3 Simple Remedies That Can Cure Your 'Financial Anxiety'
If you're feeling the effects of financial anxiety, here's three easy ways you can soothe both your mind and wallet.
By Mark Travers, Ph.D. | April 29, 2024
Money-related stress is widespread among adults in the United States. According to the American Psychological Association, 72% of adults experience financial stress, whether it's due to concerns about rent payments or the weight of debt.
Amid bank failures, rising inflation and concerns about a recession, many individuals find themselves grappling with financial stress as they strive to secure their finances. This stress often arises from disparities between income and expenses, exacerbated by economic crises or major life events like job loss or health emergencies.
Not surprisingly, financial stress can have a significant impact on one's mental health. For example, a study published in PLOS ONE revealed a clear link between financial stress and depression. This stress can be particularly detrimental to mental well-being, especially among those with lower incomes. A survey in the United States found that financial concerns heightened psychological distress, particularly for individuals who were unmarried, unemployed or had lower incomes.
We may not have the power to change the broader financial landscape or certain aspects of our financial situations, but there certainly are ways to manage financial stress and its repercussions. Here are three such ways you can navigate these challenges and cultivate mental resilience during times of financial strain.
1. Plan Your Finances Realistically
One of the most effective ways to alleviate financial stress is to gain a comprehensive understanding of your income, expenses and financial objectives. This not only provides you with a better grasp of your financial situation but also empowers you to take control. A 2007 study reinforced this by highlighting that the clarity of retirement goals and active engagement in financial planning activities serve as reliable predictors of the quality of one's retirement. To begin implementing this strategy, consider laying out your monthly budget in advance. Here's a guide to get started:
- Begin by tracking your monthly income and all your expenses. Categorize your expenditures, so you can identify areas where you might be able to cut back.
- Establish short-term and long-term financial goals. These can include paying off debt, saving for emergencies or investing for the future. Be sure to align these goals with your current financial situation.
- Once you've created a budget, commit to it. This might involve making some sacrifices in the short term, but it's a crucial step toward reducing financial stress in the long run.
2. Cut The Fat, Keep The Meat
When it comes to managing financial stress, it's crucial to strike a balance between trimming unnecessary expenses and safeguarding your essential needs, especially your health. Here's how you can achieve this delicate balance:
- Review your monthly expenses and identify areas where you can cut back. This might include dining out less frequently, reducing entertainment expenses or finding cost-effective alternatives for your regular purchases.
- Prioritize essentials. While economizing is essential, be sure not to compromise on necessities like nutritious food, a safe living environment, and, most importantly, medical care. Health should always be a top priority, so avoid skipping doctor's appointments or medications due to financial concerns. Instead, explore options like generic medications, discounts or financial assistance programs to manage healthcare costs.
- Look for ways to maintain your quality of life without breaking the bank. For example, consider using public transportation instead of owning a car the very moment you start earning. You can also explore community resources for free or low-cost activities and find budget-friendly ways to stay connected with loved ones.
3. Prioritize Self-Care To Reduce Stress
Managing financial stress isn't just about your bank account; it's also about taking care of your mental health. Prioritizing self-care and stress management can make a significant difference in how you cope with financial pressures. Here are some strategies to consider:
- Incorporate mindfulness and meditation practices into your daily routine. These techniques can help reduce anxiety, improve your ability to focus, and enhance overall mental well-being.
- Physical activity is a natural stress reliever. Engage in regular exercise to release endorphins, reduce tension and improve your mood. Findings of a study suggest that engaging in moderate and vigorous leisure walking can have a positive effect on your mental health and health perceptions.
- Connect with supportive relationships. Lean on friends and family for emotional support. Sharing your concerns with loved ones can provide comfort and reduce feelings of isolation.
Financial stress can have a profound impact on mental health, but it's a challenge that can be managed. Proactive steps are one way to reduce the burden of financial stress and build the mental resilience needed to navigate these difficult times. Remember, you're not alone, and there are resources available to help you on your journey toward financial and mental well-being.
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A similar version of this article can also be found on Forbes.com, here.