11 Tips to Help Reduce Your Financial Stress

If you’ve ever had the feeling of dread or worry because you knew the monthly bills were coming due, or because you can’t seem to make progress on your financial goals, you’re not alone. Financial stress is real, and like other sources of stress, it can take a toll on your overall mental and physical health.¹

The key to reducing financial stress is working to improve your financial well-being. This can be defined as having control over your day-to-day finances, feeling financially secure, being on track to meet future goals and experiencing financial freedom.²

Here are 11 tips to help reduce your financial stress so you can take back control of your financial life and ease your money worries.

1. Identify the Source

Doing a deep dive into your money situation and its underlying causes is the first step toward reducing your stress levels.

For example, are you worried because you’re living paycheck to paycheck and things are getting more expensive? That’s a valid concern, but you could potentially improve the situation by finding ways to lower your bills or picking up some side income. Or perhaps you might realize it’s high-interest debt that's holding you back from your goals, and you can make a plan to prioritize that debt payoff.³

2. Monitor Your Spending Habits

There’s a reason why the concept of retail therapy exists. Sometimes, people shop mindlessly as a way to feel good, but it often has the opposite effect.⁴ Not having a game plan when you shop — like sticking to a list, comparing prices and looking for deals and coupons — can also backfire.

If you know that you spend beyond your means, do some soul-searching to figure out why you spend the way you do. Are you impulse shopping online out of boredom? Do you spend a lot on brands to impress others? Do you try to show love and affection by buying expensive things for others?

Once you figure out the root causes of negative spending patterns, you can work to set some boundaries for yourself. For example, you might remove one-click payment methods from your shopping apps so it’s not as easy to complete a transaction. Or you could set limits on your personal and gift spending.

3. Increase Your Financial Literacy

Some financial stress could be a result of simply not understanding important financial concepts. For example, learning how interest works might help influence you to borrow less and save more. Likewise, understanding how having strong credit could provide access to the best financial products and competitive interest rates may make you more likely to check your credit status.

Other financial literacy topics to know include how various behaviors impact your credit score, maximizing your tax return and how to leverage different types of savings and investment accounts.⁵

4. Create a Realistic Budget

If you've already monitored your spending patterns, go a step further and create a simple budget (if you don’t already have one). Once you understand and take control of your dollars in and dollars out, it can take away the stress that comes with not knowing if your paycheck will cover your needs.

List out all your fixed expenses (like rent or mortgage, loans and utilities), and estimate your other monthly spending based on how much you’ve spent in recent months (groceries, personal care, entertainment). Add everything up and then subtract from your total monthly income.⁶

The leftover money is how much you can then allocate to your other financial goals (such as paying off debt and long- and short-term savings). Automate your savings so you don’t end up using the extra funds on frivolous items.⁶

5. Build an Emergency Fund

Your first savings goal should be seeding an account that’s exclusively available for emergency needs. Make small, automated contributions with each paycheck into a high-yield savings account that earns interest.

As your emergency fund grows, it can help melt away your financial stress since you know it’s there should unexpected expenses arise. Ideally, you should try to save enough to cover three to six months' worth of bills, but it’s OK to set a more attainable goal when you’re first starting out.⁷

6. Use Financial Apps to Stay on Track

If you're worried about staying on top of all this number-crunching and spreadsheet-making, here’s some good news: There are financial apps that help streamline your finances. They can track your spending, help you set goals and allow you to visualize the progress you’re making.⁸

Try out various tools to find the ones that are most intuitive and useful for your needs. Many apps are free, while some might have a small fee to access premium features. Some can even be shared with a partner or family members so everyone can be dialed into the budget or financial goals.

7. Prioritize Your Overall Health

Living a healthy lifestyle can benefit you in several ways, from feeling and looking your best to preventing chronic health issues that can become costly over time. Part of healthy living is learning how to manage and alleviate stress, which can ultimately improve your mental and physical health, according to the American Psychological Association’s research.¹

But it can take more than just getting yourself on a budget. Healthy eating, regular exercise and quality sleep are all important for setting yourself up for success when it comes to managing stress levels and making smart financial decisions.

8. Manage Stress With a Financial and Mental Health Routine

Building on stress management, bouts of financial strain may occur throughout your life — and they can be worse if you're caught off-guard. Knowing how to recognize and work through those rough patches is important.

Start by keeping tabs on your financial matters, making small adjustments as needed before problems fester. When necessary, rely on mental health strategies — for example, meditation, deep breathing and positive self-talk — for times when things don't go as planned.⁹

9. Look for Ways to Make Extra Money

If money is a constant source of worry in your life, being able to generate some extra income could help take some of the pressure off. Many people have found success in turning hobbies into side projects, seeking a second job or gig work or creating passive sources of income.¹⁰

If you can bring more income into the fold, though, be sure you have a plan in place to put those funds to good use, so it improves your situation — and your stress levels.

10. Celebrate Small Victories

Some financial goals may seem insurmountable when you first begin, such as saving for a down payment for a home, paying down a large credit card balance or retiring early. That’s why it’s good for your psychological well-being to set smaller, incremental goals and reward yourself in some way when you reach those milestones.

You can follow the SMART acronym when setting your goals, making sure you've delineated how it is Specific, Measurable, Achievable, Realistic and Timely.¹¹ Each small victory you achieve can help you stay motivated and feel good about your financial trajectory.

11. Share Your Feelings With Someone You Trust — or a Professional

Keeping your feelings and worries bottled up can make stress worse, but you may not feel comfortable speaking about money troubles with just anyone. However, if you do have a friend or relative who is a good listener and might provide sound financial advice, opening up may provide some relief. ¹²

For serious money concerns, seeking professional, unbiased guidance can help you get back on track. Money coaches and financial therapists provide a good balance of financial tips and wellness advice, helping you to both work through your feelings about money and come up with a smart financial plan.¹³

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Author Bio

Dawn Papandrea is a journalist with more than two decades of experience covering personal finance and consumer issues. She has written for leading financial publications and organizations, including U.S. News & World Report, Investopedia, Bankrate and others.