How to deal with financial stress
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Financial stress is a serious burden for many people, and the pandemic has only made it worse. One recent study revealed that 60% of respondents felt anxiety over their personal finances and 50% reported stress. Women, younger respondents, and individuals carrying medical debt were particularly vulnerable.

The Impact of Financial Stress

Financial stress can have a significant impact on our quality of life. It impacts both our physical and mental health. For example, stress over money has been linked to sleep problems, migraines, mood swings, depressions, lower sex drive, muscle pain, diabetes, and even heart disease.

Relationships are particularly vulnerable.

  • Research from Kansas State University concluded that “arguments about money are by far the top predictor of divorce”.
  • Arguments over money tend to be serious: another study found that “husbands and wives reported greater husband depressive behavior, and wives reported greater wife depressive behavior, in money-related conflicts than non-money conflicts”.
  • Fidelity investments report that 74% of millennial couples brought debt into their marriage, and 46% reported that debt had a negative impact on their relationship.

How Common Is Financial Stress?

We recently ran a reader survey[1] on the subject of financial stress, and the results confirm the severity of the problem.

55.6% of respondents experienced financial stress over the last 12 months.

Financial stress survey results: Have you experienced financial stress over the past 12 months?

24% reported being “extremely worried” about money, with another 21.7% stating that they were somewhat worried.

Financial stress survey results: how worried are you about money?

42% selected income stability as their leading cause of financial stress, with 38% concerned with saving for retirement and 35% concerned with paying bills.

Financial stress survey results: What are the most stressful aspects of your finances?

47% reported that the COVID-19 pandemic had little or no impact on their level of financial stress, suggesting that many readers experienced financial stress even before the pandemic.

Of course it’s true that readers of a personal finance site may be more likely to experience financial stress than the general populace, but these trends are too well established by too many studies to simply ignore.

How to Manage Financial Stress

It’s easy to recognize the impact of financial stress. Doing something about it is a lot harder. We asked a diverse group of 15 experts for their opinions on the most effective ways to cope with financial stress and anxiety. Here’s what they said.

Kimbree Redburn

Kimbree Redburn
AFC®, Financial Coach
Illuminate Financial LLC

Track Your Money, Cut Expenses, Talk to Someone

Track Your Money. One of the best things that you can do to cope with financial stress and anxiety is to know where your money comes from and how you are spending it. When you are stressed out or feel like there is more month than money, tracking your money may be the last thing you want to do. But it is often the most important. Until you track your spending, you don’t know if there is a problem or what exactly is causing it. Take some time to write down each of your income sources and all your essential monthly expenses. Remember essential expenses are those that your life can’t function without. This will give you your bare-bones budget. Then you can look at past monthly spending and consider your other expenses, those things that are optional. This will give you an accurate idea of where you are financially, and this knowledge can help you work through your stress and anxiety.

Make tracking your money a regular part of your weekly routine. Set aside 30 minutes to review past spending and look at the week ahead to see what is coming up. This can help you handle bills and different money situations before they cause stress.

Cut Expenses When You Can. Once you know what you are spending your money on, you might also see places where you can cut your spending. Is there a gym membership you never use? Or a streaming video or music service that you never log on to? If so, you can cut these expenses and put more money back into your budget. This can help you eliminate financial stress associated with the payments. It can also help eliminate the guilt that can come from constantly spending money on something that you don’t use and that no longer brings you joy.

Talk to Someone. When you are stressed about money, you can feel like you are all alone. Whether this is because you are embarrassed by your situation or you just don’t feel like anyone will understand, the isolation that comes with financial stress can compound the issue. Talking to someone about it may be helpful. You can talk to a trusted friend or family member, a member of your religious community, or an Accredited Financial Counselor® or financial coach. Talking to someone can help you feel less alone. It can also bring you outside perspective on your financial issues. This outside perspective may help you come up with new solutions or see the issue in a new way, but it also allows you to share the load.

Kimbree Redburn is a Financial Coach and Accredited Financial Counselor® in Bozeman, Montana. She has a master’s degree in International Economics and Development from Eastern Michigan University and a master’s certificate in Family Financial Planning from South Dakota State University. She runs her own financial coaching firm and helps clients take control of their money.

Nishank Khanna

Nishank Khanna
Chief Financial Officer
Clarify Capital

Use a Budget, Have an Emergency Fund, Use Technology

1. Create a budget: Creating a budget can drastically reduce financial stress by providing you with a framework to operate within. Budgets take the guesswork out of financial planning and help you feel in control. Having a plan in place can help you feel confident in your money management decisions as well as reducing the temptation to overspend.

