5 Ways to Deal With Financial Stress and Improve Your Finances

Between work, kids, bills, and debt, dealing with financial stress is not uncommon. Money is one of the top causes of stress; financial stress and depression are real. These are even bigger sources of stress when your finances change often or you struggle to make ends meet.

It’s important to keep in mind that worrying solves little. Knowing how to overcome financial problems is a vital first step on the path of mastering your money.

Paying off debt, saving more money, saving for retirement all have clear benefits. Dealing with financial problems such as these can also help you to enjoy life more.

If you want to deal with financial stress but don’t know how or even where to start, relax. It can be done – even when living paycheck-to-paycheck. Here are five ways to manage financial problems and take the first steps towards becoming financially stable:

1. Get on a Budget to overcome financial stress


The first thing I recommend to anyone coping with financial stress is to create a budget. A budget is a spending plan that tells your money exactly where to go rather than wondering where it went.

A budget can help you organize your finances and decide how you’ll realistically spend and save money. Knowing your plan can lead you to feel less financial stress.

To create a basic budget, start by adding up all your monthly income and listing out monthly expenses. You want to make sure your expenses don’t exceed your income and this may mean making some adjustments. You can check out our in-depth guide on how to make a budget to get started.

If a creating a budget sounds overwhelming, you get a lot of the same benefits from tracking your spending. When you track your spending, you write down everything you spend. This lets you see where your money is going and helps you decide what you can live without.

When tracking your spending, you can write down your purchases with pen and paper or you can use a service like Tiller to do it for you.

Tiller connects to your bank and automatically pulls all of your transactions and puts them in a Google Sheet. This lets you go through your spending and find potential savings opportunities.

Tiller is free for the first 30 days and $5 per month after that.

Find a method that works for you and stick with it. Budgeting and tracking your spending gives you knowledge which then gives you power to successfully handle financial stress.

2. Increase Emergency Savings


Having enough money saved provides a sense of financial security. When you feel secure, you’re less likely to have financial stress. I know that I feel nervous when I lose a source of income or am faced with an emergency expense and don’t have enough savings to cover it.

It’s no secret that the average person can’t afford to cover a $400 emergency, but the problem is that unexpected expenses come up all the time.

Since it’s not a matter of if and more a matter of when, you want to make sure you are financially prepared by saving enough in your emergency fund and other savings accounts.

Try to have at least three to six months of expenses saved in your emergency fund at all times. If you can’t afford to set that much money aside, start slow and try to save your first $250. Once you have that $250, save another $250 by stashing away whatever money you can. $500 should cover most emergencies and by having it, you’ll be able to cope with unexpected financial stress.

Many online banks let you start with little to nothing in a savings account. CIT Bank, for example, lets you start with as little as $100 and pays 1.55 percent on your cash – more than 20x the national average.

3. Stop Buying Things You Can’t Afford


Another thing you can do to eliminate financial stress is to simply stop buying things you can’t afford. I know it sounds easier said than done. But if you commit to living on a budget, you can fix your overspending issues.

It’s easy to make impulse purchases when you’re out and think you can afford something. Then, later, you may realize you overspent. That realization can overwhelm you if now you can’t afford other expenses that are actually important.

When it comes to borrowing money and using credit cards, it may seem that you can afford the minimum payment. That doesn’t always mean you can afford to take on the other financial implications of the item.

Let’s take buying a car for example. Say you want to get a really nice car and your limit for the monthly payment is $450. You finance a car with a monthly payment of $445. Great, right?

Not really. Did you know that interest may eat up a noticeable chunk of your payment, especially in the beginning? You also have to pay more for full coverage auto insurance, frequently put gas in the car, and pay for regular repairs and maintenance.

To top it off, you may be looking at a five to seven-year repayment term of $445 per month – which is close to the average car payment today.

In order to make the monthly payment seem lower, lenders are willing to stretch out the repayment term several years. When you look at it this way, maybe you can’t actually afford the car after all.

It’s important to look all your non-essential expenses this way. Rather than only considering how much it will cost you today, consider how much it will cost you long-term and what you may have to give up in order to pay for it.

Also, be mindful of your budget. Get creative about cutting costs by buying used, DIYing, or simply going without certain items. The less you have, the less there is to worry about.

4. Show Gratitude


Being grateful is something simple that you can do to change your outlook on life and your financial situation. Focusing on what you don’t have and how you’re going to attempt to get it can lead to stress.

Instead, take a look around and acknowledge everything you have to be grateful for. I was challenged to do this recently when planning my husband’s birthday.

We don’t exchange gifts much throughout the year so we tend to go all out for birthdays and holidays. When I asked my husband to give me details on what he wanted to do for his birthday and gifts he wanted, it surprised me to see that he kept it simple and basic.

He actually told me he wanted me to bake him one of those $0.99 box cakes that I make occasionally. Surprised by his answer, I asked him if that was it.

I instantly felt my stress levels deplete. Usually around birthdays, we have to plan a budget, work extra hours, and save more to cover the extra $400 – $500 cost for the weekend celebration.

By being grateful for the gift of seeing another year and by keeping it simple, my husband and I avoided financial stress and enjoyed his birthday surrounded by friends and family.

Dealing with financial stress is common for many people and can lead to depression. Here are 5 ways to overcome financial problems and work towards a life of happiness and financial freedom.

5. Take Better Care Of Yourself


While getting organized with a budget, increasing savings, and eliminating expensive purchases can all help you feel less stressed out about finances, you may need to take it a step further for long-lasting results.

Stress is often a deep-rooted feeling that is a result of experiencing strain or pressure in your life. To keep stress levels low all-around, you want to start taking better care of yourself.

Eliminating stress starts with changing things you have control over and accepting and finding gratitude in the things you can’t. After you’ve done that, it’s time to practice more self-care.

Self-care doesn’t have to cost a lot or even be an extravagance like getting a massage. It could be doing something simple like jogging around your neighborhood, getting eight full hours of sleep, taking the afternoon off to read a book, or even going to the doctor for your annual check-up.

Financial stress is no good for your mental or physical health and should be addressed as soon as possible. Keep these tips in mind to help you eliminate financial stress. And, if you need more assistance or counseling, don’t hesitate to reach out to a professional mental health provider.


What do you do to cope with financial stress? What’s one thing you want to do to enjoy life more?  Can you handle a $400 emergency?

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