The average American under 50 has between $12,871 and $27,838 in non-mortgage debt. Whether or not you’re already paying a substantial portion of your income to debt, the stress and anxiety that comes with financial struggles is real and pervasive. With rising costs and stagnant wages, many people find that taking on new debt is more necessary than ever. Even if you’re currently debt-free, you may worry about your ability to stay that way as you navigate an increasingly expensive world, expand your family, or plan for retirement.
The stress that comes with managing personal finance decisions can be overwhelming. Day-to-day purchasing decisions and long-term plans are all affected. Fortunately, there are several steps you can take to manage both your stress and your finances to improve your overall mental well-being.
Recognizing Financial Stress
Everyone worries about money from time to time. If this stress is getting in the way of your daily activities, then it’s time to make a change. Depending on your relationship with money, you may notice some or all of these signs:
- Unwillingness to spend money, even on essentials like food and safety items
- Haphazard and increased spending on non-essentials
- Trouble sleeping, stomachaches, headaches
- Increased use of unhealthy coping mechanisms such as drinking, over-eating
- Inability to make hypothetical plans without first worrying about the cost
- Decreased confidence in other areas of life (work, relationships, etc.)
- Increased social isolation
If you suspect your financial stress is taking a toll on your overall happiness, treat it like any other concern and gather your resources to begin healing.
The Importance of Financial Mental Health
Managing your finances is crucial to meeting your long-term goals, and managing your mental health is equally important. Financial stress can cause problems in other areas of your life. Like any kind of anxiety, people with high levels of financial stress are more likely to develop depression or other mental health conditions. Money worries can cause some people to delay medical treatment or necessary home safety repairs. Financial stress has also been linked to trouble sleeping, migraines, diabetes, and the adoption of unhealthy coping habits like drug addiction. Managing your financial stress is essential for your overall well-being.
Managing Your Stress (and Your Money)
Fortunately, there are several steps you can take to manage your finances as well as your stress levels.
Take Back Control
People are stressed and anxious when they feel out of control. Our finances often seem to have a life of their own, snowballing to take on more and more debt. It doesn’t help when unforeseen emergency expenses like new tires or dental work occur. No matter how upsetting your financial situation seems, it’s imperative that you take back control and actively manage your money. Avoiding your bank statement won’t reduce your stress (as much as it feels this way sometimes).
The first step to taking back control is to make a realistic budget. List all of your expenses, including a category for fun money, and see if you need to cut back (or simply stick to the budget more faithfully!). Build an emergency fund to cover those unexpected items. Switch to a cash-only system for six months to avoid putting more debt on a credit card and getting stuck in a perpetual cycle. Living frugally for a time may sound unpleasant, but you’ll feel more at ease when you have control.
Understand that Money is Morally Neutral
Much of our financial stress and anxiety comes from the stigma attached to being in debt or needing help paying bills. Depending on the path that led to your financial challenges, you may feel regret, failure, frustration, or anger. You must transform your relationship with money to lift some of your stress. Having money and spending money are morally neutral — they are not inherently good or bad things. Veering off your financial path does not reflect your worth.
If you feel overwhelmed by your finances, ask for help. Reach out to a friend for accountability or a financial advisor for expert guidance. You should not feel embarrassed or ashamed to seek help in this area of life. It says nothing about your character.
Create and Celebrate Successes
The road to financial freedom can be long. Make sure to build in small milestones along the way, and plan for a celebration at each juncture. You can choose free or low-cost activities you enjoy as an indulgent reward for your progress. Each new milestone will build your confidence and help reduce the impact of your financial stress.
Finances FYI is presented by JP Morgan.