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5 Ways to Manage Financial Stress and Feel Better About Your Money


If you find yourself frequently worrying about money, then you’re not alone. According to the American Psychological Association (APA), 72% of Americans admit to feeling stressed about money. And a study by Northwestern Mutual found that 44% of people consider finances their number one problem.

You know that managing your money is vital for your financial future. But did you know that maintaining a sense of financial wellness is essential for your overall health as well? 

What is Financial Stress?

Fortunately, if financial stress is taking over your life, there are steps you can take to manage it. But let’s start by discussing what financial stress actually is.

Financial stress refers to feelings of worry, fear, or anxiety about money. Many experts agree that a little bit of stress can be helpful for most people in small doses — the key word being “small.”

Small bursts of stress can help increase our motivation, build resilience, and create more meaning in our lives. The real problem is chronic stress, which is linked to physical and emotional challenges.  

The APA defines chronic stress as “the physiological or psychological response to a prolonged internal or external stressful event.” In other words, the ongoing worry and fear surrounding money can cause a whole host of problems. 

The Impact of Financial Stress

If you’ve ever experienced financial challenges, then you know how overwhelming financial stress feels. 

Financial stress can have a considerable impact on your mental health. It can leave you feeling anxious or depressed and struggling to focus. Ironically, these effects can make it even harder for you to manage your money! 

Financial stress can also take a toll on your physical health as well. For example, It can cause insomnia and other physical ailments, like gastrointestinal issues, high blood pressure, and even diabetes. Unfortunately, many people will avoid going to the doctor to receive treatment out of fear of incurring more expenses.

And financial stress can even hurt the quality of your relationships. According to a Harris Poll, a third of married couples agree that money causes the most problems in their relationship. 

5 Ways to Deal With Financial Stress

If you’re looking for ways to cope with financial stress, then we have good news for you. You don’t have to continue to suffer through it — here are five steps you can take to manage financial stress and improve your financial reality. 

1. Take an inventory of your finances

The first step is to take an inventory of your current financial reality. Don’t feel bad if taking this first step is hard for you — when you’re worried about money, it can be hard to face your current financial reality.

But the truth is, avoiding your financial situation may contribute to your ongoing feelings of stress. So start by taking an inventory of your current finances. 

Write down all of your sources of income as well as all of your outstanding debt. From there, take a month to track your spending. Understanding how you’re spending your money is crucial — this will give you the information you need to make effective changes in your life. 

2. Set up a budget

Now that you understand your current financial situation, it’s time to set up a zero-sum budget. With a zero-sum budget, you write down how much money you’ll bring in throughout the month and assign every dollar a job. These jobs include your monthly necessities (e.g. food, rent, electricity), paying down debt, saving, investing and finally your wants.

If you do this correctly, your income minus your expenses should equal zero at the end of the month. A zero-sum budget ensures that you’re not living above your means because you always know where your money is going.

3. Save an emergency fund

Many people feel financial stress because they don’t know how they would cover an unexpected expense. So one of the best ways to find more peace of mind is by saving up an emergency fund. 

Don’t feel discouraged if you can’t save much in the beginning — it’s okay to start small. Focus on starting with a $1,000 emergency fund with the goal of eventually saving up three to six months’ worth of expenses.

And most importantly, try to take some time to acknowledge your progress every month. When you take the time to recognize the positive changes you’re making, it’ll motivate you to keep going. 

4. Pay down debt

The next step is to focus on paying down your debt, especially any high-interest credit card debt. If you have a lot of outstanding debt, this can feel very overwhelming. The important thing is to start small, develop a plan, and make steady progress over time. 

Financial experts are conflicted on the “best” strategy for paying down debt. Most people will recommend either the snowball method or the debt avalanche. Ultimately, the best plan is the one you feel like you can stick with. 

5. Consider asking for help

This final point is probably the most important one — don’t be afraid to talk to other people about it. Financial advisors, counselors, trusted friends, and family members are available to help you through this process. 

Coming up with a plan to turn your financial life around isn’t easy, and you don’t have to do it by yourself. There are many qualified professionals who can assist you through this process. 

The Bottom Line

Financial stress can have a serious impact on your physical and emotional wellbeing. The most important thing you can do is take action and start small. Get a sense of your current financial situation and develop a plan for saving money and paying down debt. If you’re having a hard time knowing where to start, you might consider working with a financial planner. They can walk you through the process and help you create a better financial future.

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