Financial stress: What causes it & how to cope

Financial stress doesn’t stem only from trials and tribulations. Exciting events like moving, getting married or the birth of a child can put our minds and bodies through stress. These big life changes can be emotional roller coasters, which can ultimately impact our spending or saving.

Almost everyone worries about money from time to time. In a survey released by CreditWise from Capital One, 73% of those surveyed stated that finances are a major contributing factor of stress in their lives.

But what if you’re so worried that you’re losing sleep, lacking focus or unable to carry out normal tasks? 

Whatever your situation, there are steps you can take to cope. Read on for strategies to help you overcome financial issues and develop good habits with money.

Key takeaways

• 73% of individuals in a survey from CreditWise by Capital One identified their finances as a major contributor to their stress levels.
• Financial stress is the emotional or physical reaction that someone experiences when they’re concerned about their financial situation.
• Those who are under financial stress are more likely to push off their health care needs, causing further stress on their body. 
• Finding ways to manage financial stress is important for your overall mental and physical health.

Financial stress is the body’s emotional or physical reaction that occurs when there are concerns about money, major financial decisions or the economy.

Some of the most common financial stressors include:

• Bankruptcy or foreclosure 
• Job loss
• Reduced work hours or income
• Lack of savings
• Debt
• Health care costs
• Separation, divorce or the loss of a partner
• Taxes
• Food insecurity
• Housing insecurity

Signs of financial stress and anxiety

According to the Consumer Financial Protection Bureau’s financial well-being scale, when you’re 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 budgeting or 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.

One of the most unfortunate side effects of financial stress is its impact on your overall health. 

Over the years, scientists have attributed stress to a number of different mental and physical health problems. And individuals who are experiencing financial stress or anxiety may be more likely to delay medical treatments.

According to Gallup’s annual Health and Healthcare poll, around 30% of Americans admitted that they have put off seeking health care when in need due to concerns about the cost of the visit or treatment. 

While it may seem like you’re saving money at the time, pushing off health concerns could cause them to worsen and ultimately become more expensive to treat. That’s why it’s important to find ways to cope with any financial stress that you may be experiencing.

It could take time to change your financial situation. And if you’re suffering from severe anxiety, you might want to consider seeking more information or professional help. But by focusing on the things you can control, you might be able to take small steps toward reducing the stress you feel.

Let’s look at six places you can start.

1. Ask for help

You don’t have to ask for a loan, but you shouldn’t be afraid to reach out when you’re in a tough spot. Financial difficulty can feel isolating, but talking to someone you trust can be the first step toward turning things around.

Let the people closest to you know your financial situation and how you’d like it to change or improve. Talk about your goals for the future and how you see your finances supporting them.

You can also try connecting with money-savvy peers. Picking the brain of someone who’s got their finances dialed in can be a great way to look at money from a new perspective. Maybe they have tricks or tips, or a fresh philosophy about money that resonates with you.

2. Find ways to earn extra income

Earning extra income can help you reach your financial goals faster and give you financial security. You can start by asking your current employer for a raise or for extra hours. If they’re not willing to budge, you could consider side hustles or second jobs that you can find in your local area or virtually.

3. Control your spending

They call it impulse shopping for a reason. Emotions, whether we realize it or not, are behind a lot of our discretionary spending. You might find you tend to shop when you’re in a good mood or as a quick pick-me-up on a rough day. Note your spending triggers; they might be amplified during trying times.

4. Keep track of your money with a budget

It doesn’t have to be perfect or carved in stone, but a budget is an excellent way to see exactly where your money’s going—everything from groceries and bills to monthy subscriptions.

Look at your monthly adjusted income, subtract housing and other scheduled expenses to see what you’re working with. Having that loose figure in mind can help keep you accountable. After a month, see how closely you stuck to it. If you’re going way over in certain areas, you’ll know where you need to adjust.

There are plenty of online budgeting, investing and money management tools designed to help people take better control of their finances. Your bank or credit card company might even have complementary resources available to you.

Keep in mind that budgets and money management plans aren’t one-size-fits-all—they’re general guidelines that should be tailored to your own goals and standards for quality of life.

5. Learn from your money mistakes

We’ve all had a few unpleasant financial experiences, whether it was the time we didn’t have enough socked away for an emergency, or we let a due date slip by and our card was declined. Face down those mistakes and what caused them. You might get some valuable insight into your habits and overall money mentality.

If one thing in life stays the same, it’s that everything changes—and your budget should too. Be sure to periodically reassess what you know about budget best practices, especially if your income or personal situation changes.

6. Set future financial goals

When setting financial goals for your future, it’s important to start by understanding what’s important to you for your quality of life and future. 

Starting with a small but manageable savings goal can help you start to 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, having it written down and tracking your progress can help you reach that goal. 

Setting goals, saving more and spending wisely are all practical ways to start improving your financial situation and overcoming financial stress. But a simple shift in mindset can help you feel more in control of your finances.

Thinking about long-term goals, being kind to yourself, forgiving yourself for past mistakes and focusing on what you can control can reduce the negative impacts of stress on your financial decisions. And less stress means that, over time, you could see an improvement in your financial confidence and overall mental and physical well-being as you work on improving your saving and budgeting skills.

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