How to Cope with Financial Stress (and Feel Better)

Stress comes up for a number of reasons, such as work, personal relationships, or your physical health. But according to the American Psychological Association’s latest “Stress in America” survey, 64% of Americans say money is one of their most common stressors.

Financial stress can take a toll on all facets of your health — emotionally, physically, and mentally. And dealing with financial stress can feel even more overwhelming when you’re coping with it alone.

Why we don’t talk about our financial stress

Your values and opinions about money likely differ from those of a stranger — and even from your family and friends. Due to these differences in opinion, money can be a contentious topic. You might even have been taught by your parents that it’s rude to bring up money in conversation.

To add more stigma to the topic, FinanceBuzz's latest debt survey found that 30.3% of respondents admitted that they’d harshly judge an acquaintance who had a high amount of debt and make assumptions about that person’s finances.

Money can alleviate not all, but many of life’s day-to-day challenges. Yet, the shame surrounding debt and money push those who are suffering with financial stress to stay quiet about their hardships and not receive readily available support and assistance.

How to know if your financial stress is the kind that needs help

First and foremost, if you’re feeling suicidal, please call the National Suicide Prevention Lifeline at 1-800-273-8255. And if you’re considering self-harm or are in crisis, reach out to the Crisis Text Line by texting HOME to 741741. A trained crisis counselor is there to listen to you, regardless of the type of crisis you’re having.

Worrying about money is a normal and common occurrence, regardless of how much you earn or your financial situation. Major life goals often have some financial element attached to them, like saving for retirement, getting your college degree, saving for a home, and even starting a family. But trying to manage debt can make these aspirations feel impossible.

If you feel like you’re out of options or don’t know how to pay off debt to begin managing your personal finances, there are different ways to lessen your financial stress. Fortunately, your situation doesn’t have to be dire to seek help and get started.

Who can help you with your financial stress

Believing you’re alone with your financial stress only worsens the situation and can leave you feeling stuck. Professionals who are knowledgeable about the kind of financial struggles you’re dealing with might be able to put you at ease.

Your creditors

Although it might seem counterintuitive to reach out to your creditors and admit you’re going through tough financial times, it’s actually in their best interest to help you.

Having your account go into default is financially risky for them. Reach out to your creditors to see what your options are. You might be able to negotiate a lower interest rate or reduced monthly payment until your finances recover.

Credit counselors

Sometimes stress arises out of worrying about the “what ifs” and being unfamiliar with the financial resources out there. Credit counseling fills in the gaps to educate you about money management and teach you how to make a budget. A credit counselor can help you get out of debt faster by creating a debt-management plan so you feel confident about your next steps.

When looking for a credit counseling resource, make sure you’re working with a nonprofit organization. Check out the Financial Counseling Association of America and the National Foundation for Credit Counseling for more information.

Financial planners

If you’re stressed thinking about your future finances, working with a financial planner can get you on a path toward the future you want. Whether you’re concerned about your retirement or your dream house, a financial planner can create a detailed map on how you can reach your goal.

It’s best to find a financial planner with a certification or accreditation. You can start your search for a financial planner by using the National Association of Personal Financial Advisors’ Find an Advisor tool.

Online or in-person classes

There are a wealth of courses from government agencies and nonprofit organizations that teach you about all areas of personal finance, such as credit, debt management, budgeting, and investing.

The Consumer Financial Protection Bureau (CFPB) offers a list of online courses and resources to help you learn the basics. You can also reach out to your local community, such as a junior college or church group, to find free or low-cost personal finance classes and workshops.

How to deal with your financial stress on a money level

No matter who you turn to for help, healthy-spending basics remain the same. Here are a few ways to manage your financial stress by going straight to the source: your money.

1. Create a budget

Living paycheck to paycheck or being unable to pay your bills can feel like a daily struggle. A budget gives you a bird’s-eye view of your finances so you know how much money is coming in and where it’s going. Having less mystery around your finances will help alleviate stress.

To create a simple monthly budget, you’ll need to:

1. Determine your monthly net income
2. Calculate all of your monthly expenses (including groceries and personal care needs)
3. Set aside a percentage of what’s left in an emergency fund
4. Give yourself a fixed allowance for “fun” spending

A tool like Mint is an easy way to get started.

2. Build an emergency fund

As you’ve probably noticed from the step above, creating a budget helps you carve out some of your resources for an emergency fund. Having a rainy-day fund is important because it prepares you for large, unexpected (yet inevitable) expenses.

In the event of a sudden job loss, emergency room bill, or costly home repair, you can rely on the funds you’ve diligently saved just for the occasion. A general rule of thumb is to have three to six months’ worth of savings put aside for use in the event of an emergency.

3. Refinance or consolidate your debts

Consolidation can be a useful way to get out from under your debt. A debt consolidation loan is just a personal loan that transfers all your loans and revolving debt into one account. This is also commonly referred to as “refinancing your debt.” You’ll then repay the one new loan with your new lender.

The goal of debt consolidation is to simplify your debt management and, ideally, get a lower interest rate to save money over the life of the loan. It can also get you on a repayment term that’s reasonable for your current financial situation.

4. Leave your retirement funds alone

Using your retirement funds to stay above water today will only put your future self in greater financial stress. As much as possible, avoid touching your retirement savings before you’re able to claim it without penalties.

5. Debt settlement

Debt settlement services are also commonly referred to as “debt relief.” Before engaging with these services, be on the alert — there are many debt settlement scams that have been reported to the CFPB. And even the ones that aren’t scams may be for-profit services that charge excessive fees and exaggerate how much of your debt can be settled to win your business.

If you go this route, be sure to choose a reputable company. But be aware that you’re unlikely to eliminate all of your debt. You’ll still owe a portion of your debt, plus taxes and fees. Instead of paying for a middleman to negotiate your debt with creditors and debt collectors, you may be better off doing this yourself for free.

6. Bankruptcy

If you feel your case is extreme, you might consider filing for bankruptcy. Depending on the type of bankruptcy you file, it could discharge all or part of your debt, or allow you to restructure your debt in a way that’s more manageable, based on your financial circumstances.

Keep in mind that this should be your last resort, as bankruptcy negatively affects your credit profile for up to 10 years.

How you can deal with your financial stress on a personal level

On a more personal level, financial stress drains your energy and might affect other areas of your life. Here are some ways to ensure you’re taking care of yourself first:

• Focus on one thing at a time: Don’t spread yourself thin; work on the one thing that will ease your financial stress the most.
• Know yourself: Be aware of how you handle stress and avoid counterproductive behaviors, such “retail therapy” or turning to substances.
• Practice saying “no”: Don’t feel pressured to keep up with social events that involve spending money. Those who care about your well-being will understand.
• Celebrate small wins: It might take time to get where you want to be financially. In the meantime, recognize the progress you’re making, however small.
• Meditate: Mindful breathing and meditation can help soothe financial stress in the moment. Try closing your eyes and taking a few deep breaths to regain perspective.
• Talk to someone: You don’t have to go through your financial journey alone. Reach out to someone you trust and share what you’re experiencing. You might be surprised how they can relate and offer suggestions from their own experience.