Stress about money is something that most people deal with. Money is the biggest source of stress for Americans, with 72% acknowledging their financial situation as a stressor, according to a survey by the American Psychological Association (APA).
42% of Canadians polled said money was their main source of stress, topping out personal health, relationships, and work, according to FP Canada’s 2025 Financial Stress Index.
Financial worry is something that everyone goes through at some point. This could be anything from worries over paying rent to reducing debt.
It can be hard to deal with when you don’t know where to begin.
However, if left unchecked, its impact extends beyond your financial situation.
In this blog post, we’ll look at steps you can take to reduce stress about money and improve your financial situation as a whole.
What is financial stress?
Financial stress is the strain that people experience on an emotional and psychological level as a result of their financial situation.
A feeling of uncertainty, anxiety, and general discomfort arises when there is a mismatch between someone’s financial means and financial obligations.
There are many financial stressors, such as:
- Debt: Having high levels of debt, especially when it becomes unmanageable.
- Income anxiety: Uncertainty about your income, such as the fear of job loss or irregular income, contributes to financial stress.
- Unexpected expenses: Sudden and unforeseen expenses, like medical bills or car repairs, can disrupt financial stability and cause stress.
- Lack of savings: Not having an emergency fund or savings to fall back on in times of need can intensify financial stress.
- Budgetary constraints: Living paycheck to paycheck or struggling to meet basic needs within a budget can be a significant source of stress.
- Housing costs: High rent or mortgage payments relative to income can create financial strain and stress.
How financial stress affects your health
Stress over money isn’t just bad for your wallet; it can also have a big negative effect on your mental and physical health.
Here are several ways financial stress can impact your well-being.
Mental Health Issues
- Anxiety: Constant worry about financial matters can lead to heightened anxiety levels. Individuals may feel overwhelmed and fearful about their financial future.
- Depression: Prolonged financial stress is linked to an increased risk of depression. Feelings of hopelessness and despair can bubble up from financial difficulties.
Physical health problems
- Sleep disorders: Financial stress often disrupts sleep patterns, leading to difficulties falling asleep or staying asleep. Insufficient sleep can contribute to a whole range of health issues.
- Digestive problems: Chronic stress, including financial stress, may contribute to gastrointestinal issues such as indigestion, irritable bowel syndrome (IBS), or stomachaches.
- Cardiovascular issues: Long-term stress is associated with an increased risk of cardiovascular problems, including high blood pressure and heart disease.
- Weakened immune system: Prolonged stress can suppress the immune system, making individuals more susceptible to illnesses and infections.
Unhealthy coping mechanisms: Some individuals cope with financial stress by engaging in emotional eating, leading to poor dietary choices and potential weight gain. Others engage in alcohol or drug abuse as a temporary solution to their financial problems
Substance abuse: The use of alcohol, tobacco, or drugs may increase as a way to cope with stress, exacerbating health issues.
Social life
- Strain in relationships: Financial stress can strain relationships, leading to conflicts and tension within families or among couples. This relational stress can further contribute to mental health challenges.
- Decreased quality of life: Financial stress can diminish your overall quality of life, affecting happiness, satisfaction, and the ability to enjoy day-to-day activities.
11 Ways to Tackle Financial Stress
#1. Identify the root causes of your money stress
Begin by pinpointing the main sources of your financial stress.
- Is it a mountain of debt?
- Are you not confident about how your finances work?
- Are you struggling with rising costs?
Whatever is causing you stress, doing this allows you to better understand and brainstorm effective ways to address the issues and points you in a direction.
#2. Develop a budget or spending plan
Creating a budget can significantly reduce stress by providing a clear financial roadmap. It doesn’t have to be fancy! Track and categorize your spending to identify areas where you can cut costs.
You can do this by ranking your expenses based on priorities and adjusting your spending accordingly. Budgeting tools can help you streamline financial planning and reduce stress.
#3. Take small steps
Way too often, we try to accomplish too much at once and lose steam.
It’s critical to enjoy the journey and celebrate small victories along the way. We have an entirely different psychological outlook when we begin to believe that we can make progress and stop feeling like we’re perpetually behind.
Rather than concentrating on the whole gigantic-feeling task at hand, take baby steps forward.
#4. Establish an emergency fund
Establishing an emergency fund provides both financial security and peace of mind. Increase your contributions progressively after starting modestly.
You can think about investing your emergency savings money in a high-yield savings account to get the most out of it.
#5. Increase your income
Supplementing your income can alleviate financial stress. Explore options like:
- asking for a promotion at work
- accepting more jobs or shifts
- freelancing
- doing side hustles
#6. Automate financial transactions
Automating bill payments and savings contributions ensures financial responsibilities are met consistently. (And helps your credit score when you aren’t late on payments!)
#7. Set aside some retirement savings
In addition to working to pay off debt and maintain your emergency funds, it’s critical to keep an eye on your long-term financial objectives, like retirement savings.
H&R Block Canada, a tax preparation company, reports that over 50% of Canadians believe they are falling behind on their retirement savings.
Try to utilize tax-advantaged retirement savings choices, including your employer’s 401(k), to stay on track.
#8. Communicate openly about money
Healthy communication reduces stress even when money isn’t the primary issue.
Discuss major purchases or financial situations with your partner to make sure you both are aligned on shared money goals. Open communication can also help keep each other accountable to financial goals you’ve set together.
#9. Track your progress
Regularly review and update your list to track your progress and stay focused on your financial goals.
Knowing that your debt is reducing, that your emergency funds are increasing, or that you can operate within a budget can have a massively positive impact on your wellbeing.
#10. Talk to your lenders
Speak with your lenders before allowing debt and the stress it brings to consume you.
Lenders are frequently willing to talk with you about your problems and work with you to find a temporary fix. (After all, they just want to know they’ll get their money back.)
To minimize your monthly payments, the lender can agree to modify the loan by extending its term or lowering the interest rate. Another option would be to refinance.
#11. Seek professional help
Financial advisors can provide insightful advice and help in formulating efficient plans for debt reduction and savings.
Face Your Financial Stressors and Move On!
Most people worry about their finances at some point.
But if it interferes with your daily activities, financial stress can become a problem.
Anxiety, melancholy, behavioral changes like social disengagement, and physical problems like headaches and stomachaches can all result from financial stress.
It takes proactive measures and a calculated approach to take charge of your financial condition.
Addressing the underlying causes of financial stressors, creating a budget, setting up an emergency fund, and seeking professional advice can lead to a more stable and stress-free financial future.
Editor’s note: This article was originally published Feb 8, 2024 and has been updated to improve reader experience.
