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Money stress and how to deal with it
Follow a strong financial plan to take control of fruitless worries.
Whether or not money is truly the key to happiness, money stress almost certainly leads to unhappiness. Taking control of your financial health can help reduce anxiety, though shifting your mindset to one of gratitude and contentment is just as important.
Top money stress triggers
Money is the number one source of stress for Americans nationwide, according to a 2018 study conducted by Northwestern Mutual. And for good reason. Everyday, we’re exposed to thousands of demands for our cash.
Common sources of money stress include:
- Paying off debt. Mounting interest rates make debt an intimidating rival, especially if late payments or big balances negatively affect your credit score.
- Planning for retirement. 40% of Americans feel anxious about living longer than their retirement fund lasts, according to Northwestern Mutual’s findings.
- Funding an emergency. Unexpected illness, car troubles, and other unfortunate events can quickly deplete rainy day funds.
- Enrolling in higher education. College is notoriously expensive, but non-negotiable for many career paths.
- Lack of stable income. Working as a freelancer, self-employed person, or contractor can lead to stress from week to week.
- Making ends meet. For many Americans, simply paying bills each month is enough to cause anxiety.
How money stress affects your health
Like many emotionally taxing circumstances, money stress can negatively affect your health and well-being. Short-term stress, if not properly addressed, can lead to:
- Upset stomach
- Poor sleep
- Difficulty concentrating
- Low tolerance for frustration
- Weight loss or gain
- Interpersonal conflict
Long-term side effects of rampant money stress can include mental illness like depression, as well as physical symptoms like high blood pressure, heart disease, skin problems and more.
The good news is that you’re not alone. Help for financial distress exists: And there are steps you can take today to shift things back on track.
Tips for dealing with money stress
The best way to get ahead of money stress is by adjusting your mindset and planning ahead. Our best tips for dealing with money stress include:
Create a budget
Think of a budget as liberating instead of restrictive. When followed, a good budget will ensure you’re able to attain necessities with room to spare.
A common rule of thumb is the 50/30/20 plan. The breakdown includes:
- 50% of your income after tax goes towards needs
- 30% of your income after tax goes towards wants
- 20% of your income after tax goes towards savings
This rule was developed by Elizabeth Warren and her daughter Amelia Warren Tyagi in their book All Your Worth: The Ultimate Lifetime MoneyPlan.
Think big picture
Money troubles rarely dissolve overnight or go away with a quick fix. Once you’re on a realistic budget, trust the process and exercise patience. Try to realize that stress serves no constructive purpose if you’re taking the right steps. Finances are stabilized with daily discipline, not fruitless worrying.
Focus on the progress you’ve made
Some folks tend to magnify the bad and minimize the good. For example, let’s say you want to save $500 a month for two years so that you can put a down payment on a house. After four months, you find yourself focusing on the $10,000 to go rather than the $2,000 you’ve already managed to save.
Instead of focusing on scarcity, think about the amount you have saved or the progress you made.
Combat worries with outside advice
External help from a financial counselor or adviser can help pinpoint bad financial habits in order to quell money stress. An expert will help you develop and stick to a budget, and can provide guidance on long-term saving strategies. An outside eye can lend a new perspective and may help you feel less isolated along the way.
Put less pressure on yourself
Doing something is always better than nothing. The fact that you’re researching how to improve is the first step towards taking control of your financial situation. Be patient with yourself without expecting perfection. Practice gratitude and contentment. There’s always tomorrow.
Establish an emergency fund
A safety net of extra funds can lend peace of mind that an unexpected financial obligation won’t destroy your financial health. Consider setting a goal to save up six months of replacement income. That way, even losing your job won’t cripple your ability to pay bills. Earn interest by opening a high APY savings account.
Prioritize your goals
Making a list of your financial goals can help create tactile milestones. Decide which goals are most important to you. Then, allocate a set amount of money toward that goal each month. Sorting out your priorities will help shape the way you spend your money.
If your long-term goal is to buy a house, organize your budget to help ease the stress of potential future mortgage or loan repayments.
Main reasons why people find money stressful:
- They didn’t learn anything practical about money in school
- They don’t talk about money
- They’re forced to make money choices daily
Most stresses in life come from uncertainties and a fear of the unknown. If you’re hoping for personalized financial advice, consider partnering with a financial planner.
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