I’ve never been the type to worry much about money, but lately, I’ve been holding onto every dollar for dear life. Can you blame me? Between rising bills and ongoing instability in the job market, the possibility of losing everything I’ve worked so hard for feels closer than ever. Unsurprisingly, I’m not the only one feeling the pressure. In fact, 63 percent of respondents in Northwestern Mutual’s Planning & Progress Study reported that money worries have kept them up at night.
Of course, stressing about money—especially in today’s economic climate—is nothing new. But for many women, those fears have evolved into something deeper: a persistent anxiety about ending up financially insecure. The phenomenon has become so widespread that it now has a name: “bag lady syndrome.”
To better understand bag lady syndrome, I spoke with financial expert Charlene Quaresma about the growing phenomenon. Ahead, she breaks down what bag lady syndrome is, what causes it, how it shows up in everyday life, and the steps you can take to overcome it.
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Charlene Quaresma
Charlene Quaresma, CLU®, is a wealth management advisor with Northwestern Mutual and founder of House of Q Wealth Management in Portland, Oregon. She specializes in comprehensive planning, including wealth building, retirement, and risk management, and is particularly committed to helping women to build financial confidence and make values-driven decisions.
What Is “Bag Lady Syndrome”?
According to a Wealth Management Advisor at Northwestern Mutual, Charlene Quaresma, “‘Bag Lady Syndrome’ is a term that describes someone who has a deep, often irrational fear of ending up financially unstable.” It’s a nagging trepidation that your bank account will hit zero and leave you stranded on the street with all of your belongings in a bag.
“While it’s not a medical or clinical condition, it reflects a very real anxiety around outliving savings and losing financial independence,” she explains. This can, and does, affect women of all income levels, even those in good financial standing. For example, an Allianz study of over 2,000 women revealed that 49 percent of respondents reportedly fear losing their money and becoming homeless, and a third of those respondents reported earning $200,000 or more.
What Causes Bag Lady Syndrome?
Quaresma says all women are susceptible to bag lady syndrome because it is not solely driven by financial reality. “Someone may have substantial savings and still worry about running out of money because of past financial instability, witnessing family struggles, or feeling afraid of the unknowns of retirement,” Quaresma said. In many cases, emotional experiences with money—not the actual balance in someone’s bank account—are often what cause bag lady syndrome.
That said, it’s important to recognize that women’s anxieties around money don’t develop in a vacuum. Women earn nearly 20 percent less than men, lose about 14 percent of potential working time on average due to caregiving responsibilities, and report feeling less financially literate than men. Together, these factors can create very real financial vulnerabilities that make fears about long-term security feel justified.
“Even women who are financially responsible and in a strong financial position may struggle to shake the feeling that one setback could cause all their money to disappear.”
It’s a difficult cycle to break. Lower earnings can make it harder to build a substantial financial cushion, while time away from the workforce can lead to stalled career growth and reduced lifetime earnings. Plus, lacking financial literacy can make it harder to strategically save and build an investment or retirement portfolio, further fueling the paranoia that your bank account will inevitably hit zero. Even women who are financially responsible and in a strong financial position may struggle to shake the feeling that one setback could cause all their money to disappear.
How Bag Lady Syndrome Manifests
What makes bag lady syndrome particularly lethal is that it can manifest subtly, in a myriad of ways, and at any stage of life. Being overly conservative with money is a prime example of this. Of course, this includes things like hoarding money and avoiding contributing to an investment portfolio, but it also includes slightly more bizarre behavior, like driving to a gas station across town to save five cents a gallon without calculating the time and gas it takes to get there.
Bag lady syndrome also manifests emotionally. In addition to losing sleep or obsessing over money, Queresma says it can take a toll on your mental health and quality of life over time. Because you’re so worried about becoming a burden to family members, affording healthcare costs or household expenses, or simply getting by, you’re completely unable to enjoy any of the money you’ve worked so hard to earn.
Lastly, bag lady syndrome impedes your ability to plan your financial future. When anxiety around it is loud, or you feel suffocated by the thought of it, it’s easy to avoid financial planning altogether. This can cause someone to delay retirement despite being eligible for it or live way below their means because they’re terrified of running out of funds.
How to Overcome Bag Lady Syndrome
If this all sounds a little too familiar to you, you may be suffering from Bag Lady Syndrome. Here are the exact steps Quaresma recommends to overcome it.
1. Create a comprehensive and detailed financial plan
Creating a comprehensive and detailed financial plan is one of the most effective antidotes to Bag Lady Syndrome. “Fear often grows in uncertainty, so understanding your retirement income, savings goals, healthcare costs, and long-term financial needs can help replace anxiety with confidence,” Quaresma said.
“Fear often grows in uncertainty, so understanding your long-term financial needs can help replace anxiety with confidence.”
To do this, you need to assess what your life costs now and then estimate how these costs will change over time based on your goals. For example, if your goals include getting promoted, becoming a homeowner, traveling, or having a family, your income will be affected. Considering this will give you an idea of how much you should realistically be contributing to savings, an emergency fund, and retirement. If all of this feels too overwhelming or outside of your wheelhouse, Quaresma suggests working with a financial advisor to get started.
2. Automate your savings
Building a financial safety net can help calm your nervous system and make it easier to stop stressing about money. According to Quaresma, prioritizing emergency savings and consistently contributing to retirement accounts can strengthen financial confidence over time.
One of the simplest ways to make progress is by automating your savings. Setting up recurring transfers to your retirement accounts, savings goals, and emergency fund removes the need to make the decision each month and helps turn saving into a habit rather than an emotional choice. Over time, those consistent contributions can grow into meaningful financial security without requiring constant effort or willpower.
3. Shift your money mindset
Finally, improving your financial literacy can help shift your money mindset and quiet fears about the future. Taking free financial courses, listening to financial podcasts, reading books about money, and so forth can make money feel less intimidating and more manageable. Over time, you’ll feel confident that you have the tools, knowledge, and savings to carry you through.
Ultimately, overcoming Bag Lady Syndrome boils down to feeling financially and emotionally safe and prepared for whatever may come your way. According to Quaresma, “developing healthy financial habits, improving financial literacy, and focusing on preparation rather than fear can help shift the mindset from uncertainty to long-term stability and peace of mind.”
Arianna Reardon, Contributing Writer
Arianna is a freelance writer and journalist, and the self-proclaimed hot and dirty martini queen. At The Everygirl, Arianna uses her authenticity and relatability to empower, inspire, and motivate women everywhere. Whether she’s writing about sex and relationships, career and finance, beauty and fashion, wellness, or home and living, Arianna’s passion shines through in all her work.
