What Is Financial Stress
Financial stress is a state of worry, anxiety, or emotional tension related to money, debt, and upcoming or current expenses. Money is one of the most universal sources of stress. According to a 2015 report by the American Psychological Association , 72% of Americans feel stressed about money at least some of the time. Typically speaking, income is inversely correlated with financial stress. The less you make, the more stress you have and the less resources you have to manage and deal with that stress.
Face Up To The Situation
If it looks like you’re getting into debt, get advice on how to prioritise your debts. When people feel anxious, they sometimes avoid talking to others. Some people can lose their confidence about driving or travelling. If this starts to happen, facing up to these situations will generally make them easier.
Biden Cancelled $15 Billion Of Student Debt For Borrowers But You Can Still Apply Now
Thats why its so easy to hit the panic button whenever the topic of money arises. You know its important to make the best financial decisions, but youre not sure how. Not feeling confident in your ability to do something that you know is important can be extremely stressful.
But money management is a skill, just like playing the piano or snowboarding. In order to feel confident in your abilities, lessons and practice are usually both necessary.
The solution: Become a money expert or start working with one. Its not your fault if you never had the opportunity to learn about money management. But its never too late to take control of your situation and learn a new skill that will benefit you for the rest of your life.
2) Theres a disconnect between your spending habits and your values.
Every dollar you earn should get you closer to the person you want to be.
When this doesnt happen, we experience cognitive dissonance, or that uncomfortable feeling of worry that pops up when our actions contradict our beliefs.
For example, consider a person who believes that being responsible and secure are top priorities, but they also have credit card debt and are broke because theyre always out socializing with friends. Their action of overspending directly contradicts the values that are most important to them. And this discomfort can quickly spiral into anxiety.
3) Youre avoiding something that you know is important long-term.
5) You dont have a safety net.
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Say Goodbye To Money Anxiety
When you suffer from money anxiety, it can feel like the stress will never end. But taking a few basic steps, such as setting a budget, building an emergency fund and monitoring your credit score, can help reset your attitude about money. By taking charge of your finances, you can shake off the money stress and start down the path toward achieving your financial goals.
Stay Up To Date On Your Credit Score And Report
Keeping an eye on your credit can reveal which aspects of your finances are causing money anxiety. It’s human nature to fear the unknown, and not knowing your credit score can add to your money stress. Behaviors often caused by money stress, such as piling up big credit card bills or paying your bills late, can hurt your credit score.
Don’t have a recent copy of your credit report? Visit AnnualCreditReport.com to get a free copy from all three consumer credit bureaus . Checking your credit report will also help you spot any errors that could be hurting your credit. You might also detect possible signs of identity theft, such as someone applying for credit in your name. If you find a mistake, disputing it to get the record corrected can improve your credit score.
Checking your credit score can also ease your mind, especially if it turns out to be better than you expected. A good score could help you save money by helping you get better interest rates and terms on new debt and refinance debt you may be paying too much for. In many states, a good credit score can even save you money on insurance. If your score is lower than you expected, checking it can show you where you need to improve your financial habits.
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Your Mental Health Suffers
Were seeing more millennials with higher rates of anxiety and depression because theyve been baited into debt at a young age. One particular story that sticks with me is from a young woman interviewed by the Borrowed Future podcast. Her name is Terry, and she shared how stressful it is to see her student loan balance grow even though shes making steady payments.
I made a $100 payment, and $5 went toward the principal, and the rest went toward interest, she said. So I’m just never moving forward. That $15,000 loan grew $45,000 in interest. There were times I just wanted to give up.
You guys, that kind of stress is gut-wrenching. Terry actually became so depressed that she contemplated suicide. She said, I was worth more dead than I was alive.
It breaks my heart, but thats how so many people are feeling because they worry about money. Let me just stop right here and say, if youre feeling this way, you can call the National Suicide Prevention Lifeline at 1.800.273.TALK. Friend, youre not alone. Theres always hope. I know its hard and the deck might be stacked against you. But theres always something you can do to change the course of your life and stop worrying about money.
Do Not Give Up Your Daily Routine
Get up at your normal time and stick to your usual routine. If you lose your routine, it can affect your eating you may stop cooking, miss breakfast because you’re still in bed, or eat snacks instead of having proper meals.
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Stop Caring What Others Think
Sometimes we get stressed about what other people think about our finances or that we dont appear to be as successful as others. If thats you, stop trying to keep up with other peoples lifestyles and focus on what you want to achieve.
Use your resources to create a secure financial future instead of spending it on material possessions.
The homes, cars, clothes, and vacations many people buy are sinking their financial ships, so dont go down with them. Instead, be your own independent spirit and take pride in going a different direction.
If you have children and tend to buy them anything they ask for or demand, youre not setting a good example. Turn things around by creating a realistic household spending plan and sticking to the guidelines you set.
Using your resources to create a secure financial future, instead of spending it on material possessions, will give you a feeling of freedom that expensive toys never deliver.
Things You Can Do Today To Stop Stressing About Money
A little stress is a good thing. It keeps us on our toes, challenges us to improve and can even lead to healthier brain function. A life without any stress at all would be pretty boring.
But when it comes to money, most people are dealing with more than just a little bit of stress. On this end of the spectrum, the upsides of stress are replaced with even more downsides poor sleep, increased anxiety, decreased immunity and more. Just about everyone could benefit from stressing less about money.
That might be easier said than done, but there are some tried and true strategies we can recommend. Here are some of our favorites.
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Our Biggest Financial Pitfall:
My hour-long call with Amanda kicked off with an assessment of my biggest money concern. I explained that my husband and Iwhile goal-oriented, financiallysometimes get lost in the nitty-gritty of nickel and diming each other over expenses .
