risks lead to greater financial outcomes, even if they don’t start that way, but if your fear won’t even let you start the conversation, then you’re stuck. There’s a lot you can do to talk through inherited financial fear and help someone decide whether they can handle the baggage that comes with the risk.
But the best case is to get even more specific. “I’m scared I might run out of money.” Okay — do you know what your savings actually are? Do you know how much of it you’re comfortable spending if you need to? If you have a partner, have you had this conversation with them? [A partner who isn’t on board with your risk is its own problem — it’s genuinely hard to make it through the dark middle of a risk if the person next to you doesn’t believe in it.] Do you know your monthly burn rate — how much your household actually spends each month?
All of this is just getting at one question: what do you need to feel financially safe? Is it something you can practically achieve?
Once people get concrete, they usually end up with something like: “I know I can handle 3 months without pay. I’ve even talked to my partner about it. But after that, I’d start to feel really anxious, and to feel safe, I’d need to earn enough to at least cover rent and food, which is $5k a month, or I’ll start eating into savings I don’t want to touch.”
That sentence is gold. That’s a specific financial fear. And once you have it, you can actually interrogate it.
The next question is: what would it take for you to actually pull that off?
This is where it gets complicated, because there’s often stuff you can’t control. If you want to quit and take time off, you can’t guarantee you’ll find a new job in 3 months. So you start listing what you can control instead. It usually turns into a list of smaller, more ownable things. I had a friend who had spent a decade crushing herself as a founder of a startup and desperately wanted to take a year off but for a variety of reasons, just couldn’t handle not making money. We dug into it and discovered that if she could make enough to cover her mortgage, then she would feel comfortable taking some time off, so we focused on finding her a part-time job that could cover the mortgage, giving her 20 hours per week to herself. It wasn’t a completely free year but it ended up being a great balance for her of anxiety free work and time to recuperate.
Maybe it’s: I need to stay at my job for 6 more months to build the cushion. Maybe it’s: I need to believe I can earn $5-10k a month freelancing or contracting — so let me go test that before I quit anything. Maybe it’s: I know I’m going to burn through $20k of savings, and I need to decide if I’m at peace with that. And sometimes it’s just: I need a backup plan, pulling shots at Starbucks, so I know what I would do if things got rough. [Worst case, that job exists, and it can pay my rent while I figure out the next thing. Just knowing that is enough to loosen the fear’s grip.]
None of these answers are dramatic. That’s the point. Diffuse fear feels like an emergency, or a concrete wall standing between you and what you want. Specific fear is just a math problem with some emotional weather attached to it.
Sometimes you do the math and the number doesn’t work. You genuinely cannot afford the risk right now. That’s essential information. It’s not a failure to find out you’re not ready or now’s not the moment. The failure is never asking the question, and letting the fear win or trying to take a risk without examining the financial fear.
This is also where the green light thing gets more nuanced. I still believe fear is often a signal to run toward something, not away from it — that most of what keeps people stuck is fear of feeling incompetent or fear of failing, and that kind of fear is exactly the kind you should push through. But financial fear is different. Unmanaged, it can turn you into a terrible version of yourself in the middle of a risk – deeply anxious and unable to do your best work. This happens not because the risk was wrong, but because you never did the work to give yourself the best possible platform before you jumped.
Diagnosing fear you should listen to
Here’s a way to think about which fear is worth stopping and diagnosing.
You’ve probably heard of Maslow’s hierarchy of needs — the idea that humans have a stack of needs, and the ones at the bottom (food, shelter, safety) have to be reasonably secure before you can care much about the ones at the top (belonging, achievement, becoming the fullest version of yourself). Almost every fear you feel when you’re staring down a risk is guarding something on that stack. The question is what level.
If it’s guarding the bottom — can you eat, can you keep your home, can you take care of the people who depend on you — that’s not a fear to push through. That’s a fear to examine. Do the math. Find the number. Decide if you can hit it.
If it’s guarding the top — will people think less of you, will you feel like an idiot, will your ego take a hit if this doesn’t work — that’s the green light. That fear is protecting your reputation, not your survival, and it is almost never worth listening to.
There’s a third case that’s a little more complicated: sometimes your alarm goes off at the bottom of the stack even when nothing there is actually threatened. If you’ve been laid off before, or grown up somewhere unstable, your body can treat any uncertainty as a survival threat — even when you have savings, a partner with income, a real plan. It feels exactly like financial fear. It talks like financial fear. But it’s not actually about your current number — it’s an old alarm going off in a new context.
That one’s the hardest to sort, because it deserves compassion, not dismissal. You’re not wrong to feel it. But the fix isn’t the same fix as real financial fear. Doing the math won’t quiet an alarm that isn’t really about the math. What helps is naming it for what it is — an old wound, festering — so you can decide, consciously, whether you’re willing to feel unsafe for a while in service of something you actually want or if now is a moment to design for safety, not risk.
For what it’s worth, despite all my writing and TED talks, I still get scared every time I’m faced with a risk – the edge of the cliff is terrifying no matter how many times you’ve done it. I’m just much more familiar with my old friends the fear monsters (meet Bob) and have learned how to diagnose signals worth listening to. That’s what I hope this helps you do.
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