2. Have a dedicated emergency saving account: As a general rule of thumb, aim to save around 3-6 months of your expenses in an emergency savings account. Saving 3-6 months in expenses provides a financial safety net should you experience any financial hardships, like a job loss, or unexpected medical bills. That way, you won’t have to worry about something coming up that you aren’t prepared to deal with.

3. Use technology to make organizing finances simple: One of the easiest ways to save, track expenses, and budget is to make it as effortless as possible. There are tons of great apps and software out there, like Mint and Qapital, which integrate with your bank account for a seamless experience. You can monitor your spending, create tangible savings goals, and automate deposits, depending on your financial objectives. Staying organized and having a tool that makes financial planning simple can help you navigate money management with ease.

Nishank Khanna is the CFO of Clarify Capital, a lending marketplace for small businesses. He is a is a serial entrepreneur with a knack for creating profitable startups. He’s an engineer, designer and marketer. 

Melanie Pump

Melanie Pump
CFO
You Move Me

Don’t Compare Yourself to Others

1. Truly understand your financial situation: A lot of stress and anxiety is created from uncertainty. A lack of clarity on the impact of our financial decisions will increase the level of uncertainty we feel. Therefore, to avoid unnecessary stress, it’s important to have a good grasp of our financial situation. I recommend creating a budget that outlines the dollars that come in every month and the costs that must be paid. This provides a clear picture of the funds available to spend and reduces the anxiety of not knowing what we can afford.

2. Be realistic: Many of us habitually spend beyond our means with the hope that better financial days will come. But that just increases the stress today. We need to be realistic about our current financial situation and when that may change. If it isn’t clear when our financial situation will improve, we need to live within our current means to avoid creating unnecessary stress.

3. Don’t compare yourself to others: Often we create more financial stress for ourselves by looking at what others are spending and thinking that we should be able to do the same. However, everyone has their own unique financial situation and spending habits. Someone else may be in a better financial situation than us so is able to spend to a greater degree. Or they may be digging themselves a financial hole that we don’t want to aspire to. We need to focus on our own financial situation and accept that it will be different than other people’s and that’s ok.

Melanie Pump is a solutions-focused business leader with twenty years of experience. She is adept at delivering results that improve operations and reduce costs in accounting, treasury, human resources and purchasing departments.

Joshua Gerstler

Joshua Gerstler
Chartered Financial Planner
The Orchard Practice

Talk To Someone You Trust

The old saying “A problem shared is a problem halved” comes to mind. Don’t keep it to yourself – speak to a family member, friend, expert to help share the burden and get their perspective on the situation. Write it down. I used to find that if something was on my mind, it would race around my head all night. Get it out of your mind and onto a piece of paper, for you to deal with in the morning. If you are struggling financially, there are often benefits available to you from the government. Speak to someone who can help you take advantage of these.

Most importantly, remember it is normal to have financial stress or anxiety at some point. You are not alone.

Joshua Gerstler is a Chartered Financial Planner, Chartered Accountant, and the owner of The Orchard Practice, an award winning team of Financial Planners and Mortgage Advisers.

Brandy Baxter

Brandy Baxter
Financial Counselor and Coach
Living Abundantly

You Can Learn to Deal With Financial Stress

The National Institute for Mental Health defines stress as, “how the brain and body respond to any demand.” Financial stress can present as feeling overwhelmed, anxious, or frustrated whenever you think about your money. My grandmother would say, “At my wits end!” However, you can learn to cope with financial stress. Below are a few tips to cope with financial stress and anxiety.

• When facing financial stress, don’t bury your head in the sand. Rather, bury your head in a relaxing meditation to calm you before thinking about your money situation.

• Don’t tackle your money challenges alone. Enlist a trusted friend or confidante to be your support on this journey.

• Let bygones be bygones. Rather, let “buy-gones be buy-gones.” Take time to forgive yourself for your past money mistakes and leave them in the past.

• Set smaller financial goals to give yourself the adrenaline rush of accomplishment, success, and fulfillment. Then build on that success.

• Create a spending plan that includes a line item for fun. The plan will help you tell your money where to go and the fun line items let you reward yourself.

• Take a six-month sabbatical from one spending category that is not a need. During that time, use the money you save to help reduce anxiety in another area.

