When life throws you a curveball and money is tight, the uncertainty it brings can make you feel stressed. Most of us prefer stability and predictability in our lives. But when things don’t go according to plan, it’s important to find ways to cope with money stress.
Stress is a response that’s deeply hardwired in our brains, so it’s impossible to eliminate it completely. When it gets out of hand, though, you need to do something about it to regain your inner balance.
According to a recent survey by the American Psychological Association, nearly 65% of American adults reported being stressed over money. It’s one of the most common sources of stress across the country.
Regardless of your current level of stress, it’s in your power to make things better. Here are five easy strategies to help you deal with financial stress and anxiety.
1. How to deal with money worries: Accept that change is a fact of life
Go easy on yourself and accept that change is the only constant in life. It might feel like a difficult thing to recognize right now, especially if you’re hurting financially and you’re going through an emotional rollercoaster.
Take a deep breath. Whatever’s afflicting you, it’s likely something that’s happened to others before, and surely they survived! Move on and don’t dwell on things you can’t control. Replaying past events in your mind and picturing how things could’ve been different won’t help lower your stress.
Jobs come and go, financial loss can be dealt with, and debt can be managed. What’s important now is that you focus on the things you can control to tackle with your money worries. It’s well within your power to do something about your current situation to change it for the better.
Your mind is a powerful tool
Break your current mental pattern and believe you will come out on top of your current predicament. Henry Ford once said whether you think you can, or you think you can’t (do something) – you’re right. Attitude plays a key role in changing your current circumstances.
People sometimes associate change with sacrifice and pain. But that mindset isn’t helpful. Instead, enlist the power of your mind to change your attitude and follow through with the changes you know you can make:
- Focus on the fact that your current stressful situation will come to pass.
- Visualize yourself overcoming your current troubles, and
- Believe you’ll find the resources you need to achieve your goal.
2. Tackle the source of money-related stress
One way you can ease your money worries is by addressing the source of your stress directly. When money is tight, make a budget, come up with a plan to cut back expenses, and look for ways to expand your income.
Make a budget and stick with it
A budget is an essential tool to help you manage your available cash and put you in command of your money. As such, it‘s critical that you put one together and follow it.
In coming up with your budget, it’s important that you make a realistic assessment of your income and expenses. Take your time to go through your bank statements and review all of your monthly expenditures.
Sticking with a budget takes willpower. If you find yourself tempted to go over budget with a “nice-to-have” expense, take your attention off of it. Break that mental pattern; distract yourself and forget about it. Remind yourself why it’s important to cut back and push through.
Once you’ve cut back expenses and looked for ways to expand your income, you should have some extra cash. Use it to help you ease your financial worries and cope with your stress.
» Further reading: Develop a debt repayment budget with our Shed Debt Faster guide.
Cut back expenses
Start by listing all of your monthly expenses and categorizing them into fixed and variable. Fixed expenses are those which are difficult to cut back in the short term, and include items such as your car payment, insurance, mortgage or rent.
Variable expenses, on the other hand, are expenses that you can readily control and modify such as groceries, entertainment, or a holiday trip, for example.
As you categorize your expenses, you’ll find that some of them won’t be easily classified as fixed or variable, since their classification will depend on your personal situation.
For example, if you drive to work, you’ll find that gas is a relatively fixed expense. On the other hand, if you take public transportation to go to work, then gas will be more of a variable expense for you.
Turn your attention to your variable expenses and review each item:
- Identify your non-essential expenses
- Decide which ones you can eliminate altogether
- Cut back those expenses you can’t eliminate
- Find cheaper alternatives for all your variable expenses
Expand your income
You’ve cut back expenses, but your income is still falling short. Now what? There are several things you can try to expand your monthly income.
- Find a part-time hustle. If a second job isn’t an option for you, you can find plenty of ways you can make extra money from home.
- Negotiate a raise. If you’ve been doing well at work, but haven’t had a raise in a while, ask for one. It’s a win-win for you, no matter the outcome. If you get the raise, great; if you don’t, then at least you’ve learned that perhaps it’s time to look elsewhere for a position where your skills will earn you more.
- Extend your work hours. If you’re paid hourly, look for extra hours and work overtime, whenever possible.
- Find a higher-paying job. You owe it to yourself to make sure you’re being paid competitively. If you aren’t, look elsewhere.
- Get a second job. Working a second job is another option to raise the necessary cash. If your current job doesn’t leave you with much available time, consider a part-time job, or depending on your skills, freelancing.
- Sell spare assets. Selling jewelry or a fun toy like a motorcycle won’t increase your monthly income, but it’s a fast way to help you raise cash.
