Tips for Coping With Financial Stress

First Republic Bank
May 19, 2022

  • Financial stress is common, affecting more than 6 in 10 Americans, and has the potential to cause mental and physical symptoms and signs, including anxiety, fear, insomnia and high blood pressure. 
  • Identifying the underlying causes of financial stress, and setting goals accordingly, can help you gain agency and feel more control of your money. 
  • A financial professional can offer additional support, so you can more easily achieve your goals and relieve stress. 

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

Many Americans are no stranger to money worries, and financial stress can trigger both emotional and physical signs and symptoms. People struggling with financial stress may feel anxious, worried and fearful — and even notice that other emotions, like anger and sadness, feel more intense. The stress may also coincide with physical signs and symptoms, including headaches, high blood pressure or insomnia, that affect how you feel throughout the day. 

Financial stress is widespread. Around 61% of Americans report money-related stress, according to a 2021 report from the American Psychological Association.

While the sources of financial stress may look different from person to person, solid planning can help anyone gain more calm about their financial future. Here, we will discuss some of the most common causes of money worries, as well as how to deal with financial stress.   

1. Understand what causes financial stress

While each individual’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, can increase financial stress on families across the country. Job loss and instability have the potential to affect one's income and can contribute 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, can 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, have the potential to change your financial situation and add to your stress levels. Even joyful events — such as growing your family — may be accompanied by financial worries as you look to your future. 
  • Mental or physical health changes: How you feel in one aspect of your health may affect how you feel in others. Changes to your or a loved one's mental or physical health may naturally bring about medical expenses. But they can also heighten your anxieties around money, triggering financial stress.

How financial stress feels can 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 first child. However, understanding the factors contributing to your financial stress can help you begin to craft a plan to address this type of stress. 

2. Determine your financial priorities

Once you’ve identified the source(s) of your financial stress, you’re ready to begin creating a plan to address financial stress. Start by reflecting on your financial priorities, and identify goals that would help you feel better about your financial health. 

Depending on your unique financial situation, these might include:

  • Saving for retirement
  • Growing a rainy day fund 
  • Paying off credit card debt 
  • Pursuing a large purchase 
  • Creating an emergency fund 
  • Saving for education expenses
  • Saving more and spending less

Articulate which objectives 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 everyone is on the same page, so you can 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 on your goals. Creating and sticking to a plan to achieve your financial goals can help you feel in control of your finances. And feeling in control of your finances means less stress for you.

Your priorities and goals will of course dictate the nature of your plan. However, some common plans might include:

  • Learning more about strategies to repay debt, such as the debt snowball and debt avalanche methods, to work toward living debt-free.
  • Creating a monthly budget, which allows you to better track where your money is going so you can spend less and save more. 
  • Opening a savings account and setting up regular automatic transfers to slowly build your emergency fund or work toward a major purchase. 
  • Opening a retirement savings account, like an IRA, to prepare for retirement.
  • Opening a 529 plan or another education savings plan to fund K-12 or post-secondary education.
  • Boosting your financial literacy — for example, by learning more about investing — to feel more confident in your ability to manage your money and prepare for the future. 

Set goals that feel manageable, so your plan helps ease your stress. And 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 can feel daunting, especially when you’re already grappling with anxiety and stress. Fortunately, you don’t need to do it alone. A financial professional can answer questions about your financial situation and enhance your financial literacy, so you feel more confident about managing your money, as well as help you set goals and suggest the most effective plans to achieve them.

Working with a financial professional also helps you create longer-term plans, so you’re always working toward a stronger financial future

5. Build your financial resilience

Some financial stress may be inevitable, but building financial resilience can allow you to overcome obstacles more easily. The more you learn about managing money, for instance, the more prepared you’ll feel if the unexpected happens. Growing your emergency savings also builds 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 money management in general — is a skill that takes time to cultivate. But each step you take today brings you closer to the sense of financial security you deserve.

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