How to Deal with Financial Stress? A Complete Guide

While travelling in East Asia, I heard a hubby quip angrily to his wife. Though the man was visibly angry, he seemed to have a sense of humour and said: “Even god almighty has financial stress because he has to satisfy us mortals.” I couldn’t help but stop and have a good laugh with my companions on the trip. We thanked the confused man and sped away to our sightseeing.

Yet, upon returning to the hotel room later that day, I couldn’t help but reflect on these words: “Even god almighty has financial stress because he has to satisfy us mortals.” Though these words were mentioned in anger, they held a profound meaning for mankind.

Meaning, most of us humans suffer from financial stress. And the worst part: we often are unaware of how to deal with financial stress.

Personally, I suffered from financial stress too, and the condition stubbornly persists. However, with some self-help and reading, I have managed to alleviate and to some extent, eradicate the short-term and long-term effects of financial stress.

Surely, you too have some level of financial stress. Who doesn’t? Therefore, if you’re interested in knowing my unique tips and tweaks on how to deal with financial stress, continue reading. Maybe this simple guide can relieve your financial stress to some extent.

The first step towards addressing financial stress is to identify the reasons. Personally, I have a healthy income and relatively fewer expenses. Ideally, financial stress shouldn’t exist in my case. Yet, I suffer chronically.

Here are some simple ways to identify stressors or causative factors of your financial stress.

Analyzing Financial Stress

Globally acclaimed spiritual teacher and author, Dr. Eckart Tolle famously said: “Stress is being ‘here’ while wanting to be ‘there.” In these few words, Dr. Tolle also sums up the main cause of financial stress. And that is our financial goal. I will explain further.

1. Unrealistic Financial Goals

Most of us set unrealistic financial goals or have zero financial ambitions. Unrealistic financial goals mean wanting to have a million dollars but not knowing the ways and means and even when to reach that mark. Others don’t even want to reach the million-dollar mark: they’re always cribbing about having less money but have no ambitions to achieve it.

Having unrealistic goals or even no ambitions is the surest stressor. It’s like walking on a street without knowing where you wish to go. You end up wasting vital resources such as energy and time and get no results from this expense. This leads to intense frustration that cascades later into full-blown financial stress.

Also read: How to set financial goals

2. Excessive Debt & Credit

Excessive debt and credit are another major factor that causes severe financial stress. It’s well known that Americans love credit cards. As a matter of fact, an adult American holds at least two credit cards while some have as many as nine, depending on which source you tap.

Credit cards are fine as long as you can repay dues on time and that too, fully. If not, the Annual Purchase Rate and interest on credit cards continue to burgeon till you’re neck-deep in debt.

Unpaid student loans, home mortgages, vehicle finance, and buying fancy gadgets and appliances in instalments are also some common ways for Americans to pile on loans and credit.

Unless your income justifies and enables timely repayment of all these debts, you might soon find that all your income is useless. A major portion of your income is eaten up by debt servicing. This scenario is a recipe for financial stress preceding a total financial disaster.

Also Read: How To Use a Credit Card? 12 Tips for First Time Users

3. Reluctance to Invest

This might shock you: most Americans are reluctant to invest their money on high-returns plans and prospects such as stocks, Mutual Funds, Exchange Traded Funds, cryptocurrencies, foreign currencies, commodities and other such assets.

Instead, they park their hard-earned income in bank accounts that pay minimal interests, living under the myth that their money is safe. Unfortunately, factors such as Time Value of Money and inflation steadily erode the purchasing power of their money.

There’re superb opportunities available for Americans to invest.  You could use apps such as Acorns and Robinhood that enable you to start investing with as little as $5 and own fractional shares.

Over a period, such small and large investments add up to a large amount of money and can help alleviate a large chunk of financial stress.

4. Less Money for Retirement

The cascade effect is that anywhere between 30 percent and 90 percent Americans don’t have enough money to live with during their golden years or post-retirement. This forces a lot of senior women and men to work well into their 70s.

Furthermore, any savings can also be depleted due to out-of-the-pocket medical expenses that might arise during their golden years. It’s worth knowing that medical insurance doesn’t cover all your expenses.

Furthermore, a large number of Americans also don’t diversify their retirement portfolios and stick to conventional plans such as Social Service and others. This means, their wealth remains limited and returns are restricted.

Fearing not having sufficient funds post-retirement is one of the major factors of financial stress in the US. You can address this situation while younger and with some diligence.

Also Read:

• How to Retire Early: Best Early Retirement Strategies
• How To Make Money In Retirement? 5 Creative Ways

5. Overspending

Millions of Americans are into overspending. This means, they spend more than they earn or at times, borrow money to splurge. There’s a sort of spending pandemic that the US is witnessing nowadays.

The cause: extreme loneliness in the post-Covid-19 pandemic era. We learned isolation and self-quarantine during the pandemic to protect against the contagion. However, now a lot of Americans isolate themselves voluntarily and for no reason.

The fallout of such loneliness is overspending. Millions of women and men seek some sort of gratification through shopping. Online shopping has become an addiction of sorts, if we believe market experts.

Overspending means lesser or no money to save and, in some case, also paying others. This is a major factor for financial stress, especially among American millennials. Unless the pandemic of loneliness and overspending aren’t tackled, you might suffer from financial insecurities and related stress.

Also read: How to Make a Budget Plan (15 Budgeting Tips)

Now that we have explored some of the main stressors and causes of financial stress, let’s look into its possible remedies.

