If money stresses you out, you’re not alone. A recent study by the American Psychological Association reported that money is a significant source of stress for 64% of American adults (and the percentage was even higher for people in lower income categories). Financial stress, if left unchecked, can wreak havoc on our mental and physical health, as well as our relationships and our overall quality of life. But it doesn’t have to. We can learn how to handle financial stress so that it doesn’t take over our lives. 

The Link Between Finances and Stress

Finances are one of the biggest contributors to stress in our lives. Whether your financial stress comes from debt, loss of income, unexpected expenses, or a combination of factors, it can have a significant impact on your mental health. 

Financial struggles can make us feel inadequate, especially when we compare ourselves to what we see on TV, online, or even in the lives of those around us. When we don’t have the disposable income to keep up with the material belongings of our friends and neighbors, it is easy to feel inferior. Financial difficulties can also cause strain in our relationships with our spouses and families. 

Dealing with your financial struggles (especially if you’re not a CPA) can feel overwhelming. When the bills are piling up it can feel pointless to try to get on top of them, and it can be tempting to simply ignore them. Unfortunately, this only creates more anxiety and more stress. 

Effects of Financial Stress on Your Health

Financial stress affects every part of our lives, including our mental and emotional health, our physical health, and our relationships. Financial stress can lead to:

• Disrupted Sleep Patterns, including insomnia. It’s difficult to sleep well when financial stress is high.
• Anxiety. Worrying about unpaid bills or loss of income can trigger anxiety symptoms such as heart palpitations, shaking, shallow breathing, or even panic attacks.
• Depression. Financial troubles can make it difficult to concentrate or make decisions, and can leave us feeling hopeless. Those who struggle with debt or financial instability are much more likely to suffer from depression. 
• Social withdrawal. Concerns about our finances can cause us to feel insecure or even shame, prompting us to withdraw from our relationships.
• Relationship strain. Money is one of the most common sources of argument among couples. Financial stress can take a toll on relationships.
• Health problems. Like other stressors, financial stress can contribute to headaches, high blood pressure, heart disease, and diabetes. Finances can also be a barrier to getting necessary medical care, further impacting our health.

In addition, financial stress can cause us to turn to unhealthy coping mechanisms that exacerbate these health issues even further.

How to Handle Financial Stress

No matter how difficult your financial situation may be, there is always hope. The best way to handle financial stress is to start taking control of your finances again. But it can feel overwhelming figuring out where to begin. Here are a few tips to get started:

• Talk it out. Money can feel like a taboo subject to bring up to your friends and family. But talking through your struggles with a trusted person—whether they are a friend, family member, or counselor—can bring relief to the stress you are feeling. Keep in mind that the person you speak to doesn’t have to have the ability to fix your problems. They just need to be willing to listen to you and talk things out without judging or criticizing you. Talking through your worries can help make a seemingly insurmountable problem feel more approachable. 
• Take an inventory of your finances. Avoiding your bills and bank accounts, while an understandable response to stress, will only make the situation worse. Take some time to take inventory of your income, debt, and spending over the course of at least a month. This will give you a clearer idea of where you stand financially, so that you can make a plan to move forward. Include all sources of income and all expenses—even the small ones can add up. List your debts, including past-due bills and late fees, noting minimum payments due.
• Identify spending patterns and triggers. You may already know what yours are, but if not, pay attention to what triggers you to spend money (aside from necessary expenses). Some common spending triggers are boredom and stress, but yours may be different. Once you know what your triggers are, you can work to find healthier ways to cope with them.
• Make a plan. There is no one “correct” money management plan. The plan you choose will reflect your specific problems and goals. Whether you choose to tighten your budget, try to lower credit card interest rates, curb your shopping habit, find an additional source of income, sell belongings to pay off debt, or another tactic, make a plan that you can stick to. Start with small changes and work from there. 
• Create a budget. Setting and following a monthly budget is the best way to keep you on track with your plan. A budget can also help you regain a sense of control over your finances. In your budget, include everyday expenses, as well as annual or semi-annual expenses (such as car insurance or property taxes). Prioritize your spending so that if you are struggling to cover your monthly expenses, you have a plan for where your money goes first. 
• Incorporate stress management. Having a plan in place to manage your finances can definitely help lower your stress level, but financial stress won’t go away overnight. Institute stress management tactics to help you cope from day to day as you begin to get on top of your finances. Regular exercise, deep breathing, getting enough sleep, practicing gratitude, and eating healthy foods can all help reduce the effects of stress on your mind and body. Another thing that helps is finding a way to give to others. Volunteering not only helps a worthy cause, it can boost your confidence and help ease stress as well.

And one last, but important, tip: don’t be too hard on yourself if you find it difficult to stick to your plan. This is completely normal when you are starting new habits! Just get back to it again as soon as possible, and keep moving forward one step at a time. Learning how to handle financial stress will not only help you manage your day-to-day stress level, it will make your financial goals seem much more reachable.

Wood CPA is here to answer your questions and help you meet your goals. We can assist you with all of your accounting needs, from business advising and accounting to tax preparation services and more. Contact us today at 952-356-1110!