Amandas take: She wanted to know more about our money habits and tendencies, but also our emotional state when we sit down to review our spending. Are we calm? Angry? On a scale of 1 to 10, whats our anxiety level in relation to finances? Acknowledging the vulnerability that money can create was the first step toward resolution, she promised.
See A Financial Planner Or Advisor
Dont make the mistake of thinking financial advisors are only for the wealthy: Making an appointment with a financial advisor helps calm your fears and ensures youre on the right path for your financial goals.
Whether you want to save more for retirement, hope to start investing, or just need help defining your aspirations, an advisor can be of great assistance. If you dont currently have a financial advisor, SmartAsset has a tool that lets you locate vetted advisors in your area.
Many financial advisors offer a no-obligation, low-pressure first appointment as a way to get to know each other and consider the basics of your finances. The process is much like seeing a therapist but for your money. Just bring a list of goals and questions to the first appointment. If you feel comfortable, make it a long-term relationship.
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Break Down Why Youre Actually Stressed
Something I figured out awhile ago is that were all only actually afraid of one thing:
You might think youre afraid of not being able to pay the bills, or fearing what will happen if you lose your job
But the reality, is youre afraid of the uncertainty relating to those things.
When you reframe your mindset to realize that youre actually only afraid of one thing, rather than potentially dozens, its easier to address that concern.
Start with this simple exercise:
Action Item: We created an entire course on overcoming uncertainty . If you have a lot of fear and stress in your life, this could be something valuable for you, so check it out.
Focus On Your Financial Goals
Whatand whoare you budgeting for? Where do you want to see yourself in five years? Focus on your financial goals and reassess. Are some of them just a little too out of reach right now ? Focus on the financial goals that inspire, excite and motivate you. Remember why you are doing what you are doing and how you plan to get there. And then write it down! Whether you choose to write it in your money diary, create a cell phone wallpaper or simply tape it to your bathroom mirror, the important thing is to keep yourself accountable. Incorporating simple money mantras into your life can also help you feel more connected with your finances and change your money mindset.
Start A Side Business
This piggybacks off the last one, but if stress over money is a recurring theme in your life, then potentially starting a more serious side business can be a great way to ease the pain.
Not only that, youll be building a brand, an asset, and growing your connections in the process so theres a lot more value there than just making some extra cash.
It also could take less time than you think.
When people join Location Rebel Academy, I usually tell them to plan to spend at least 10 hours a week on their new business. That gives you enough time to build up some momentum.
Action Item: Check out these posts on different businesses you can start.
I mean anywhere. This is where I worked on the river banks in Saigon, Vietnam
Note: Weve also just released The Complete Beginners Guide to Creating a Lifestyle Business. This is for people that think they want to start something but have no clue where to begin. We tell you everything you need to know so that you know exactly how and where to begin.
Set Goals For The Coming Year
Take time to carefully consider what your short-term and long-term financial goals are in the coming year. These goals should be both measurable and realistic. For example, spend less money or make more money are too vague. By contrast, pay off my $3,000 car loan, or save $1,000 for an emergency fund, or pay an extra $100 on my student loans each month are specific, measurable goals that allow you to track your progress with relative ease.
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Getting Through A Layoff
Brett Dobin’s wife was among the 114 million people laid off during the Covid pandemic in 2020.
The 44-year-old guidance counselor from New York is concerned about getting by with one income and a 21-month-old baby, while emotionally supporting his wife.
When something like this happens, it affects both partners, James noted. While they are going through a loss due to this sudden change, the good part is that it allows the family to have more time together.
It’s key “not to be so stressed about everything I know, easier said than done that you miss out on the moment to connect as a family,” James said.
Also, remember that this is a temporary situation. Therefore, it’s a good time to take stock of your financial goals and how you may get there once a second income is added back to the household, Klontz said.
“Look at this crisis as an opportunity to get clear, get specific and get ready for when you are in a better place,” he said.
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Talk To Someone About Your Financial Stress
Sometimes life can become overwhelmingand your finances can play a big role in that. If youre struggling to manage everything alone, its time to talk to someone about the financial stress youre experiencing. Whether you decide to talk to a trusted family member, friend or therapist or book an appointment with one of our understanding, accredited counsellors, talking about your finances and the feelings associated with it can help you tremendously. Remember: Youre not alone in your financial journey and its okay to not be okay.
And Surround Yourself With Friends Who Help You Stick To Positive Money Habits
You know, the friends who:
Keep you on a healthy financial track and don’t push you to overspend.
Help you find solutions to your problems instead of criticizing.
Stay positive .
Expressing your feelings is great, but its also important to be selective about who you share them with. Sharing your stress with friends who judge you or make you feel worse about your situation might increase your anxiety.
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Cut Down On Your Debt
If finances are causing you stress, look for things you can cut out of your budget and put it toward paying off credit card debt. Youll eventually have something that you value more than these extras: a chance at financial freedom and peace of mind.
This may be challenging at first because these extras can often be purchased for the sake of convenience, for an emotional pick-me-up, or simply out of habit–and habits can often be difficult to change. The key here is to change your focus, or the meaning you attach to these extras. For example, after identifying a spending habit that you’d like to change , you could focus more on how you’ll enjoy saving the money than on how you’ll enjoy the few minutes of pleasure you’d receive from the treat. Or you could change your habit by replacing this treat with another of life’s pleasures that would cost nothing or at least something that costs less.
You can take baby steps toward progress, and still make considerable progress in the long run, with minimal stress.
Experiment with what provides you with the greatest level of savings with the least amount of stress do what works for you. But any changes you make in this direction can reduce stress by helping you to save.