Financial stress: What causes it and how to cope

Worrying about money from time to time can be natural. But what do you do if it starts to impact your mental and physical health? 

Discover ways experts suggest managing stress and strategies that could help you with your finances.

What you’ll learn:

• Financial stress is the emotional or physical reaction someone experiences when they’re concerned about their financial situation.

• Signs of financial stress include feeling unable to manage your finances, being unprepared for emergencies and being unable to plan for the future. 

• Some ways to manage financial stress include seeking support, creating a budget and defining your financial goals.

Financial stress is the body’s emotional or physical reaction to concerns about money, major financial decisions or the economy. Bankrate says that 43% of Americans report having financial worries that negatively affect their health in various ways, such as sleep loss, depression and anxiety.

Financial stress doesn’t stem only from challenges and hardships. Exciting events like moving, getting married or the birth of a child can also put your mind and body through stress. These big life changes can be emotional roller coasters, which can ultimately impact your spending or savings.

According to the Consumer Financial Protection Bureau and its financial well-being scale, when experiencing financial stress or anxiety, you may feel that:

• You can’t effectively manage your finances: If you’re recently unemployed or have gotten too far into debt, you might not be able to pay your bills on time or afford essentials. 

• You’re not prepared for emergencies: If you’ve been living from paycheck to paycheck, you might not have been able to save for an emergency fund. This means you could struggle if faced with an unexpected expense or a financial emergency.

• You lack confidence about the future: If you’re not saving, you might not feel ready for retirement or other goals like starting a business or having kids.

• You can’t enjoy living in the moment: If you’re using all your income to pay back loans or other debts, you might not have the resources you need to treat yourself. For example, you might miss out on taking a vacation or going back to school.

Over the years, studies have linked stress to a number of different mental and physical health problems. 

Studies by the National Library of Medicine have determined there’s a direct link between financial stress and overall mental well-being. Financial stress could cause depression, anxiety or mood swings that impact relationships.

Financial stress can also lead to physical health concerns by disrupting sleep patterns or appetite. It might also cause regular headaches, high blood pressure and other physical ailments. A Gallup poll found that many Americans have put off healthcare decisions due to rising costs.

By focusing on the things you can control, you might be able to take small steps toward reducing the stress you feel. 

Here are five financial stress management tips Bankrate recommends you can start implementing:

Tell the people closest to you about your financial situation and how you’d like it to change or improve. Letting the people closest to you know you’re working on your financial situation could make it feel less isolating.

Seek professional advice, like from a credit counseling service. A credit counselor can work with you to create a budget and provide information about managing debt. Some might even be able to create a debt management plan that can help lower your current monthly payments.

It doesn’t have to be perfect or carved in stone, but a budget can help you see exactly where your money’s going—from groceries and bills to monthly subscriptions. 

Start by looking at your monthly adjusted income, then subtract housing and other scheduled expenses to see how much is left over. After a month, determine whether there are any areas you might need to adjust.

Budgets and money management plans aren’t one-size-fits-all—they’re general guidelines that can be tailored to your own goals. And consider reviewing your budget periodically, especially if your income or personal situation changes.

Consider previous financial missteps—like missing a credit card payment—and try to determine what caused them. You might get some valuable insight into your money habits.

When setting financial goals for your future, start by understanding what matters to you in terms of your quality of life. 

Setting a small but manageable savings goal can help you feel more in control of your financial situation. Maybe your goal is to start paying down credit card debt. Or maybe you want to start an emergency fund or save for a down payment on a house. No matter what your goal is, writing it down and tracking your progress can help you reach it.

Seeking support, setting goals and building your savings are some practical ways to start improving your financial situation and easing stress. A simple shift in mindset can help you feel more in control of your finances and lead to more confident financial decisions.

Want to better understand your current financial situation? Learn how to calculate your debt-to-income ratio and what it means.