Managing Stress From Financial Anxiety
The current economic climate has Americans worried about their finances. Here's how to manage stress from economic anxiety and stay in control even when things look bad.
August 23, 2022
Between slow economic growth, surging inflation, and volatile stock markets, there are plenty of reasons for Americans to feel anxious about their finances right now. Unfortunately, economic anxiety can cause a great deal of physical and mental stress, and can even take a toll on your overall health and relationships.
Luckily, there are a few proven strategies you can use to manage financial stress and stop it from taking over your life.
Americans and economic anxiety
Money has long been one of the leading causes of stress in the U.S. Even before the COVID-19 pandemic and the resultant economic fallout, research shows that a sizable proportion of American households were already concerned about their personal finances.
A 2018 study by the George Washington University’s Global Financial Literacy Excellence Center (GFLEC) and FINRA Investor Education Foundation found that 60% of U.S. adults between the ages of 21 and 62 indicated feeling anxious when thinking about their personal finances, and 50% reporting feeling stressed when discussing their finances.
Recent economic difficulties, such as high inflation and swinging stock markets, mean that even more of us are facing significant financial uncertainty. A recent report by the American Psychiatric Association shows that Americans' worries about the economy intensified in June, with 87% saying they were anxious or very anxious about inflation, an 8% increase from the previous month.
The report further shows that financial worries top nearly all other types of worries in the country. Americans (51%), for example, are more concerned about a potential loss of income (51%) than gun violence (35%) or a natural disaster (29%) affecting them.
How can economic anxiety affect me?
Economic anxiety and the resultant stress can affect you in a variety of ways, such as:
Lack of sleep. Most people experiencing financial stress often have trouble sleeping. It’s hard to get sleep if you're constantly worrying about whether you'll still have a job next month, whether you'll be able to make your rent or mortgage payment or even have enough cash to buy food for your family.
Dread and panic. Economic anxiety means that even small, everyday actions like opening bills can trigger feelings of dread and panic.
Weight gain or loss. Money-related stress can disrupt your appetite, causing you to overeat or skip meals, leading to the gain or loss of weight.
Relationship problems. People suffering from economic anxiety and stress are often irritable and quick to anger. This can lead to frequent arguments with partners. Some might withdraw from their partners or completely lose interest in any form of intimacy.
Work problems. The effects of economic anxiety can spill over into the workplace. People who are financially stressed or anxious are more likely to miss work and be less productive.
Social withdrawal. Economic anxiety may also cause some to retreat from friends and social activities for fear of spending money or simply not having enough to cover activities that friends want to take part in.
Unhealthy coping behaviors. People experiencing financial anxiety and stress may, unfortunately, resort to unhealthy coping mechanisms such as smoking, drinking, using drugs, and gambling. Some may overspend to try to make themselves feel better, or may completely ignore their personal finances because they feel like there’s no hope.
How to manage stress around economic anxiety
Address your primary stressor
Identifying the primary cause of your worry or anxiety is usually the first step to getting rid of financial stress. What’s the one main thing that keeps you awake at night?
Maybe you are currently living paycheck to paycheck and are worried about having enough money to cover unexpected bills. Perhaps you’re saddled with massive credit card debt and are concerned about repaying it.
Once you know what the primary source of your financial anxiety is, you can begin to work on a plan to address it.
For example, if you are carrying multiple high-interest credit card debts, consolidating them into a single loan using an app like Tally✝ could help you save money on interest and pay off the debt faster.
Create a financial plan
A good financial plan can reduce financial uncertainty and thus lower stress and anxiety. One of the best ways to plan for your finances is with a budget.
Start by creating a spreadsheet to track your income and expenditure. Then sit down and see where you can cut back. Maybe you can cook at home more and eat out less to save money. Perhaps you can cancel some of the streaming subscriptions that you don’t use as much or switch to less costly options. Or maybe you can start shopping in bulk or buying generic brands instead of name brands when you visit the supermarket.
After that, set ideal amounts for how much you should be spending each month going forward. The goal here is to make sure that your expenses are lower than your take-home pay. Put any funds that you save toward building an emergency fund or be put in a savings or investment account to grow.
Once you’ve created your budget, try to stick to it. A budget will make you feel more in control of your finances, and that means less stress and worry.
Avoid reading too much into the news
If you're someone who struggles with financial anxiety, it's important to be mindful of the news you consume. In times of economic uncertainty, for example, you are likely to see a lot of alarming and sensational headlines about financial markets. Such headlines will only heighten fear and anxiety.
To avoid this, focus on getting your information from trustworthy sources, and take a break from the news if it starts to feel overwhelming. When you read or watch the news, stick to the facts and resist the urge to view everything as doomed.
Instead of focusing on things you can’t control, try to focus on things that you can, such as your budget.
Focus on the long-term
Focusing on the long-term is another useful tactic for coping with financial anxiety and stress. If you’re an investor, for example, that means keeping your cool rather than panic-selling when markets drop.
One thing that can help is to remember that while the market can go up and down in the short-term, in the long-term, it has an upward bias. Indeed, each time the market has fallen, it has always recovered to set new highs, demonstrating that focusing on the long-term almost always pays off.
Work with a professional
If the stress of financial anxiety seems too much to deal with on your own, consider seeking the services of a financial therapist—a licensed professional who assists people in financial planning and in dealing with the emotional aspects of finances.
A financial therapist can help you understand your relationship with money and develop strategies for coping with some of the negative emotions it causes, such as anger, anxiety, and stress. Being in control of your emotions can make it easier to set and stick to a financial plan.
Don’t let economic anxiety ruin your life
You’re not alone if the current economic environment has you feeling anxious about your finances. Don't let stress from economic anxiety ruin your quality of life, however. Use the tips above to stay in control and keep negative emotions at bay.
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†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.