How to Deal With Financial Stress

Worried about credit card debt? In a panic over retirement savings? Tap these 7 strategies to feel more secure about your bottom line.

Written by Lisa Lombardi / January 20, 2022

Quick Bites

  • Taking the time to zero in on what’s causing your stress is an important first step.
  • Tracking your spending can be easier than you think.
  • Having an emergency fund will help you feel more secure.
  • When you’re feeling overwhelmed by your finances, take a deep breath, and try some meditation to help you relax so you can think more clearly.

If you’ve ever felt scared to open your Visa bill or in a panic over looming college tuition payments, you know managing finances can be stressful. “Money is deeply emotional,” says Nate Astle, a certified financial therapist in Manhattan, Kansas. “We associate so many memories and feelings with money that actually sitting down and dealing with it can be very uncomfortable.” 

Adding to the pressure: Nearly 90% of Americans report the COVID-19 pandemic is giving them financial stress, according to a 2020 survey by the National Endowment for Financial Education. 

But it’s key to address financial worries head-on, because that can help you tackle problems and get on track to live the life you want. Overcoming money stress also helps us feel happier and less overwhelmed, Astle says: “Financial health and mental health have a reciprocal relationship.” Here are some simple ways to feel in control of your financial future.

Inside this article

  1. Get to the root of money stress
  2. Track your spending
  3. Identify your money goals
  4. Create an emergency fund
  5. Don’t ignore debt
  6. Get help with financial stress
  7. Don’t beat yourself up

Get to the root of money stress

Ask yourself, “What’s really keeping me up at night?” Are you afraid you’re not putting enough in your 401(k)? Overwhelmed by investment choices? Worried you won’t have the funds to afford a new roof or braces for the kids? “If you can get to the heart of what’s causing the money stress, that’s the first step to fixing it,” says consumer advocate Laura Adams, host of the Money Girl podcast. 

Track your spending

Keeping a budget can be a game-changer. After all, “You can’t change what you don't measure,” Adams says. By logging a record of your costs and cash flow, you’ll get a clearer picture of where your money is going—and where you could save. For example, you might discover your binge-watching habit is costing you a fortune and decide you don’t need that fifth streaming channel. There are many tools that help with budgeting. Adams likes Quicken software and in particular their budgeting app Simplifi, which lets you easily track your spending, savings, bills and budget goals on the go.

Identify your money goals

Where do you want to be in one year, five years, 10 years? Give it a think, then list out your answers in a notebook on your smartphone notes app. Now “work backwards,” Adams advises. “Say, ‘OK, by the end of the year, I want to have saved $2,000. How do I get there?’” When you focus on a goal, it becomes easier to take the small steps to work toward it because you understand the why of it all. (“Oh yeahhh, I’m scrimping and bringing lunch to work so I have the money to … go on a dream trip to Japan/afford cello lessons for my kids/feel more relaxed in retirement.”)

Create an emergency fund

No matter how much you make, it’s crucial to set aside a stash of cash for a rainy day. Think of it as an insurance policy in case you experience a job loss or have any unexpected money event (from surprise medical expenses to a costly home repair). Most pros recommend socking away three to six months’ worth of living expenses. What are living expenses? Your rent or mortgage, car payments, utilities, food and other regular monthly costs. Keep your stockpile of dough somewhere safe where you can easily access it—think parked in a savings account, not invested in the stock market.

Keep in mind, some of us actually need more than others. To assess your situation, ask yourself these questions

  • “Is my job insecure?” 

  • “Is it hard to find a job in my industry now?” 

  • “Are we a one-breadwinner family?” 

If you answered yes to any of these questions, you should aim to put away a full half-year of expenses. But no need to panic if you haven’t saved much yet: Just add what you can on a regular basis, Adams advises. To make it easy-breezy, use an automatic savings option. Here’s how it works: You choose a designated amount and it’s funneled straight from your paycheck or checking account into your savings account. Done.

Don’t ignore debt

Tempted to not even open the AmEx bill or college loan statement? Bad idea. Looking away may alleviate your butterflies in the moment, but it will ultimately make the problem much worse. Not to mention, it can become a (bad) habit: “The more we avoid a money problem, the worse we feel, and the worse we feel, the more we avoid it,” says Astle. 

In fact, your best bet is to be proactive and contact your creditors to work out an alternate payment plan, Adams advises. “A lot of people are scared to do that, but creditors want to communicate with you,” she explains. Not only will it not hurt your credit, but as long as you make the agreed-upon payments on time, this strategy can help preserve your credit rating while you get through a financial rough patch.

Get help with financial stress

Managing money decisions can feel overwhelming, but you don’t have to go it alone. If you need perspective or support, tap a partner, friend, family member or professional such as a financial counselor, certified financial planner or therapist. “Many of us do a lot better when we have someone to talk to,” says Astle. To find someone who has your best interest at heart, look for an expert who charges by the hour and is not making money selling you anything (investments, insurance products, etc.). You’ll also have a built-in “accountability partner,” Astle says, which can help you set small goals and stick with them.

Don’t beat yourself up

Nobody is perfect at managing their finances. So no need to feel embarrassed. “Shame is what keeps us from addressing many problematic financial behaviors,” Astle says. “Self-compassion goes a long way in reducing this stress.” Doing deep breathing or other mindfulness exercises can help bring your central nervous system back to a calm state, making it easier to think clearly. One app to try: Insight Timer, which has more than 100,000 meditations. And, bonus, it’s free—so you don’t have to sweat a budget-busting subscription fee.

About the Author

Lisa Lombardi

Lisa Lombardi

Lisa is a writer and editor who has worked at Quick & Simple, Health, Redbook, and more.

Full bio

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