Facing Financial Anxiety
Practical Steps to Maximizing Your Income
by Alacias Enger

Malik is a twenty-six-year-old resident of Harlem. He works part-time in jewelry sales and resells clothing and sneakers for additional income. He lives with his sister to minimize his expenses while he focuses his attention on building his business as an independent fashion designer. While his business in fashion design is gaining traction, it is not yet profitable, and what little money is generated from sales is being put right back into the business to help facilitate its growth. Between reselling clothing and his job in jewelry sales, Malik brings home about $2,000 per month, more than half of which he pays to his sister to cover monthly expenses. His employer doesn’t provide him with an insurance benefit, so he receives coverage through the state, utilizing New York’s ADAP for his medical needs.

Within the last several months, Malik has had several small emergencies, some of which were medical. With a relatively tight budget and no real savings, he leaned on his credit cards to cover the related costs. This has resulted in Malik incurring approximately $6,000 in credit card debt spread over four separate cards. The resulting payments are eating into his already tight budget and causing him ever increasing financial anxiety.

Worried slim woman is looking in a wallet. Dollars are falling.

Malik is not alone when it comes to financial anxiety. In 2020, researchers from the Global Financial Literacy Excellence Center at the George Washington University and FINRA Investor Education Foundation, compiled and analyzed data from multiple recent studies. Findings suggest that 60% of Americans were experiencing financial anxiety, a number which has likely increased due to COVID-related hardships. These experts have cited insufficient income, high debt load, lack of assets, inadequate money management skills and financial knowledge as being heavily contributing factors. Much like Malik, having too many monthly bills, and significant medical expenses were listed among the study participants’ primary concerns.

In order to reduce financial anxiety and improve his overall financial health, there are a number of steps Malik can take. The first steps might include reducing credit card debt and a plan to avoid adding future debt. Malik recently filed his tax return and is expected a refund of approximately $2,200. He might consider setting aside $1,000 to protect himself against future financial emergencies, while using the remainder to pay off his smallest two credit cards using the debt snowball method.

The debt snowball method is a simple way to gain traction in eliminating debt. This method involves organizing debts according to balance from smallest to largest and attacking them in that order. After each debt is paid off, the dollar amount that had been used to make that monthly payment gets applied to the next debt in the lineup. So, Malik’s four credit cards, organized by balance, are approximately $500, $700, $900, and $4,000. If he eliminates the two smallest ones using his tax return, he frees up two entire monthly payments which can serve to help him eliminate the next debt on his list.

It might also be wise for Malik to reconsider his payroll tax withholdings. The fact that he is getting a refund at all means that more of his paycheck is being withheld for taxes than what is necessary. He is essentially giving an interest-free loan to the government by allowing them to hold onto his money all year long. Those funds might be put to better use by Malik himself. He could use the additional funds to help him continue building his business, eliminate credit card debt, build savings, or overall pad his already tight budget.
When Malik first started his jewelry sales job, he claimed “zero allowances” because he didn’t want to have to pay in at the end of the year. By claiming “zero,” Malik had the maximum amount withheld from his paycheck for tax purposes. He can simply request another W-4 form from his company’s HR department and fill it out again. If he claims, “one allowance,” he is basically claiming an allowance for himself, and result will be that less will be withheld for taxes, subsequently making his paychecks higher. As his business continues to grow, and become profitable, he may want to revisit this form in the future to request that additional funds be withheld in order to help offset taxes resulting from that profit.
While Malik is reaching for the stars, aggressively pursuing his dream career in fashion design, financial anxiety doesn’t need to be a part of the picture. Adjusting his payroll withholdings and eliminating debt will help free up funds that will help him to reach his goals.


Alacias Enger is a performing artist, writer, and educator. She lives with her partner in New York City, and is the founder of blogs “Sense with Cents” and “Travel Cents.” If you are living with HIV/AIDS and would like to stay on top of your personal finances, emailquestions to [email protected] for possible inclusion in Money Matters. Follow her on Twitter @sense_w_cents.