Financial Stress: Causes, Signs, and How to Manage It

Financial Stress: Causes, Signs, and How to Manage It

Adulting is hard. We all feel stress and anxiety over various things. One that’s top of mind for many of us right now is financial stress. Managing money and ensuring we have enough to pay our bills, make sound investments, and save for retirement—financial stress is with us throughout our adult lives. And it can deplete not only our bank accounts but also our emotional health and well-being.

What do we mean by financial stress, and how common is it?

By financial stress, we’re referring to fear, worry, or anxiety that’s focused on money, which can include worries about your expenses, debts, investments, or other aspects of your personal finances. While financial anxiety isn’t a mental health disorder, concerns about finances can contribute to stress and anxiety, just like other sources of fear and worry. In fact, some mental health professionals specialize in addressing issues that arise at the intersection of financial stress and mental health.

According to research from the American Psychological Association (APA), many people deal with money anxiety. In its 2022 Stress in America survey, 83 percent of respondents said inflation is causing them stress, followed by worries like the economy (69 percent) and money (66 percent).

Financial anxiety may also be a key issue affecting mental health within the U.S. workforce. One study found that 63 percent of workers in the United States feel stress about their finances, with 56 percent saying it negatively affects their mental health. Similarly, Lyra’s 2023 State of Workforce Mental Health report found that U.S. workers are increasingly occupied with anxiety about money. In fact, money appears to be taking the place of COVID-19 as the top factor impacting employee mental health, with 48 percent of surveyed employees citing finances as a top concern. Among those employees who were considering switching jobs within the next year, low compensation was cited as the main reason.

Signs of financial stress

One way to take back some control over stress and anxiety is to recognize and name what you’re feeling. When it comes to money anxiety, “people don’t necessarily know they’re dealing with financial stress. They just know life feels hard,” says Aja Evans, a licensed mental health counselor who has helped people for over 10 years and specializes in providing support for financial stress.

It’s normal to have occasional worries about money, but sometimes stress and anxiety get in the way of our quality of life and ability to function. If you’re experiencing some of the following signs, it may mean that financial stress is starting to have a significant impact on your well-being:

  • Feeling restless or excessively worried about finances, even during unrelated activities
  • Aches, pains, racing heart, or other physical symptoms when thinking about finances
  • Feeling overwhelmed, like you’re losing control or can’t keep up
  • Avoiding financial decisions or transactions, such as making purchases, paying bills, or communicating with creditors
  • Difficulty enjoying other parts of your life because you’re worried about money
  • Feeling guilty, embarrassed, or ashamed about your financial situation
  • Rigidity around budgeting (e.g., minor budget changes upset you)
  • Feeling angry or irritated with people involved in your finances
  • Trouble sleeping due to money worries

It’s common for people with financial anxiety to worry about not having enough money or beat themselves up for past financial missteps, but it can also show up in other ways. For example, people who’ve made solid money decisions may obsessively save or check their investments, or they may feel like they’ve failed because they aren’t further ahead. 

Effects of chronic stress and anxiety

Over time, stress, including stress about finances, can impact us mentally and physically in numerous ways. For example, chronic stress may increase the risk of mental health disorders such as anxiety and depression, and some research shows people with debt are more likely to experience mental health problems. 

Stress can also negatively affect our physical health. For example, stress has been linked to higher cortisol levels, which when left unchecked over a long period of time can increase the risk for many health problems like heart disease, digestive issues, diabetes, and more. Unfortunately, when money is tight, one of the first areas where people cut costs is health care, which may make health problems worse and more costly in the long run.

Tips for managing financial stress

You may not be able to control every circumstance that affects you or your finances, but you can use strategies to manage financial stress in healthy ways. 

Talk to people you trust

The taboo of discussing finances can contribute to money anxiety. “Money is a major part of life,” says Evans. “It affects how we live and allows us to take care of ourselves. Yet somehow we ignore it and think it should ‘work out.’ But ignoring feelings only makes them worse.” Consider sharing your feelings with trusted friends, family, or mentors. You may be surprised how many will relate and offer creative solutions.

Seek financial advice

In addition to trusted friends or family, consulting a financial expert could be helpful, as money anxiety can also stem from a lack of knowledge or confidence about how to manage money. Maybe you aren’t sure how to manage your money or even where to get started. In these situations, a financial advisor or even free online resources can help you take inventory of your finances, create a budget, take steps to improve your situation, and monitor your progress.

Check in on your beliefs about money

It’s important to examine the beliefs about money you’ve learned over time, likely without realizing it. Do you have a short-term or long-term money outlook? Since stress about finances is often deeper than how much money you have, it can be helpful to identify these beliefs and explore strategies for reframing them. 

Make a plan

A concrete plan is a great step toward gaining some control and combating financial stress. Be honest about your current financial situation so you can improve it. Then lay out a budget so you can plan how to use your income effectively. This gives you some power back and helps you avoid surprises like coming up short on bills. Once you have a budget, you can start looking at longer-term financial goals and seek advice as needed.

Practice self-care

While daily practices like exercise, relaxation, mindfulness, and making time to connect with people and activities you enjoy won’t necessarily fix the root causes of stress, they can help us cope. Consider setting a goal to practice a daily form of self-care, even if it only lasts five minutes. And most importantly, practice self-compassion. Most people never learn about money management in school or from family, and it takes time to forge a path that works for you.

Seek mental health support when needed

Most people worry about money sometimes. But if financial anxiety affects your ability to manage daily life, or if you feel “stuck” or incapable of making strides toward a financial plan, it may be time to consider mental health support. “Financial stress is about money, but often it’s more about the feelings you have about your money,” Evans says. A mental health professional can help you identify stress triggers and learn new tools and coping strategies. Check with your employer to see if you have mental health benefits through work, which can make this type of support free or low-cost. 

You’re more than your net worth

Money is a concern for many of us. Financial worries don’t magically disappear because you make more or have a few good investments. Acknowledging that you have financial anxiety and taking steps to address it can get you back on the path to peace in your life—even if your bank account isn’t picture-perfect.

“People don’t lack value because they lack money,” Evans says. “We’re more than our net worth—and you deserve to feel better.”

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About the reviewers
Sarah Hagerty, PhD

Sarah holds a doctorate in clinical psychology and neuroscience from University of Colorado Boulder and completed an advanced fellowship in PTSD at Stanford University. Prior to her role at Lyra, she served as an independent mental health strategy consultant for companies of various sizes across a variety of industries. She has a passion for using her expertise at the intersection of research, clinical practice, and neuroscience to deliver data-driven insights that help individuals and organizations thrive.

Kendall Browne, PhD

Dr. Browne is a program manager on the workforce transformation team at Lyra Health and a licensed clinical psychologist. Dr. Browne has over a decade of experience in the development, evaluation, and use of evidence-based interventions for mental health conditions, including anxiety disorders, trauma-related disorders, and substance use disorders. Prior to joining Lyra, Dr. Browne conducted research and supported local and national education and clinical training initiatives as the associate director, training and education for the Veterans Affairs Center of Excellence in substance addiction treatment and education.

By The Lyra Team
17 of January 2023 - 6 min read
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