How To Deal With Financial Stress

Financial stress is extremely common. According to an American Psychological Association (APA) study, even before the pandemic, over 70% of Americans reported concern about money. And, while a majority of Americans express concerns about their financial health,  BIPOC Americans face disproportionately more financial challenges than their white counterparts. Because financial health is so deeply tied to our ability to meet core survival needs, worrying about money can have a significant impact on our mental and emotional wellbeing. Read on for more about the causes of financial stress and how you can take action to minimize and hopefully eliminate it.

Things That Cause Financial Stress

There are many causes of financial stress. Sometimes it’s likely to be short term — such as when we lose a job or have unexpected but fleeting expenses. In these cases, a new job and some attentive budgeting can relieve the concern. Sometimes the stress is more chronic and rooted in deep structural inequities — such as the growing number of individuals and families who struggle to make ends meet even while working.

No matter what causes it, the stress of not knowing whether we can meet financial obligations, for ourselves and sometimes for others, can really take a toll on our mental health. And while money troubles or financial stress affects everyone, it may be especially challenging for young people who have less experience than older populations with managing finances. Although, it should be noted that often older people don’t have the physical, mental, or experiential capacity to work, while healthy young people typically have years of possible training and new skills acquisition ahead of them to help turn the tide.

Effects of Financial Stress

Financial stress and mental health challenges can be mutually reinforcing. Like all stress, if left unaddressed, it can snowball into something bigger. Financial stress can damage mental health, and in turn, negative mental health can make it more challenging to manage our finances. When we’re under a lot of financial stress, we may experience emotional or physical symptoms like:

  • Damage to self-esteem, shame, anger, fear, or despair
  • Trouble sleeping, low energy or change in weight
  • Trouble maintaining relationships or keeping an active social life
  • Substance misuse
  • Suicidal thoughts and behaviors

Suicide is an extreme response to financial stress and is always the result of a multifaceted array of factors, but financial stress is sometimes a contributor. More common effects of financial stress are depression and anxiety — especially in cases where there’s no clear solution to financial challenges. The most important thing is to identify the source of the stress and to move into problem solving mode whenever possible. Wanting to avoid the stress by avoiding the issue is understandable, but rarely works to actually alleviate the issue. And, in the case of financial stress, avoidance can make the situation much worse. Instead, it’s much more helpful to move into active problem solving mode and use whatever resources you have available. Here are some tips on how to get started:

Stay Connected to Friends and Family

When we’re struggling financially it’s tempting to want to pull away and minimize the challenge. Not having money to spend on socializing and/or feeling shame or embarrassment about our situation can make even admitting that we need help challenging. Our best resource, however,  is other people. Sometimes, just having others around to provide emotional support can help us feel less alone. In other situations, friends and family might be able to help provide tactical and practical real-world advice or help you problem-solve, especially if they’ve been in a similar situation before. Remember that financial stress is common, so it’s highly likely that someone in your circle has experienced a similar situation before and will have ideas or at least short term assistance to offer.

Get Professional Financial Advice or Support

When you’re faced with chronic or structural challenges, it’s useful to know that there are organizations that provide free financial advice and other services. One that we know is the Foundation for Financial Planning. You can reach out to your personal bank for help as well. Many banks offer free counseling and financial advice; they’re a good resource because it’s in their best interest to help you. Of course, books are another great resource, and most libraries have a ton of information on financial planning. You can also Google “best books for financial advice” and see what comes up. And, as always, if you really need assistance immediately, there are government programs and benefits available. See if you qualify.

Track and Manage Your Finances

One of the best tools for reducing spending, and knowing where you spend money is by tracking and budgeting where you money goes. It’s always surprising where we spend money  and most people don’t realize how much they spend on certain things. Here are a few ways to track and manage your finances:

  • Download a financial tracking app, open up a spreadsheet, or just keep track on your phone. Whatever makes sense for you.
  • Set a spending budget and stick with it. You can do this by setting a daily, weekly, or monthly budget. Some people like to break a budget down into categories while others might prefer having an overall monthly budget to stay within. Play around and see what works best for you. Be ambitious in cutting your spending, but also be realistic. Remember, change won’t happen overnight but if you stick with it, you will see improvements over time.
  • If you need to save or make monthly payments, you can often arrange to have funds automatically debited from your account and moved into a savings account or applied to a bill as soon as you’re paid. Not including these automatic and immediate debits in your monthly budgeting for other expenses can make it much easier to save and pay bills.
  • Set up a system or structure that makes it easy for you to stick to your budget, and keep in mind that there’s no one-size-fits-all. For some, it may be easier to track spending and stick to a budget by using a debit card and checking online statements regularly. For others, it may be easier to limit yourself to just using cash.
  • Identify triggers for impulse purchases. You’d be surprised how easy it is to pick up small things you don’t need, so ensuring you’ve budgeted for it, and tracked it will really help curtail that unnecessary spending.
  • Recognize the impact of small changes. Deciding to set a new spending budget can be intimidating, especially when you only think about it in terms of making big changes. But small changes, like removing a single online subscription, can really add up over time.

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If you or someone you know needs to talk to someone right now, text, call, or chat 988 for a free confidential conversation with a trained counselor 24/7. 

You can also contact the Crisis Text Line by texting HOME to 741-741.

If this is a medical emergency or if there is immediate danger of harm, call 911 and explain that you need support for a mental health crisis.