• Lastly, remember you are not the first person to be in a financial challenge and you won’t be the last. Be kind to yourself.

Brandy Baxter is an Accredited Financial Counselor and a Financial Fitness Coach®. She is an accredited financial counselor and coach at Living Abundantly. She is the author of the book, The Three Little Divas™ Reach Your Money Goals in 3 Steps Before You Huff and Puff and Blow Your Next Paycheck Away. Brandy is also the co-founder of Black Girl Financial Magic, an organization that supports and promotes women of color who work or have businesses in personal finance and related fields.

Scott Sturgeon

Scott Sturgeon
Wealth Advisor
Falcon Wealth Advisors

Stress Is a Manifestation of Your Fear of the Unknown

My recommendation to alleviate financial stress is always to gather as much data and information as you can, since you can’t properly assess a financial problem without all the available information. Until you have all the info, any stress you’re experiencing is really just a manifestation of your fear of the unknown (possibly the most common fear a human can experience).

Not sure if you can afford to buy a house in 6 months? Collect and write down literally every single data point you can think of. That might include how much cash can you put towards your down payment today, how much additional you could save in 6 months, what interest rate you would potentially be approved for on a mortgage, what your monthly payment would be as a result, and will that payment be sustainable given your NET (not gross) income. That’s an abbreviated list! Without these points and their resulting calculations, it’s totally natural to be stressed out or overwhelmed. By controlling the process and gaining the knowledge of what’s possible though, you can rid yourself of that fear of the unknown.

Scott Sturgeon works in the wealth management division of Falcon Wealth Advisors, helping clients navigate life’s obstacles, financial or otherwise, so they can pursue the things they’re passionate about. Leveraging his background in finance and law, Scott helps identify blind spots clients may be overlooking and assists them in taking action on strategies to most efficiently achieve their goals.

Urban Adams

Urban Adams
Urban Adams
Dynamic Wealth Advisors

Financial Decisions Can be Driven by Emotions

From my standpoint as a financial professional, one of the ways to ease (or cope with) financial stress or anxiety is to speak with a professional.

Often, money and finances – and decisions around them – can be driven by emotions, which in my opinion is not the best frame of mind for making financial decisions. What I believe is helpful is to speak with a professional who can separate out the emotional aspect of what is causing the stress or anxiety and break the situation down into a possible outcome or outcomes.

It is also important to note that the professional should be a fiduciary and required to act in your best interests. Those who are not acting in a fiduciary capacity may sometimes try to capitalize on emotions (especially fear) to “sell” a solution – often disguised as a product.

Urban Adams is an Investment Advisor Representative with Dynamic Wealth Advisors. All investment advisory services are offered through Dynamic Wealth Advisors. He specializes in providing investment management solutions and financial planning services for his clients.

Derek Hagen

Derek Hagen
Financial Behaviorist
Money Health Solutions

The First Thing To Do is to Not Be So Hard on Yourself

Much of our stress and anxiety about money stems from the fact that we tend to think we are the only ones struggling. Money touches every area of our lives and it’s a taboo conversation topic. We end up feeling our own stress while at the same time believing everyone else has it all figured out.

The first thing to do is to not be so hard on yourself and realize you are not alone.

Derek Hagen is the founder of Money Health Solutions®️, a financial therapy and financial life planning firm. Money Health Solutions helps clients live intentionally and mindfully, using money as a tool to support their ideal life. He facilitates financial health by helping clients understand their own money psychology, lowering financial stress, and increasing confidence in financial decisions.

Scott Nelson

Scott Nelson
CEO
MoneyNerd

Note Down All Your Financial Obligations

I am not a mental health expert but I do help a lot of people with their debt stress and one thing that is proven effective time and time again is writing everything down on paper or in a spreadsheet.

By this I mean, you should note down all your financial obligations including debts, rent, monthly bills and so on and have them organized in front of you to make it clear where you stand. If you get all of this information out of your head and onto a clear format you will automatically feel a little weight off your shoulders and then you can start tackling your problems. Creating a budget is the next step here.

Talking to someone close to you about your stress and financial issues is also recommended but avoid talking to someone who it might cause arguments with as that can cause further detriment to financial health.

Then, once you have received emotional support, if you still require it, it is recommended to contact a free debt helpline to seek advice.

All of these steps are productive ways to deal with financial stress and productivity with an issue leads to stronger mental health. I’m sure there are plenty of other contributors who will suggest some fantastic mental health specific aids such as apps to download or breathing exercises as well.

