Couple managing financial stress

How do I Reduce Financial Stress?

Jul 23, 2021
By Mariclare Cranston, Content Specialist

The Best Tips for Managing Your Financial Stress

Can you imagine a completely stress-free life? Neither can we. But there are ways to manage your stress – especially when it’s financial stress – that can make your day-to-day a little easier. We’ve put together 5 tips to help you start reducing your stress. And while these tips focus on financial stress, you can use them in all areas of your life.

The 5 best ways to manage financial stress are:

  1. Make a list
  2. Prioritize your list
  3. Create a plan
  4. Improve your money management
  5. Build your savings

1. Make a List 

 It’s hard to de-stress if you’re not entirely sure what exactly is stressing you out. We often resort to the general, “I’m stressed about money.” But what does that mean exactly? The first step in effectively managing stress is to list out everything that’s causing you stress right now. Whether or not it’s related to finances. And whether or not you feel it’s insignificant. Be specific and get detailed. The clearer you are in your list, the more clarity you’re going to get about how to manage what’s bothering you.

Making a list helps you organize and contain a sense of inner chaos, which can make your load feel more manageable. ~Psychology Today

“I’m stressed about money” doesn’t help you define a way to beat that stress. But “I’m stressed because I am only making minimum payments on two cards and I feel like I’ll never pay them off” paints a clear picture – and lends itself to a clearer solution. Or consider, “I’m stressed about work.” Well, what does that mean? How can you resolve it? Getting granular helps: “I’m stressed because I have 4 major projects at work that are all priority and I can’t get the resources I need to complete them and my boss is on vacation.” Much clearer, right? And because it’s clearer, you’re going to have an easier time figuring out how to manage that particular stressor.

73%25* of Americans rank finances as their number one stress

Once you have your detailed list complete, think about what aspect of each item is your biggest stressor. In the last example we just used, would it be the fact that you have so many projects? Or that you don’t have the resources you need? Or that your boss isn’t available for guidance? If you’re struggling with debt, what aspect is most stressful? Having multiple cards and payments? Only paying the minimum? Or the fact that all of your cards are maxed out? This step is important because it helps you whittle away the “noise” and focus in on your primary concern. 

2. Prioritize Your Stressors 

 As with almost any list you’ll ever create, not everything you’ve identified is going to be equally important. Your next step is to prioritize the stressors you’ve identified. Skipping this is going to make you feel overwhelmed – and unable to ever manage your financial stress. You finally have a clear picture of everything that’s weighing you down. Now you can objectively look at it to decide what to focus on first. And that’s key: figure out which stressor you need to tackle first and dump your energy into it. This focus on one stressor at a time allows you to be more effective in managing it. The folks at Productivity Matrix agree: “If you do not take the time to prioritize, then you will have trouble getting things done on time, stress about how you will finish everything on your to-do list, and not be productive.”

Prioritization is useful in an information-overload situation. ~Psychology Today

Hand in hand with prioritization, evaluate each item on your list against your level of control over it. Continuing with our example, you have no control over when your boss is on vacation. Let that go as a stressor. What you can control is how you handle questions and concerns when they’re out of the office. Make a note to develop a plan with them. Eliminating those items that you have no control over frees up your energy to focus on those that you do – like how many credit cards you have or how you’re using them. 

3. Create a Plan 

 Congratulations, you’re half-way there! Now that you have your prioritized list, make a plan for how you’re going to manage each stressor. This plan should include the detailed actions you will take to eliminate that stress. This isn’t the time for “I’ll try” or “I might.” Your plan must outline gradual steps that you will be able to do. If you have $15,000 in credit card debt and are struggling to make the minimum payments, your plan probably should not be: I’m going to pay off my card by next month. Break your overall goal down into weekly goals to help create a manageable plan.

If you’re planning for financial stressors, keep your budget in mind. Don’t commit to putting $100 more towards payments if you can’t find that extra money in your budget. Run through your expenses to see what you can cut. Pay special attention to subscriptions, memberships, and streaming services. You can often find money by eliminating or reducing these costs.

Don’t have a budget? We’ve got you. Download your free budget sheet here.

4. Improve Your Money Management 

 Financial stress is high on a lot of people’s lists. Better money management can help alleviate a lot of it. How are you currently managing your finances – or, are you managing them? Sometimes not fully understanding what’s going on with your money is what’s causing you the most stress. The key to improving your money management is to develop a system that you will stick to. Don’t create more stress for yourself by implementing tools you’ll never use or don’t understand.

Basic money management can include:

  • Building and maintaining a budget. It sounds tedious and a lot of people ignore budgeting. But it is the most effective way to understand where your money is going and how you can better control it. Your budget doesn’t need to be fancy. You can keep a notebook or an Excel spreadsheet. Or grab your free budget tool here
  • Reducing recurring charges – think subscriptions, memberships, and apps. To do this, go through your bank statement at the end of the month. What charges showed up for things you don’t use…or forgot you have? Cancel them and then use the extra cash for wiggle room, to build your savings, or to pay down debt.
  • Paying your bills on time. Missing payments and dealing with late fees add to financial stress. Set up automatic payments or reminders for your bills and be sure to build your budget to cover those charges. Even if you can only make minimum payments, making them on time will keep you on a stronger financial foundation.

Want more money management tips? Check out this 30-minute mini-webinar for 10 tips on improved money management.

5. Build Your Savings 

 Unexpected expenses are a huge financial stressor. CNBC reports that over half of Americans wouldn’t be able to cover a $1,000 emergency expense. You might have heard experts recommending you save 6 months’ worth of expenses. And while that’s a good goal, it’s also a lot of money to save. It’s easy to feel overwhelmed – and stressed – about achieving that.

Instead, start with manageable goals and build on them. Focus on saving up one month’s worth of grocery money first. Then enough to cover your rent or mortgage for a month. Then save up enough to cover your utilities for one month. Repeat for another month and keep building on that until you have 3-6 months’ worth of expenses saved. Breaking it down like this makes it feel much more manageable. Emergency savings don’t happen overnight. Like any investment, it will take time and patience. But even just knowing that you’re building a savings can help to reduce some financial stress.

Curious about microsaving – and if it can help you build your savings account? Find out in this article.

Introduce Positive Behaviors

You have 5 solid tips for reducing the financial stress in your life. And you can apply those tips to other stressors, too. Incorporating other positive behaviors into your daily routine is another way to reduce your overall stress. Consider these ideas:

  • Incorporate exercise. Even adding a walk to your day can help reduce stress by releasing endorphins. The Mayo Clinic also asserts that exercise protects your body from the harmful effects of stress.
  • Organize an area of your home. You don’t have to tackle every room. Focus on your bedroom, your desk, even just the ever-present pile of mail on the counter. Doing so will help you feel accomplished and more capable of managing other areas of stress. For tips on easy organization hacks, listen to our podcast episode with organization expert Colleen Ashe.
  • Make time for the things you love. Walking away from your stress is often the easiest way to reduce it. This doesn’t mean ignoring it. But you should take time with family or enjoying your favorite hobbies. You’ll get an important reminder that stress doesn’t have to be all-consuming. Plus you’ll reenergize yourself to better manage it.

Money plays a significant role in all of our lives. But it doesn’t have to control it. Try these tips to reduce your financial stress.

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