Dealing with the Real Causes of Your Financial Stress

Financial stress goes from wreaking havoc on your wallet to ruining your health if you’re not careful. Yes, your finances can cause so much stress that it can trigger long-term diseases and bust your budget even more. As with any problem, the first step is to know the enemy so you can fight it. So what is the real cause of your financial stress?

When you're suffering from financial stress, you may think you just need more money. But what you really need is a bit more involved than that.

You may think that simply the lack of money is the obvious answer as to why you spend so much time worrying and stressing. Surprisingly, that isn’t always so. Let me explain why.

The Single Most Important Key to Dealing with Financial Stress is…

You might think that unless you’re unemployed or in need of cash because of an unexpected emergency that having more money solves your problem outright. But often, the more money we have, the higher our financial stress. Not to say this is always the case, but the truth is most of us have an insatiable thirst for more things than our money can actually buy.

If you think billionaires are just happily sitting around singing “Kumbaya” every day, you couldn’t be farther from the truth. Many of them are also stressed out, especially during economic downturns. That’s because the more you have, the more you can lose after all.

The real key to dealing with financial stress is to change your behavior towards money. If I have any advice for you as to how and overcome your financial stress it is this: spend smarter, save more, and invest more.

Causes of Financial Stress

You probably have one or more of these conditions in your life that causes your stress and they are:

Your spending habits – What you spend every month is simply more than your income. When you do that, you often max out your credit, take ridiculous payday loans for trivial things, or even take some cash from your retirement fund. It’s a spending habit that turns into an addiction and thus a disaster.

Living paycheck to paycheck – You count days by 14’s hoping you’ll make it to the next payday. Your perpetual problem is that you always wipe out your entire pay every time you get a check because of expenses and debts.

Your debts – The terrible feelings you have from your debts can cause shame or disgrace and that often destroys relationships with friends and family members. Paying it with a big chunk of your salary over a long period can make you feel like you are a rat running on a wheel.

Lack of a financial plan – You have lost control of your finances and you don’t have a goal or financial anchor. You sit there in your little dingy and float aimlessly in the middle of an ocean of out-of-control spending. In many ways, you are your own biggest obstacle to getting rid of your financial stress. I am reminded of the old comic strip wisdom of POGO saying, “We have met the enemy and he is us!”

Help to Cure Financial Stress

1. Focus on Positives

There’s a lot to be said for focusing on the good instead of negative issues. Thinking positively won’t magically pay your bills, but it can help calm your fears and can also help you recognize and appreciate your financial strengths.

2. Don’t Be Ashamed

Your past financial mismanagement can lead to shame around lack of money, incorrect budgeting, or just plain being ignorant about proper financial practices. That shame can cause a repeated cycle of anxiety and future mismanagement. Knowing you’re not alone is a first step in your recovery. There’s no shame in wanting to do better with your money and if you need to, see a financial advisor for help.

3. Create an Emergency Fund

The best-laid plans can be derailed by some unknown event like the loss of a job, illness, death, or even a natural disaster. It happens. If fear of the unknown has you second-guessing your financial plans, now is always the best time to evaluate your emergency fund. It’s your cash that should always remain untouched, except for emergency purposes. You need at least six months’ worth of living expenses saved and knowing that you have that money will help you rest much easier each night.

4. Stop Comparing Yourself to Everyone Else

Social media is inundated with friends’ pictures of trips, cars, and other indicators of wealth. Don’t compare yourself and your finances to others; it will definitely increase your stress level. Constantly comparing yourself to others is not a healthy way to live. Take a break from social media if necessary.

5. Plan for the Worst and Hope for the Best

It might seem counter-intuitive that one of the best coping techniques for financial anxiety is to consider the worst. After all, “the worst” is probably a trigger for much of your money stress. After you realize and acknowledge your fears, put a contingency plan in place and diminish the power it holds over you. Bad things sometimes happen but by knowing how you’d react, you can be firmly in control of the situation.

6. Educate Yourself

If fear of the unknown causes you to stress about money, turn those unknowns into “knowns.” For instance, if you want to save for retirement but have no idea where to start, you may be worried about the future. Or if you think you need life insurance, but don’t understand the difference between the various types, you are likely feeling extremely confused. In the case of finances, ignorance is definitely not bliss. Calm your fears by educating yourself. By taking matters into your own hands and learning more on the subject, money stops being a stressful enigma and becomes something that you can understand and control.

7. Retool (or Start) Your Budget

I get the most stressed about my finances when my personal budget is out of whack. It can be anything from overspending on certain categories to not properly planning my purchases. Regular budget checkups are essential since life, and all of its expenses, are rarely a constant.

8. Keep Some Concern

While constantly worrying about money is detrimental to your wellbeing, retaining some concern over your finances actually protects you from making poor spending and saving decisions. Being preoccupied with your future could inspire more saving, or extra caution about sticking to your budget can protect you from overspending each month.

When it comes to investments, if your gut is telling you an opportunity is risky, you might want to talk to a financial advisor. Discussion helps to avoid making rash decisions.

Final Thoughts

The bottom line is this: staying up at night and worrying about money won’t magically make cash appear in your depleted bank account or help you decide how to save for your retirement. Instead, learning how to calm your fears and feel confident about your financial choices is a matter of education, action, and respect. As you find proactive ways to stay on top of your finances, you just may find that the anxious feeling that comes when checking your bank balance disappears in favor of control and confidence.

Do you ever feel anxious about your finances? What is the core reason you think you are falling behind financially? What are you doing about your problems and how are you coping?

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  1. We suffered from a bad case of financial stress for years. We simply did not have a plan for our money. We cured it by building a plan for our money and establishing a cash saving. It gave us peace of mind when unexpected events happened.

  2. Now that we’re starting to get our finances under control, I feel much less stressed out about money. At this point it’s all about following through on our plan to get out of debt and then ramp up savings in a big way.

    I will admit that it’s hard not to make comparisons. Other people just seem to have it wayyyyy more together, financially speaking.

    1. First let me congratulate you on the progress you’re making. Having a plan and executing it means you’re definitely on your way to financial stability. Don’t always believe everything you see and hear about others’ successes and failures. There’s a good chance that it’s not as rosy, or bleak, as it seems. Keep up the good work!

  3. For us, the best thing we every did was set our lifestyle below our paycheck. Yes, the bank said we could get a mortgage of XX but we chose less than that. It is so much easier to write a check for $100 less to the mortgage company than it is to economize to find $100 every. single. month.

    1. Taking the pressure off by living below your income level is just plain smart. Not only are you able to save some extra money and prepare for an emergency that way, but it gives you a comfort level knowing that you’re able to handle your finances each month. It’s a good lesson to have others observe and learn from. Thanks, RAnn.

  4. Good tips! Optimal performance is like a bell curve, when there is a little bit of stress involved but not too much. You’re correct in that most people stress about money because they are making decisions that put them in a bind financially. Of course everyone wants more, but it’s important to live within your means.

    1. It’s always been my opinion that until someone is in the throes of financial problems, they operate with eternal optimism that no matter how much they spend, they will earn more and be able to deal with it. Reality tells us that doesn’t always happen. Certainly if you live below your means, you’ll be in a much better place if somehow you need to deal with an emergency. Thanks, Tawnya, for your comments.

  5. Prudence Debtfree

    Gary, this is excellent! I especially like #8. There’s a difference between “worry” and “vigilance”. We’ve needed to focus on our finances, and the result is that we really don’t worry anymore. All freedoms need to be maintained with wisdom – including financial freedom. I used to think of it as being able to let go and just enjoy La-La-Land. Not so. (I also really like #5.)

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