Scott Nelson is is a financial services expert with over 10 years of experience in the industry. Troubled by the lack of moral conscience in the industry, Scott decided to use his insider knowledge to give genuine advice to those struggling financially. Scott is CEO of MoneyNerd Ltd. He focuses on personal finance, particularly debt, and providing advice for those who are struggling.

Steffa Mantilla

Steffa Mantilla
Certified Financial Education Instructor (CFEI)
Money Tamer

Make a Plan Going Forward

To cope with financial anxiety, the best solution is to make a plan going forward. Many times, financial stress comes about because you don’t have enough money or you are overspending. By simply making a budget, you can see where all your money is going. Then you can allocate some of it towards paying off debt or building an emergency fund.

If you don’t have one already, an emergency fund is one of the best tools for eliminating financial stress. Typically having 3-6 month’s worth of expenses set aside in a money market account is enough. Then, if you have an unplanned money emergency like a job loss or major car repair, you have money to help you get through it rather than going into debt..

Steffa Mantilla is a Certified Financial Education Instructor (CFEI) and founder of the personal finance website Money Tamer. She educates women on how to get out of personal debt and build wealth.

Claire Hunsaker

Claire Hunsaker
CEO
Ask Flossie

Everyone Comes Into Adulthood With Money Baggage

The most important advice: don’t beat yourself up. Everyone makes financial mistakes and everyone feels money stress. A lot of people screw up their credit or lose income or have a hard time saving. Don’t let a misstep prevent you from taking action. Focus on the wins that you feel good about. It’s more important to do anything beneficial than to try to do the perfect thing and delay.

Can’t save $250 a month for your emergency fund? Save $25 and enjoy your win. I firmly believe in treats. When I first started therapy years ago, it was hard work. So after a session, I went across the street to the drugstore and got a cheap treat – a new nail polish, a candy bar, a trashy magazine. This also helps with financial goals. Did you make your budget this week? Candy bar. Did you hit a debt paydown milestone? Get the whipped cream on your boba tea. It’s so important to highlight and focus on the positives, however small.

Remove the influences that make you feel bad about yourself, and replace them with people who share your values and goals. An example is Instagram: does that fancy influencer inspire you or make you feel like garbage? Replace them with someone on a similar financial journey. Build a support network. Whether you’re dealing with the stress of starting a business, or supporting a family or making ends meet, rally a group of people who are in the same situation and check in with them regularly. A quick message on group text to celebrate a win can make your journey less lonely.

The last one, investigate the money messages you grew up with. Everyone comes into adulthood with customized money baggage. Great ways to unpack it: talk to the people who raised you about how they thought about money when you were a kid. Take notice of financial topics and ideas that make you anxious, take a deep breath, and explore that feeling. Once you understand your feelings, it’s a lot easier to make money moves.

Claire Hunsaker is a personal finance expert, and founder of AskFlossie, a money community for ALL women. Claire earned an MBA from Stanford, is a CFEI Certified Financial Educator, and IRS-certified Tax Preparer. She has 20 years of business and leadership experience at unicorn tech companies and is a wife, mom, and feminist who approaches money topics with real talk and real humor.

Sara Weand

Sara Weand
Relationship and Anxiety Therapist
Sara Weand

Chip Away at the Problem

Example Problem: Let’s say someone hasn’t balanced their bank account for months, they’re overdrawn on their checking account, have a stack of bills piling up, and they started getting calls from a collection agency. This person is feeling overwhelmed, like they’re drowning, and don’t know where to even begin to tackle this huge hole they’ve dug themselves into.

1. “Chunking” helps reduce the overwhelm by breaking down seemingly huge tasks down to smaller, manageable “chunks”. For the example situation above, the problem can be broken down into at least parts: balancing bank account, prioritizing the stack of bills, and responding to the bill collectors. Those three issues can be further broken down even further into “chunks”, such as with balancing the account can be “chunked” into balancing one week’s worth of transactions. Then once that one week’s transactions are balanced, they’d move onto the next week’s, and so on.

2. “Chipping Away” is another strategy to help reduce feelings of overwhelm. Using the same example above, it can be tempting to get pulled into having to solve the entire problem all at once, and that just adds to the anxiety and stress. When you implement “chipping away”, you’re breaking down an overwhelming, complex problem into smaller, more manageable parts. Using this example, you’d commit to completing just one, mini task before even thinking about moving onto the next. The key with “chipping away” is doing small, mini tasks at a time, in order to “chip away” at the overall, big problem.

