Money is a leading cause of stress for Americans. 72% of adults report feeling stressed about money. And for the majority of people, financial stress is an ongoing struggle.
Financial stress can lead to mental and physical health problems, as well as a strain on relationships. And while most of us feel financial stress at some point, you can take steps to alleviate some of the stress you feel and prevent it in the future.
When we spoke with Personal Capital’s newest financial Hero, Deepak Chopra, he shared his experience overcoming financial stress and talked about the importance of your finances to the bigger picture of love, compassion, and personal goals.
What is Financial Stress?
Stress is your body’s reaction to external factors such as life changes, work or family struggles, and of course, finances. Stress is a totally normal reaction and can even be a good thing in some situations. It’s a survival instinct and can push you to take necessary action.
But stress can also have some severe mental and physical ramifications. And while it might be helpful in some situations, we can probably all agree that it rarely feels good.
Financial stress can stem from many areas, including debt, rising expenses, and stagnating wages. Unexpected situations like a job loss or financial emergency can also create financial stress.
How Financial Stress Affects Your Mental and Physical Health
Financial stress can take a toll on your mental health. It can result in side effects such as:
- Panic attacks
- Substance abuse
- Social withdrawal
And it’s not just your mental health that can struggle due to your financial stress. Your physical health can take a hit. Physical side effects of stress include weight loss or gain, exhaustion, insomnia, headaches, and more.
And these mental and physical results of stress can have an even more detrimental impact on your finances. If you find it hard to focus on the budget or find yourself spending more money on healthcare, your finances can become more overwhelming.
How to Cope with Financial Stress
Take stock of your finances
Before you can start repairing your finances, you have to figure out exactly where you stand. Start by doing a full inventory of your finances, compiling information such as:
- Monthly income
- Monthly expenses
- Total debt
- Delinquent bills
- Upcoming expenses
Start with one task at a time
Once you’ve figured out where you stand, start by tackling just one problem at a time. By trying to fix everything at once, you’re likely to create even more stress for yourself.
Look at your financial inventory and decide which problem needs the most attention. If you have any past-due bills, that’s likely the place to start. Other starting places might include eliminating unnecessary expenses if you spend more than you make, or tackling high-interest debt.
Make a financial plan
Once you’ve addressed the most pressing issues in your finances, put together a financial plan. According to a Charles Schwab survey, 63% of people with a written financial plan report feeling financially stable, while only 28% of those without a plan feel this way. And those with a financial plan are more likely to display healthy money habits.
Likely components of a financial plan include:
- A monthly budget
- A debt payoff plan
- A savings plan
- A retirement plan
- Financial goals
Track your spending
One of the greatest causes of financial stress is the uncertainty of knowing whether you’ll have enough to make ends meet. Many people have found them in a situation where they pay a bill or swipe their debit card and silently hope the funds are there to cover it.
When you track your spending, you have a better idea of where your finances are at any given time. Rather than hoping you have enough money, you can feel confident knowing where each dollar has gone and how much you have left.
Personal Capital’s financial dashboard can help you track your income and expenses and understand your full financial situation.
Build an emergency fund
Having an emergency fund is one of the best ways to create peace of mind and help prevent financial stress. When you have money in the bank to cover unforeseen expenses, you don’t have to live in fear of them popping up.
And when you have an emergency fund, surprises like a broken-down car or medical bill don’t seem like quite an emergency, but rather an inconvenience that you know you have the money to cover.
Seek outside help
Don’t think that you have to solve all of your financial struggles on your own. There are plenty of professionals, from financial advisors to debt counselors, who can help you with the next steps. Even if professional help isn’t in the budget, some nonprofit organizations offer free financial coaching to those facing financial hardship.
Find healthy ways to deal with the stress
If financial stress is taking a mental and physical toll, it’s important to find healthier ways to deal with stress. Sure, addressing the financial issues themselves is a great starting point. But at some point, it’s likely that stress will arise, financial or otherwise. When that happens, it’s essential to have healthy coping mechanisms in place. A few ways you can do this are:
- Talk to a mental health professional
- Incorporate relaxation into every day
- Focus on daily exercise and healthy eating
- Adopt a daily gratitude practice
- Get enough sleep
Money might be just one facet of our lives, but it affects each other part of your life. Deepak shared the importance of learning to deal with your financial struggles and deal with stress in a healthy way so that you can open the door for fulfillment and joy in each facet of your life. As Deepak said, “Financial confidence is the goal, and it starts with financial wellness.”
Personal Capital compensates Erin Gobler (“Author”) for providing the content contained in this blog post. Featured individuals are paid spokespeople and not clients of PCAC and do not make any endorsements or recommendations about securities offerings or investment strategy.