Best Practices

3 Tips to Deal with Financial Stress

by Jim Hughes   Nov 22, 2019

Research shows that financial stress can have a large impact on mental and physical health. Here’s how to address the financial pitfalls in your life and adjust your financial habits.

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Most Americans are going through the wringer when it comes to financial stress. Forty-four percent of Americans cite money as the dominant source of stress for them, while 69% of workers say they are stressed about their finances.

And when stress goes unchecked, it can have both emotional and physical detriments to one’s body. Indeed, research shows that those with higher levels of financial stress show more symptoms of anxiety and depression than those who are less financially strained. Plus, frequent headaches and a weakened immune system are among the most common symptoms of stress

Relieving financial stress is possible if you know what to do.

How to Deal with Financial Stress

Here are three tips for handling financial stress and finding peace of mind about your money problems:

1.) Create a Budget

Making a budget each month will help you determine what big-ticket items you’re splurging on and where you need to cut back in order to stay out of the red. Studies show that many American consumers tend to spend more than they can afford, causing credit card debt to rise. Adhering to a budget helps to keep track of financial progress and can limit unnecessary spending.

Despite the proven benefits of tracking finances, research suggests that only 32% of American households create a written budget. And while payday loans and cash advance loans may be viable ways of getting cash fast when you’re short-changed, creating a budget can help to avoid the high-interest rates that often come with short-term loans. 

Plus, if you’re like most Americans, chances are you aren’t prepared for a financial emergency. In fact, only 40% of Americans are able to cover an unforeseen emergency expense of $1,000, according to a survey from Bankrate.   

Therefore some financial experts suggest following a 50/30/20 budgeting plan that recommends spending 50% of your income after tax on necessities, 30% on personal desires, and at least 20% on savings. Putting 20% of each monthly income provides a sense of security in the event of a financial emergency and can subsequently reduce monetary stress. 

2.) Speak to a Financial Advisor

Speaking to a financial advisor might help to relieve some of your worries surrounding money. 

Financial advisors offer a wealth of knowledge and experience regarding the best spending practices. Planners can also offer impartial opinions about your money and give insight into areas that can be steered in the right direction. With a third-party opinion, monetary issues might seem more bearable.

Advisors can be reliable tools for easing financial burdens, but they can often be expensive and stretch an already thin budget, even thinner. Therefore it is important to assess your financial bandwidth and decide if speaking to a financial advisor is the best course of action. Other options for reliable credit counseling may include:

  • Religious organizations: Some reputable churches offer forms of credit counseling services that may be of benefit to you.
  • Credit unions: If you belong to an organization that is partnered with a credit union, then this may be the perfect place to start. Credit unions often offer great rates to members and can offer guidance when necessary.
  • Armed Forces Legal Assistance office: If you are an active-duty member of the military, you are privy to rights and protections that may help ease the burdens of debt. NRD.Gov offers an Armed Forces Legal Services Locator.

3.) Find Peace of Mind

In the face of financial concern, it is important to keep the body calm and maintain a clear mind, in order to address the situation at hand. 

There are a number of breathing exercises experts suggest doing to help you relax in high-stress situations. The following techniques initiate the body’s natural relaxation responses and can help to keep one calm:

  • To begin, make sure you are somewhere comfortable. This can be anywhere from the library to your bedroom.
  • Then, let your body take a regular breath and exhale.
  • Take a deeper breath, but this time, take the air in through your nose and slowly let your chest rise. 
  • Lastly, exhale slowly through your mouth.
  • Keep taking focused breaths for several minutes.

Creating a routine where you do the above exercises for 10 to 20 minutes at the same time and place each day, can greatly improve your overall wellbeing and response to stress.

General Tips for Relieving Stress

To paraphrase Charles Dickens, the difference between a great year and a miserable one is coming out a dollar ahead instead of a dollar behind. That said, money might be just one of the many sources of stress in anyone’s life. Therefore, reducing stress in other areas can be beneficial. Here are some tips:

  • Exercise: Regular physical activity is known to lower stress levels and increase your levels of dopamine, which can instantly lift your mood.
  • Sleep: Research has shown that getting eight hours of sleep each night can make the brain function better.
  • Talk it out: Having a friend or counselor to speak to can help you feel supported.
  • Cut down on caffeine, nicotine, alcohol, and sugar: All of these can be stimulants that can increase stress.

Reducing stress, financial or otherwise, can help you focus more on the things that really matter and better equip you to handle the financial ups and downs that life may throw at you. 

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Jim Hughes, author at OpenLoans
Director of Content
Look to Jim for advice on budgeting, savings, insurance, stocks, retirement funds, and other topics in personal finance.
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