Sara Weand is a mental health expert who specializes in anxiety treatment.

Lindsay Bryan-Podvin

Lindsay Bryan-Podvin
LMSW, Financial Therapist
Mind Money Balance

Think About How Helpful or Truthful Your Thoughts Are

Financial therapy shows up in three domains: the way we think, the way we feel, and the way we behave. Each person experienced financial anxiety in slightly different ways.

When coping with the thoughts of financial anxiety, I encourage people to think about how helpful or truthful their thought is. For example, if they think “I’ll never be able to stick to a budget” how helpful or truthful is that thought? Can they try reframing it to “I’m working on learning how to budget,” or “I’m good at negotiating down my bills, now I’ll use those skills on sticking to a budget?

If they feel anxious in their bodies, I encourage people to do the opposite of the sensations they feel. For example, if looking at their student loan account makes them take shallow, short breaths, they can practice taking deep, steady breaths. If talking to their partner about money makes them feel frozen, they can literally wiggle their hands and feet.

If a person is experiencing financial anxiety in their behaviors, I encourage them to get external accountability and set deadlines. As in “by the end of the week, I’ll schedule an appointment with HR to open up my 401k.” Having external accountability makes it more likely we’ll complete tasks or achieve our goals.

Lindsay Bryan-Podvin is a financial therapist and author of the book The Financial Anxiety Solution.

Jacob Dayan

Jacob Dayan
CEO
Community Tax

Start By Noting Your Top Priorities

Start by working with someone to figure out a plan. That does not even need to be a financial professional, a trusted friend or family member works great. It is easy to feel overwhelmed with financial issues but working to develop a plan can help you recognize that there are ways to work with your financial situation.

When developing your plan, start by noting your top priorities, whether that be saving, investing, or paying off debt. Even if you find all three important, try to rank them so you can work on them one at a time. For example, if you know that your debt has been looming over your head, then work on paying that down first. But having someone you trust there to help you through your situation can make all the difference. Whether they are providing you advice, keeping you accountable, or offering support, having them there can help you deal with your financial stresses.

Jacob Dayan is CEO and Co-founder of Community Tax and Finance Pal. Jacob has years of professional experience in the financial industry and managing his own business.

Catherine Hall

Catherine Hall
Psychotherapist, Licensed Master Social Worker (LMSW)
Psychology Degree Guide

Perform an Honest Assessment Of Your Finances

Sometimes our tendency, when we feel stress or anxiety about something, is to avoid what’s causing it. In most cases, this will only make things worse. When it comes to finances, people often feel overwhelmed, or feel a lack of control. The first step in overcoming the anxiety this causes is to face things head-on.

Block off some time to perform an honest assessment of your finances. If debt is the culprit, add up everything you owe, and start making a plan to pay it down. If you’re worried that you haven’t been saving enough for retirement, talk to an advisor at the company that manages your 401K (it’s usually free). Educate yourself about personal finance in order to make sure you’re making choices that will bolster your financial health. However you choose to approach your financial stress, the goal is to gain a greater sense of control over your situation.

Catherine Hall is a psychotherapist, Licensed Master Social Worker (LMSW), and contributor to psychologydegreeguide.org.

Let’s Sum That Up

Each of our contributing experts had their own ideas, which is expected. There are still some recurring themes that are worth repeating.

  • Organization matters. The more you understand a problem the less likely you are to be overwhelmed by it. Several experts recommended writing down and organizing financial information as a step toward beating stress.
  • Talk to someone. This can be difficult. Talking about money is taboo in many families, and conversations about money can easily become arguments. If you don’t have someone to talk to about finance, consider consulting a professional.
  • Confront the problem. Avoiding financial issues, especially debt, only makes matters worse. Taking positive steps, even small ones, can have a real impact on stress. Try these suggestions for getting out of debt, making extra income, setting up a budget, and getting help with medical bills!
  • Don’t beat yourself up. You’re not the only one facing financial stress. Lots of other people are in the same situation, including many who publicly portray their lives as perfect.

Financial stress and anxiety are serious problems and can be debilitating. Financial problems are difficult enough to manage even when you’re in a good mental state, but stress and anxiety can make them far worse than they already are. Clarifying your situation, talking to a professional, taking action and treating yourself kindly can start you on the road to freedom!

What’s your #1 advice on dealing with financial stress and anxiety? Let us know in the comments below!