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The Top Causes Of Financial Stress and How To Handle Them

Worrying about money goes back as far as money itself. Keeping it safe from thieves and unfair taxes, and of course, not having enough money or resources is an ancient stress. So what are the top causes of modern financial stress?

Depending on your age group these financial stressors are among the most common. Keep in mind that people worry about money even when they are seen as successful with earning and saving.


Not enough saved for retirement

Job worries

No emergency fund (no safety net)

Feeling stuck

Health insurance

Medical bills

Stock market fears

The list could go on and on but those worries are found on surveys of Americans again and again. The common theme is stress that comes from a lack or perceived lack. Not having health insurance is a lack. But so is the fear that you will lack sufficient funds to last during retirement. Different spectrums of finance, yet both produce stress.

*72% of Americans report being stressed about money (American Psychological Association).

Financial Stress of Debt

According to Business Insider, Americans average $52,940 in debt. That statistic includes mortgages, by the way. Regardless of what your payments are for, if they are almost as much as you earn, that’s where financial stress wreaks havoc. You can feel as if you’re on a hamster wheel, never making any progress.

And when you are deeply in debt things can spiral since you may have to pay higher interest rates as your credit limits are reached. Or worse, your credit score takes a hit when you are late on just one payment.

It’s obviously easier to stay out of debt than to get out. Once you are in over your head you will have to work incredibly hard to get out. This adds to family stress as mom and dad work extra to try and improve their position.

Avoiding debt can be as simple as couples agreeing to only borrow money for certain big purchases like a home. Or putting a limit on debt to income ratio.

Getting out of debt can involve:

● Working overtime

● Big budget cuts at home

● Getting a second job

● Starting a small part-time business

● Credit counseling

Not Enough in Retirement Accounts

This is a tough one since there is no specific amount that Americans are supposed to save before they retire. Each couple, each individual is unique. Clearly, it is better to have as much saved as possible before quitting work for good though.

Being unsure if your savings will last through a 25 - 30-year retirement adds financial stress. That kind of stress has caused many investors to take unnecessary risks that end up costing them. Trying to time the market or get in on the latest trend are a couple of examples.

Slow and steady investing is the surest way to build wealth and avoid worries that cloud your financial judgments.

No Emergency Fund = Financial Stress

No safety net is a real reason to worry. $500 - $1,000 set aside can keep you from adding to credit card debt should the car need repair or you get an unexpected plumbing bill.

Being without an emergency fund can cause more job worries as well. Living paycheck to paycheck with no savings at all can keep you on edge because losing your job would then be a disaster. Having money in the bank to pay the bills for three to six months helps you sleep better at night even if your job was eliminated.

The feeling of being stuck is also connected to having no emergency fund. It’s hard to have much hope and see any chance for progress if every bit of your paycheck goes toward bills. Just knowing you can set aside some portion of your income for a rainy day reduces financial stress. Because you can see the savings grow and that gives you momentum to save more.

*Nearly 80% of Americans have an emergency fund but less than half of those savers could cover 6 months of expenses.

Worries about Health Costs

One of the biggest financial concerns for Americans is the cost of health care. Health insurance rates climb yearly and medical bills are the reason for the majority of bankruptcies. Even with decent insurance, the remaining balance of a hospital stay can wipe out years of savings.

Health care costs only get higher as we age. No kidding, right? Doctor visits become more frequent and prescriptions are more likely to be needed the older we get. It is stressful enough to need a doctor. Then tack on copays, confusion over generic medicines and in-network physicians, and the worries pile up.

Our tips coming up will also help you manage these financial stresses.

Stock Market Stress

One sure way to get stressed out over your savings is to monitor the stock market like a hawk. You will think the sky is falling every other day. But you’ll be on cloud-9 some days.

The key is to relax and realize you are in this for the long haul. Over time stocks and mutual funds generally climb in value. It’s not a straight line upward though. So you have to be prepared for dips but not overly focused on downturns.

Nest eggs are not created in a day. And you’ll scramble your brain worrying about the non-stop ticker that reports on minute-by-minute ups and downs.

Financial Stress Relief

Stress is part of life and so is money. I don’t see that changing. So the only solution to this stress is to manage it. When it comes to financial stress, the best way to do that is to have a plan.

That is what financial planning is all about. Having a plan to deal with what could happen down the road. And this increases the chance that what you want to happen… will happen.

With debt, you can plan to avoid it and that will assure you stay out of trouble. But once you’re in debt, you must make a plan to get out. And that can involve:

Drastically trimming your household budget

Getting a second job

Asking for a raise

Starting a small business (part-time)

Attacking one debt at a time, using focus to work your way out

Job Worries and Retirement Savings

The way to relieve job stress and concerns over not having enough in retirement savings? Give yourself more options. With work, you can always add skills that make you more valuable to the company or another company. This works great when workers are in short supply. You will be surprised how easy getting a raise is when you ask.

This applies if you own a business too. The higher-level services you offer, the bigger profits you’re likely to make. For example, a certified public accountant commands higher fees than a bookkeeper.

As for retirement savings, you can ease your mind by not having all your eggs in one basket. Common wisdom. But also try to add revenue streams that give you “extra” money to invest. Segmenting your income like this makes it easier to invest in various assets. An example would be using bonuses to invest in real estate or REITs (real estate investment trusts). Or take overtime pay and automatically put it into a Roth IRA.

Building wealth by giving yourself more options is a path to a more peaceful financial life.

Stress of Feeling Stuck

To lower your stress about being stuck and having no emergency fund, it’s about small steps. Progress produces more progress so don’t discount even tiny wins.

Keep a financial journal daily

Write down goals and achievements - post them where you see it daily

Many people find positive self-talk is a big help

Also, it’s crucial to “buy in” to the fact that you can improve your situation and build an emergency fund. The “buy-in” lets your brain believe doing better is possible. There’s science showing if we believe in treatments doctors prescribe then they are more likely to work. The same effect applies to systems you use to make financial progress. Believe it will work and your chances increase that it will.

Taking Time for Mind and Body

On the same note as buying into a system to improve your financial health, this applies to our physical / mental health. Many health insurance plans and companies now offer incentives to join gyms. This is proof that it saves them money because it improves our health.

Imagine how much healthier Americans would be if we dedicated 30 minutes a day, every day, to doing something good for our bodies / minds. That could be as simple as:

● Brisk walk with the dog

● Hiking

● Treadmill

● Meditation (or NSDR)

● Gym

● Slow / healthy meal preparation

● Yoga

● Simple stretching

● Martial arts

● Walking in nature (parks inside urban areas work too)

● Swimming

All those activities promote physical health and, you guessed it, relieve stress. Hard physical activities reduce stress but just moving your body can have similar benefits. Better health, less stress, and fewer costly trips to the doctor and the pharmacy make physical activity a no-brainer.

Why Worry about the Market?

Financial stress about the stock market is natural. As an investor, you’re depending on it to increase your savings so you can one day retire to the good life. But there are so many moving parts that it is like worrying about the universe - asteroids, solar flares, on and on. We can’t control every little detail.

And that’s ok. Because with a long-term approach we can control the right things. We can make a financial plan, choose wise investments, then monitor and adjust those investments regularly. Statistics don’t lie - if you stay invested for the long haul, you should reap the benefits the stock market was designed to produce.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.

This material was prepared for Eric Powers use.

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