How To Deal With Financial Stress?

Honestly, there’s no panacea for financial stress and nor a one-size-fits-all solution. That’s because we’re humans and have our unique issues and problems to grind.

At the same time, we also have a few assets such as our education and skills. Using these assets, we can effectively cope with financial stress, find buffers and ways and means to counter the evil.

Here’re some of the steps to counter financial stress that you might find useful.

1. Reduce Debt and Credit

I can clearly understand that asking you to wipe out or reduce debt and credit sounds like a proverbial tall order. It’s not, I can assure you. To reduce and eliminate debt, identify those that’re gnawing away the largest chunks of your income. Make a strategy to clear these debts at the earliest.

Obviously, that involves stepping up repayment. You can easily start repaying more money and reducing the debt till its extinct by cutting down on your expenses. Create a strict budget for household expenses and adhere firmly.

The money saved can go for reducing your debt burden. A few months of austerity is definitely worthwhile for leading a financial stress-free life.

Also read: How To Pay Off Debt Fast With Low Income – Easy, Effective Tips!

2. Freelancing and Side Gigs

All of us have 24 hours in a day and not a second less or more. Of these, we spend eight hours on the vital function called sleep and another eight to 10 hours on work, including the weekday commutes. This leaves us with as many as six extra hours for rest and recreation.

Unfortunately, a lot of us waste this precious time by indulging in gainless activity such as watching videos, gossiping, playing on mobile and other such pursuits. Instead, we can spend at least two hours from this time to work freelance or perform side gigs and earn an extra income.

This is an activity where your skills and education could be leveraged. Having an extra income ensures peace of mind and a fatter bank balance, money to invest and buffers for emergencies.

Also read: Top Freelancing Jobs | Freelancing Job Opportunities From Home

3. The 50-30-20 Rule

The 50-30-20 rule was created by Senator Elizabeth Warren and her daughter, Amelia Warren-Tyagi. Regardless of your political inclinations, you can safely use this rule to optimize income and save money. The 50-30-20 rule is very simple.

It states that you should allocate 50 percent of your earnings to necessities such as food, clothing, shelter, education, utilities and telecommunications, transportation and other basics that a modern human needs. The remaining 30 percent should be stashed away to meet our “wants” or things that we yearn for while 20 percent represents savings.

Actually, this rule is superb because it sets a tone for stepping up savings and making the best use of the 50 percent of income for expenses. You needn’t spend from the 30 percent of the income earmarked for wants and luxuries. Instead, you can save some or all of that amount too and add it to the 20 percent money meant for savings.

4. Maintaining Superb Health

This might seem easy but trust me, it’s the most difficult thing to do when you wish to get away from financial stress. Maintaining superb health isn’t the proverbial cake walk as you might image.

Instead, it takes dedication and effort. Nowadays, most of us are hooked to a sedentary lifestyle. We barely exert physically and depend on machines such as cars and washers to do our tasks.

Instead, start walking and doing a few manual tasks. Exerting burns away excess fats and streamlines blood flow. It can help lower bad cholesterol levels and leave you feeling fresher and also younger. Maintaining superb health means you would have zero or fewer out-of-the-pocket medical expenses and live without financial stress.

Also read: How to Eat Healthy on a Budget?

5. Create a Corpus Fund

Yes, create a corpus fund. You might wonder what a corpus fund means. In simple words, it means an emergency fund where you stash away money and use it only during extreme crises such as a medical emergency or natural disaster.

Remember, it’s not easy to borrow money from relatives and friends and even more difficult to get money during difficult times. You have only you to depend upon for funds. In such cases, your credit cards or bank balance might not support more expenses.

In such a case, an emergency fund is always useful. Stash away coins and change as well as some cash daily. Open a savings account at a bank or credit union to keep this money. Never withdraw this money. A corpus fund is a sure way to eliminate financial stress to some extent.

These five remedies should help attain some level of respite against financial stress. You can add more creative ways. The focus should be on savings and investments, if you’re serious about tackling financial stress and eventually ridding it from your life.

Evil Effects of Financial Stress

If you’re one of those millions around the world afflicted by financial stress, using all the ways above could help immensely. Unfortunately, like most types of stresses, financial stress also comes with silent, hidden or dormant symptoms.

Meaning, most people remain blissfully unaware of their financial stress until it’s too late and the condition worsens enough to warrant professional intervention by a psychiatrist.

Here're some symptoms of financial stress:

• Frequent headaches
• High or irregular blood pressure
• Excessive perspiration even when it’s cool
• Losing temper quickly
• Lack of appetite for long periods
• Sleeplessness
• Propensity towards escapism through alcohol and drug abuse
• Lack of personal hygiene
• Overall disinterest in work and life

The symptoms are common to other ailments too. Should you suffer from one or more of these symptoms, I strongly suggest that you meet a counsellor or your healthcare professional and seek help. Left untreated, financial stress can burgeon as anxiety and depression needing long-term care and medication.

Wrap Up

Hopefully, these few steps on how to deal with financial stress would help you live a happier life. Its worth remembering that we frail humans are depending on money for almost everything.

Hence, it’s natural that we would face money problems either ways- regardless whether we have money or not. Stress is a natural reaction of the brain to things that demand our constant attention.

However, its fairly easy to eliminate or at least, reduce financial stress to an extent that it doesn’t affect us severely. Using the tips and tweaks I have given, you could break free from financial stress, at least to a great extent.