“Money stress is killing me!” He said.
This could very well be the case for you and countless others. Even if you don’t know it yet.
Whether your problems stem from a blow to your income source(s), urgent and unexpected bills (like a health emergency), rising debt, or a combination of factors, the worry and anxiety that result from money issues is one of the most common stressors in the modern day! Financial stress is a problem worth addressing if it disrupts your everyday life.
Like it or not, money is something we all need to survive in this world, and money stress can be a constant weight on our shoulders. As with any source of overwhelming stress, financial problems can take a huge toll on one’s mental and physical health, relationships, and overall quality of life. In the worst of cases, it does even trigger suicidal attempts.
Staying up at night brooding about your money situation doesn’t make cash magically appear in your depleted bank account though. Learning how to calm your fears and feel settled about your finances is largely a matter of being proactive. No matter how hopeless your situation seems right now, tackling your money problems head-on can help you find a way through the financial quagmire, ease your stress levels, and regain control of your life.
In this article, we will discuss the features of money stress, the common triggers, and provide you with practical tips and strategies to eliminate it from your life. By the end of it, you will have a clear understanding of how to overcome money stress and feel much better about your finances.
What is Money Stress?
Money stress also known as financial stress is the anxiety and worry people experience when they are concerned about their financial situation. It can be caused by a variety of factors, such as debt, unemployment, low income, unexpected expenses, and financial insecurity as a whole. When people are experiencing money stress, it can affect their mental and physical health, relationships, and overall well-being.
The causes of money stress are many and varied. People may feel stressed about money because they are struggling to make ends meet and don’t have enough to cover their basic needs like food and shelter. Others are worried about unexpected expenses that may arise like medical emergencies. Some people may also experience money stress due to societal pressure to keep up with the Joneses. And for some yet, they feel stressed about money because they just do not understand how to manage their finances effectively.
Anyone can experience financial stress, but studies do suggest that financial stress may occur more often in households with low incomes. Since there are many events or circumstances that can trigger money stress, and they may vary from person to person, it’s important to identify yours so that you can begin to address the underlying issues.
When You’re Stressed About Money
The negative effects of money stress can be far-reaching and it can manifest itself in a variety of ways. It’s important to be aware of the signs and symptoms so that you recognise them early on.
Some common signs include being anxious and worried sick about your finances, feeling angry, ashamed, irritable or on edge, having mood swings, depression, and insomnia. Energy levels and self-esteem take a hit. Physical health problems like headaches, stomach aches, high blood pressure and heart disease could also be experienced.
People may also feel overwhelmed or hopeless about their financial situation, and they may avoid talking about money altogether. Money stress can also affect relationships with loved ones, fueling tension, arguments and conflict with those closest to you.
It’s a vicious cycle really. Financial problems adversely impact your mental health. The decline in your mental health makes it harder to manage your money. These difficulties in managing money then lead to more financial problems and worsening mental health problems, and so on.
When people are stressed about money, they typically try a variety of coping mechanisms to reduce their anxiety. Some individuals may avoid dealing with their finances altogether and procrastinate on the actions they know they should take. Others may turn to retail therapy and other unhealthy spending habits like gambling. Some may try to distract themselves by focusing on other areas of their lives, while others may turn to drugs or alcohol to numb their feelings.
Though frequently used, these coping mechanisms are often ineffective and often make the problems worse. The most effective way to cope with money stress is to face it head-on and develop a plan for managing your finances, seeking help when needed, and finding healthy ways to cope with stress.
How to Not Stress About Money
Money stress can be a daunting experience, but there are several practical ways to reduce it. Here are 10 of those you can adopt for yourself.
1. First, breathe
I know it doesn’t seem like an obvious first step but trust me here. Remember what was mentioned before about the vicious cycle of financial problems and mental health?
When feeling that pressure like the walls are closing in on you, it helps to pause and consciously slow down your mind’s activity. Practice taking deep breaths to calm yourself so you can think clearly about possible solutions and the next right steps to make.
2. Take stock of your finances and identify the specific stressors
Ask yourself “What exactly am I worried about?” Think hard and truthfully. Then make a list of the financial struggles you are most concerned about. Once this is clear, you can craft a plan of baby steps to tackle each problem one by one so you don’t overwhelm yourself.
For instance, if things are uncertain at work and you are worried about being let go from your job with your finances taking a hit, polishing your CV, networking with people in your field and applying for desired jobs can help alleviate your stress.
3. Focus on the positives and things you can control
Yes thinking positively won’t magically pay your bills or stretch your budget, but it can help calm your fears. When it comes to money, a healthy mindset can go a long way in reducing stress and anxiety.
Keeping your mind on the positives helps you recognise and appreciate the financial strengths to be grateful for. It can also point to solutions to some, if not all of your problems. For example, if you are living paycheck to paycheck but know you are very good at your job, speaking to your bosses about a raise is on the cards. Initiating a negotiation process is something that is within your control and can help you improve your financial situation.
Focusing on the positives and things you can control instead of worrying about everything else would serve you well.
4. Make use of a budget
Budgeting is another important tool for reducing money stress. If you don’t use one yet, it’s a great time to start because it can help you gain control over your finances and feel more empowered.
To create a good budget, start by tracking your income and expenses to know for sure what comes in and where all your money goes. Then create your spending plan based on those figures.
If you already work with a budget, it helps to review it and identify any areas where you can cut back. E.g unused and underutilised subscriptions like cable TV and magazines. Be firm with the leaks and reduce the expenses that come with the likes of impulse buying so you can live below your means and have more money saved away.
