Coping with Financial Stress

The reasons for the stress vary and it's important to understand the psychological factors that shape our response.

Stress about money has been building for many. Back in 2019, the American Psychological Association reported that 60% of Americans said money was their greatest source of stress. In 2020, a Gallup poll showed that 50% of adults believe their finances are getting worse. And a 2023 CNBC Your Money survey found that three quarters of working Americans (74%) say they are stressed about their personal finances, with more than half of Americans (61%) considering themselves to be “living paycheck to paycheck.”

The reasons for the stress vary, from inflation, stagnant wages, and high interest rates to lack of savings. On top of that, aging, layoffs, medical bills, and credit card debt are keeping people awake at night – regardless of their income level. However, these outward causes do not always paint a complete picture. There are other psychological factors that can compound and complicate our responses to our financial situation. It’s important to understand these so we can move forward in a healthier way.

Digging deeper

The consequences of financial stress can be serious. They range from insomnia, anxiety, and depression to social withdrawal, physical ailments, unhealthy coping mechanisms, and problems with relationships. That’s why it’s important to get to the bottom of why money issues are causing such anxiety. It’s often because they are tied to emotions. For example, if money is tight, it can produce feelings of fear, shame, anger, and panic. We can begin to think that money is at the root of our problems and if we are able to get more money, our problems would be solved.

Feelings of anxiety can also be linked to certain beliefs about finances, which most likely were forged during childhood and among our family of origin. Common beliefs include, “Money is evil,” “There will never be enough,” or “I’m not smart enough to have more money.” As we develop these “money scripts,” they form the foundation of our financial perspective that – good or not so good – guide and impact our adult behaviors.

Improving your relationship with money

Gaining a healthy perspective and being able to successfully manage finances comes from a conscious and purposeful relationship with money that is satisfying and not overly stressful. How do we get there? It involves spending money based on your values, having low or reasonable debt, saving money to meet your goals, and establishing an emergency fund as a safety net. It’s also about understanding that money cannot buy happiness. Once there is enough to meet basic needs, having more does not increase well-being. In fact, more money can have a negative effect. It can cloud moral judgement, increase chances of addiction, and render us less compassionate.

Here are points on how to improve your relationship with money:

  • Take note of your habits: Track how, when, and why you spend.
  • Rethink money’s value: It doesn’t necessarily bring happiness.
  • Avoid comparing yourself to others’: Aren’t your experiences more valuable than affluence?
  • Adjust your goals: Discover ways to have a good life while spending less.
  • Encourage yourself to save: Cut your use of credit and find ways to reduce expenses.
  • If you’re unemployed, develop new skills: Think out of the box for getting back to work.

Ideas for Coping with Financial Stress

Financial well-being is one part of a person’s total well-being. To get yourself on the right track, think about improving your financial situation as a necessary step to feeling better in general and being able to enjoy a high quality of life. These suggestions may help.

  • Honor your emotions. This may include talking to non-shaming friends about your financial situation, going to therapy, meditation, gratitude journaling, and permitting yourself to focus on things besides money.
  • Look after your well-being. Are you exercising and moving throughout the day? Are you eating a healthy diet? How’s your sleep pattern? Make time for health-boosting habits. If you’re feeling strong you will be able to think more clearly and be in a better position to handle the stress.
  • Pinpoint your spending triggers. Sometimes, spending money is a perceived antidote to problems. Ask yourself about emotional spending with questions such as, “Why do I spend impulsively?” Understanding what’s behind this can help you stop.
  • Cut through unproductive behaviors. Sometimes people avoid checking their bank balances because they’re afraid of what they’ll see. If you can look at, and identify, your expenses you can cut back. Then you can create a budget for paying off your debt as quickly as possible.
  • Focus on what you can control. Go through your expenses and see what you can take out to counteract inflation. Stick to a grocery list to minimize the cost of food. Consider riding a bike to work or to do errands so you have less wear-and-tear on your car. These are just a few ideas.
  • Prepare for the future. Things to think about include tracking your spending, creating a budget, and learning to set goals. Doing this will help you feel more in control and reduce the risk and impact of financial stress as you move forward.
  • Get help. If it all just seems too overwhelming, it’s a good idea to consider professional counseling. When employers offer an Employee Assistance Program (EAP), you can find free, confidential counseling for stress brought on by anything – including money.

Across the United States and locally in Pennsylvania and New Jersey

If your employer does not offer an EAP, encourage leaders to contact Preferred EAP for more information about services for companies.