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5 Ways to Reduce Financial Stress

5 ways to reduce financial stress

If your financial situation brings on anxiety, you’re far from alone. Close to three-quarters of Americans reported feeling stressed about money at least once during the past month, according to a recent survey by the American Psychological Association.

Now for a bright spot: Taking control of financial stress is almost always doable. Read on for five action-backed steps for flipping the script.

In this Article

1. Get clear on what’s stressing you out.

To tackle your financial stressors, you’ll first have to identify them. Take some time to think about what exactly is causing your anxiety. It may be one or more of the following:

  • Not having enough income to cover your bills
  • Feeling overwhelmed by debt
  • A lack of progress toward your financial goals
  • A less-than-perfect credit score

Facing your stressors is an essential first step toward financial well-being. It often brings clarity to the situation so you can better understand what you’re dealing with. It also allows you to shape your new financial vision. If, for example, you have debt that feels unmanageable, you can begin carving out a plan for getting debt-free. Keeping that positive end game in mind is important — especially if you write them down in detail. Research shows that people who envision their goals in this way are anywhere from 1.2 to 1.4 times more likely to accomplish them. 

2. Make an action plan for each stressor.

Pinpointing your stressors and formulating your end goal is essential. From there, you’ll want to make an action plan for bringing it all to life. If it feels insurmountable, begin by cutting your big goals into smaller, short-term benchmarks. Let’s say your big-picture goal is to stop living paycheck to paycheck. Your bite-sized action items might look like this:

  • Track your spending habits to see where your income is going each month
  • Clarify all monthly expenses
  • Find ways to increase your income, like picking up a side gig
  • Are you spending more than you make? If so, what expenses can you reduce or eliminate?

When taken together, all these steps should help shore up your financial stability. The key takeaway is that these things rarely happen overnight. Take stock of where you are, then take baby steps to get to where you want to be. Just be sure to track your progress as you go. Doing so allows you to see what’s working and what’s not. In the example above, you might find that cutting your spending too much is negatively affecting your quality of life. In that case, you might have to revisit your budget and make some trade-offs.

 On that note, updating your spending plan is a key part of overcoming financial stress. In fact, those who stick to a budget are generally less anxious than those who don’t, according to the CFP Board.

3. Pat yourself on the back when necessary.

Don’t be afraid to celebrate the wins along the way. Harvard researchers say it appears to ignite motivation to keep going forward. So what does that look like in practice? Going all out with an expensive night on the town probably won’t help your financial stress, but you can look for more reasonable ways to pat yourself on the back. After reaching each short-term goal, you could treat yourself to dinner at your favorite restaurant or indulge in some other motivating reward. Think of it as a simple way to gamify your journey to financial peace of mind.

4. Seek out support.

Going it alone might make things feel harder than they need to be. There’s plenty of research out there suggesting that social support can help us stick to healthy behaviors. When friends and family are behind us and offering encouragement, self-accountability tends to follow.

 Beyond that, you can also look to other sources of support. There’s no shortage of apps and programs to help with things like budgeting, saving, investing and other positive financial habits. Let your unique goals be your guide. If you’re working toward improving your credit, for example, non-profit credit counseling could be a great resource that provides personalized financial tips to help reduce stress. Similarly, the Financial Therapy Association blends financial well-being with mental health to set the stage for behavior change that sticks

5. Safeguard your future.

Once you’re making progress in the right direction, it might be helpful to look back at what led to your financial stress to begin with. Maybe a lack of emergency savings got you caught in a debt cycle, or a spell of unemployment derailed your finances. Whatever it is, be gentle with yourself. The idea is to identify past mistakes so you can learn from them — not beat yourself up over mishaps that are behind you.

 Ask yourself if there are any changes you can make today to help prevent history from repeating itself. This could be simple financial habits, such as meal planning every Sunday to avoid unplanned take-out orders during the work week. The goal is to set yourself up for success going forward.

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