- Downsize. If you rent your home, consider moving to a cheaper place when your lease is up for renewal. If you own, and depending on your financial situation, selling and buying a cheaper place to free up cash might be an option.
» Further reading: 21 Simple Ways to Make Money Online Faster.
3. Develop a sense of control to curb financial anxiety
Mental drills to reduce financial stress
Shifting your mindset will go a long way towards helping you lower your stress. It’ll help you avoid procrastination and keep you engaged with your goal. Your mind is a powerful ally, so get into the right mindset first.
Picture being in control
Here’s one quick and simple exercise that‘ll help you cope with stress. Think of a skill or activity that you’re really good at. Now recall a particular time when you performed that activity really well. Picture how much in control you were then. Remember how good it felt.
This mental drill can help you strengthen your confidence muscles when facing a stressful situation. It’ll remind you what being in control feels like and help you summon the determination you need to overcome your current troubles.
Change your inner dialogue
Another helpful exercise is to mentally address yourself in the third person as you deal with your sources of stress. Doing this puts some distance between you and your financial burden and helps you think through decisions more objectively.
For example, if a good friend of yours was going through your current situation, what would you recommend she does? Surely, you would find some helpful words.
In all likelihood your tone would be positive and you’d try to provide advice you thought helpful. Similarly, when dealing with your own stressful circumstances, address yourself by your first name and in a positive, can-do tone.
4. Deal with financial anxiety through exercise
Another way to cope with money-related stress is through regular exercise. According to the Mayo Clinic, exercise can act as a stress reliever. When you exercise, your brain releases feel-good chemicals like endorphins and dopamine. Virtually any form of exercise will do and you don’t even have to spend any money to do it.
Go out for a jog, do yoga at home, try body weight exercises, or do something else that gets your body moving. To make it more enjoyable, pick an activity that you love. It’ll drop your tension and improve your ability to sleep. The health benefits that come with exercise are a nice plus, too.
Check with a doctor first if you haven’t exercised in a while or have other health considerations. Build your stamina slowly, taking care not to overdo it and pace yourself.
You’re more likely to stick to an exercise routine if you fit it in your schedule. It’ll add consistency to you workouts. Try exercising with friends or peers to keep you motivated and committed.
5. Realign your relationship with money
Our relationship with money doesn’t need to be complicated. Planning for the next eventuality, living within your means and avoiding financial temptations can help you keep financial stress at bay.
Build an emergency fund
Unexpected emergency expenses are part of life and are bound to pop-up when least expected. It’s best to meet them with cash you’ve stashed away in an emergency fund rather than new borrowing.
Here are some tips to get you started:
- Start now. There’s no better time to start building your savings than today. Take at least one action step. Get moving in the right direction and add a savings line to your budget.
- Any amount will do to get you started. It doesn’t matter if it’s just $20 a month; what’s important is that you start building a savings habit.
- Increase what you “pay” to yourself later on. Once you have more available cash, you can increase the amount that you “pay” into your savings account.
- Don’t forget to set a savings goal. Review past unexpected expenses that caused you financial hardship. Round that number up to the nearest hundred and set it as a savings goal.
- Repeat. You can never have too much in savings. Once you reach your initial savings goal, there is no reason for you to stop doing it. Increase your savings goal and keep this financially healthy habit going.
» Related: Compare savings accounts quickly with this tool.
Walk away from social pressures to spend
Keeping up with the Joneses may provide people with gratification today, but it comes at the expense of their financial future. It’s a behavior driven in part by the emotional meaning they give to money.
That’s why vanity purchases are so alluring and tempting. They’re something we do sometimes because we want to feel good now, not at some point in the future, even if later on we regret increasing our debt load. And that’s a bad reason to go into debt.
It’s best to stay away from social pressures to spend. Your net worth or perceived net worth is not your self-worth.
Live frugally
Frugal living is not about living miserly or on the cheap. It’s about realigning your relationship with money. It’s about you being the master of your money and not the other way around.
Instead of spending time wishing they had more things, frugal people spend time thinking about how they can get more out of what they already have. It’s also about being secure with themselves and not with what they have.
Developing a frugal mentality won’t happen overnight, but you can start nurturing it. You can begin by choosing a lifestyle that allows you to live within your means.
Bottom line
You can’t avoid the unexpected, but you can choose how you react to it. While some stress can be helpful, too much can impair your wellness and interfere with your life. Some simple things you can do to help you cope with money-related stress are:
- Accept that change is a fact of life
- Tackle your source of stress
- Develop a sense of control
- Reduce stress through exercise
- Realign your relationship with money