Saving is an important part of reducing money stress and you should learn to pay yourself first. Whether that be 5%, 10%, 20% or more of your income initially depends on what your earnings and lifestyle allow. By building up your savings, you have a safety net in case of unexpected expenses or changes in your financial situation. You would also be saving with the view to invest!
While investing does involve some risk, it can provide long-term benefits and help you build wealth over time. Investing can help you feel more secure about your financial future and reduce stress by providing a source of passive income. Learn more about how to make smart investments.
5. Create an emergency fund
An Emergency fund is money set aside for unexpected and important expenses and serves as a good financial cushion to maintain your lifestyle in the face of unfavourable life events. The fact is, unplanned expenses can wreck the best budget out there and upend your plans totally.
From the likes of a sudden illness to valuable property damage or theft, or even an unfortunate death in the family, all these events requiring money can cause you a lot of stress if you don’t have an emergency fund that can cater to them. So setting up this “incase money” helps relieve major financial stress.
6. Manage your debt effectively
One of the key ways to reduce money stress is to manage your debt effectively. Start by understanding your debt details, including the interest rates, minimum payments, and due dates. Write out a clear list of these.
Make a plan to pay off high-interest debt first, such as credit card debt, and consider consolidating your debt with a lower-interest loan. Creating such a repayment plan and sticking to it can help you feel more in control of what is going on and reduce your stress.
7. Increase your income
Let’s face it. It is the very real lack (or threat of lack) of money that causes a lot of our stress. Money can free us from a ton of worries and unforeseen bumps in the road. Instances ranging from being able to handle small nuisances like dodging a rainstorm by ordering up an Uber, or bigger worries, like handling an unexpected hospital bill.
Except you are financially free in every sense of the word, increasing your income can help you acquire the level of money that greatly reduces money-related stress. Explore the options that would work best for you.
8. Get proper financial education
You don’t know what you don’t know, and such ignorance is costing you. Unfortunately, it is not the norm to learn the important things about money growing up either at home or in school. We mostly learn at the University of Hard Knocks!
Despite all of this, the onus lies with you to become financially literate. Learn what you need to learn about how to manage money right by reading personal finance books, taking courses, listening to money podcasts, being part of financial literacy communities, and also from financial professionals like financial coaches and advisors. Make the time and money commitment necessary to shorten your learning curve to financial security.
9. Talk about it
Sometimes, despite our best efforts, money stress can become severely overwhelming. Money is often touted in society as a taboo subject to be kept under wraps. Sometimes even more tightly than one’s medical issues.
Discussing your finances with someone else (however close he/she is) can be really uncomfortable and ignite a lot of negative feelings like shame and embarrassment. I understand this. However, in situations where the stress is really getting to you, it’s important to admit it and seek help.
Start by briefing a loved one. If you can’t discuss it with a friend or family member, or don’t think they are capable of giving the best advice, consider reaching out to a financial professional (coach, counsellor, therapist, planner) who can provide guidance and support. Asking for help is a sign of strength, and there is no shame in seeking support when you need it.
10. Go easy on yourself and manage your stress levels
Regardless of how bad you feel things are, do try to take it easy with yourself. Don’t punish yourself for your past mistakes or resign to feeling like an utter failure. Withdrawing from those you care about or abstaining from any activities that bring you joy isn’t the way to go.
Take measures to manage your stress levels well – Sleep adequately, consume nutritious meals and supplements, get your body moving with regular exercise, pamper yourself in a healthy manner however you can. It’s also important to put blinders on and avoid comparing yourself to others. Recognise that everyone’s financial journey is unique and appreciate your growth for what it is.
By taking the bull by the horn and developing good financial and wellness habits like those above, you can reduce anxiety and worry and enjoy greater peace of mind.
What is the Surest Way to Reduce Money Stress?
The best form of defence, in this case, is attack. Good financial planning is an effective way to reduce money stress. By creating a feasible financial plan, you are setting goals and developing a roadmap for achieving them that would put you more at ease about finances.
Your financial plan should include both short-term goals like building an emergency fund and risk management strategies like insurance, and long-term goals like saving for your children’s education or retirement. Be sure to revisit your plan regularly and make adjustments as needed to ensure that you’re on track.
Do worst-case-scenario planning too. You might wonder why the suggestion to think up the worst things that can happen. It’s simple. If you can think up worst-case scenarios and map out what steps you’d take in that situation, it can be empowering for you.
For instance, if you were to lose your job or be forced to take a pay cut, what would you do to maintain your standard of living? What sort of cushion would you have till you can get your inflow back up? Actions such worst case scenario planning can inspire include the likes of augmenting your present income through a side hustle like an online business, increasing your skillset to appreciate your market value and having enough savings in your emergency fund.
To wrap up on money stress
Money stress is a common problem that can have a negative impact on our overall well-being leading to a reduced quality of life and decreased happiness.
By understanding what money stress is, and the common features and triggers, we can adopt practical strategies to eliminate it from our lives and feel more in control and confident about our finances.
Focusing on developing a healthy money mindset, creating a budget, having a financial plan, and saving effectively. Additionally, managing debt, investing in our future, and seeking help when necessary are all effective strategies we can use to reduce stress and feel more secure about our finances.
Reducing money stress is not an overnight process of course, but it’s never too late to start making positive changes in your financial life. Just breathe and begin with one small step. And then another. And another. Remember, your financial well-being is an essential part of your overall well-being, so take action today to start living a money-stress-free life!
What kind of money stress are you battling and want to get rid of? The Money Doctor is here to help you so reach out by contacting her here.