How to Alleviate Financial Stress
and Reclaim Your Sanity
Financial stress is real. It’s painful, exhausting, and mentally excruciating. But with the right plan, you can fight back and rediscover what it’s like to live free.
The Causes of Financial Stress
According to a comprehensive study of more than 19,000 American adults, 60 percent of people say they’re anxious when thinking about personal finance. Roughly 50 percent of people say they feel stressed when discussing money. The number is slightly higher among women (65 percent) than men (54 percent), but is an issue across all genders and demographics. The recent pandemic has done nothing but worsen underlying factors.
“Focus group discussions reveal that for most participants, the pandemic seems to have exacerbated existing financial anxiety, rather than creating new anxiety that was not present pre-pandemic,” says Andrea Hasler, Ph.D., one of the lead researchers behind the study. Thus, it’s more important than ever to build financial resilience and make it part of the recovery path.”
While there are obviously different factors for every individual and family, common causes of financial stress include:
- Trouble paying mortgage or rent
- Lack of stable income
- Paying for education
- Wanting a nicer lifestyle (but not being able to afford it)
- Not having an emergency fund
- Being unable to retire
- Paying off debt
Most Americans find themselves dealing with one or more of these financial stressors on a regular basis. As a result, money is a source of stress and contention, rather than something that blesses them.
How to Put an End to Financial Stress
Financial stress can be so overwhelming that sometimes the challenges seem almost insurmountable. But in reality, all it takes is consistent and proactive movement in the right direction. Here are some suggestions:
It starts with getting organized. Depending on your current financial situation, this can be a painful process. However, it’s a necessary step in order to move forward.
During this phase, gather everything you can. Every single debt, bill, and financial account needs to be accounted for. The goal here is to figure out exactly what you’re facing. You can’t keep pushing things to the back burner or ignoring letters and phone calls. You must confront everything head-on.
Develop a Budget
Armed with all of the right information and insights, it’s time to develop a budget. This budget should account for every penny you have coming in each month, as well as every penny you have flowing out.
As you develop your budget, start with essential expenses only. This includes housing, food, healthcare, transportation, and minimum debt payments. Once the essentials are accounted for, everything that’s left over should go to paying down the debt with the highest interest rate. (If you have multiple debts with the same interest rate, attack the one with the smallest balance first.)
Address the Root Issues
Now that you’re attacking debt, let’s peel back the layers and look at the root issues. In other words, what’s causing your finances to suffer?
In some cases, it’s something very specific and tangible. For example, your house is a money pit and you can’t afford to stay in it any longer. In this case, selling your home to stop foreclosure is an obvious choice.
In other cases, the root issues have more to do with habits and mentality. For example, you might have a compulsive shopping disorder where you spend hundreds of dollars per month on things you don’t need. If you know this is an issue, then you may need to see a therapist to understand what’s going on beneath the surface. Plus, you’ll want to set up safeguards on your credit and debit cards that prevent you from overspending.
Simplify Your Life
It’s amazing how quickly we can convince ourselves that a certain lifestyle is normal. In many cases, people earn very healthy salaries, yet flush it all away on things they really don’t need or can’t afford. Simplifying your lifestyle could help.
By simplifying your lifestyle and no longer keeping up with the ‘Joneses,’ you leave more margin in your budget and reduce financial stress. Yes, it can be that simple.
Increase Your Income
Once you’ve stopped the bleeding, it may be worth considering how you can increase your income. Even adding a few hundred dollars of additional income per month could be enough to alleviate a lot of the pressure you feel.
Reclaim Your Life
You shouldn’t let financial stress linger for too long. The longer it sticks around, the more the anxiety compounds. This tends to lead to even more questionable financial decisions (whether intentionally or as a way of surviving), and the cycle gets worse. Today’s the day to start fresh.