Tips for coping with financial stress

 If you’ve ever stayed up late worrying about your bills or found yourself anxious about your financial future, you’re not alone.

About 63% of Americans report money-related stress, according to a 2023 report from the American Psychological Association. Financial stress has the potential to cause mental and physical symptoms and signs, including anxiety, fear, insomnia and high blood pressure.

While the sources of money stress may look different from person to person, identifying the underlying causes and setting goals accordingly may help people feel more confident about their financial future.

1. Understand what causes financial stress

While everyone’s financial situation is unique, several common sources of stress have the potential to strain your financial health. These include:

• Financial and economic uncertainty: Large-scale economic changes, such as those seen during the COVID-19 pandemic, may increase financial stress for families. Factors like inflation and job loss may impact income, contributing to financial stress.
• Outstanding debts: Owing a significant amount of money may cause anxiety, especially for unexpected or high-interest debts.
• Unexpected expenses: Large expenses, like a surprise auto repair or emergency medical bills, may cause financial concern — even if you have the money to pay for them.
• Significant life events: Times of transition, such as going through a divorce or separation, may potentially change your financial situation and add to your stress levels. Even joyful events — such as growing your family — may come with financial worries as you look to your future.
• Mental or physical health changes: Changes to your or a loved one's mental or physical health may naturally bring about medical expenses. But they may also heighten your anxieties around money, triggering financial stress.

How financial stress feels may differ from situation to situation: the stress one feels due to job loss, for instance, will likely differ from the anxiety one might feel about funding the future education of their child. Understanding the factors contributing to your financial stress may help you begin to craft a plan for your unique circumstances.

2. Determine your financial priorities

Start building a plan to address your money stress by reflecting on your financial priorities. Set realistic goals that motivate you.

Depending on your personal finances, these may include:

• Saving for retirement
• Growing an emergency fund
• Paying off debt
• Preparing for a major purchase, such as buying a car
• Funding education expenses

Name the milestones that are most important to you, and discuss your financial priorities with others in your household, such as a partner or other family members. This ensures that everyone is on the same page, so you may work toward your goal as a team.

3. Create a plan and stick to it

While setting actionable goals starts you on the journey to better financial health, it’s essential to craft a plan to follow through. Committing to a savings plan may give you a greater sense of control over your finances, which may help reduce your stress.

Some common plans might include:

• Create and stick to a budget, which allows you to better track where your money is going so you may spend less and save more.
• Opening a savings account and setting up autosave transfers to steadily build your emergency fund or work toward a major purchase.
• Opening a retirement savings account, like a CD or high-yield savings account, to prepare for retirement.
• Learning more about strategies to minimize debt, such as the debt snowball and debt avalanche method, to work toward reducing your debt.
• Consider opening a kids’ checking account for your child to introduce them to money basics and teach them about financial independence.
• Boosting your financial literacy — for example, by learning about different savings accounts — to feel more confident in your ability to manage your money and prepare for the future.

Setting goals that feel manageable may help ease your stress. Revisit and adjust your plan as needed to ensure it continues to work for you.

4. Seek help from a financial professional

Making financial decisions may feel daunting, especially when you’re already grappling with anxiety and stress. Fortunately, you don’t need to do it alone. A financial professional may answer your money questions and work with you to set achievable financial goals.

5. Build your financial resilience

Some financial stress may be inevitable, but building financial resilience may allow you to overcome obstacles more easily. The more you learn about managing your money, for instance, the more prepared you’ll feel if the unexpected happens. Growing your emergency savings also may increase resilience, since you’ll be more financially prepared to cover unexpected expenses or pay your living expenses in the case of illness or job loss.

Remember, financial resilience — and managing your money — is a skill that takes time to cultivate. But each step may bring you closer to a stronger financial future.