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Coping with Financial Stress

Do you ever feel stressed-out about money? I don’t have statistics on how many people have financial stress, but if you’re one of them, I know you’re not alone. In this article I’ll highlight four fundamental causes of financial stress and provide tips on how to deal with them effectively so you can create a more peaceful life.

There’s no shortage of reasons why people are dizzy with money stress these days. The high unemployment rate, sagging real estate values, and steep gas prices are real issues that we can’t control, but that affect our wallets nonetheless. But it’s important to realize that stress is nothing more than your body’s response to a situation or a series of events. When faced with an emergency—like a fire in your building—some people panic while others stay completely calm and in control. The situation is exactly the same for everyone, but the way each person perceives the situation is very different.

It’s absolutely possible to calm your body’s stress responses so you can think clearly and work on solutions, even if what’s stressing you out doesn’t go away. Though you may never completely eliminate all stress in your life, managing it can help you improve your relationships, health, and general sense of well-being.

What Causes Financial Stress? As a psychologist, I often encounter clients who have some amount of anxiety about what’s going on with their money. I help them identify exactly what the problem is so we can pinpoint the most effective solutions. That’s the first step—to really understand where your stress comes from. When you strip down the issues, there are four fundamental reasons why people get stressed about their finances:

Money Stress #1: Drowning The first common stressor is when your living expenses exceed your income and you can’t keep your head above water. I’m sure you can guess what happens when you consistently spend more than you make. You begin to finance your expenses using some form of debt, like a credit card, a loan, or a home equity line of credit. Or you might tap into your savings or retirement funds to pay your bills.

Money Stress #2: Barely Surviving A second reason for stress may come when you’re surviving financially, but feel like you’re just treading water. That can happen when you’re able to pay all of your bills, but are still living paycheck to paycheck. When you can’t seem to get ahead of your expenses and accumulate emergency savings or build wealth for the future, it can cause worry and financial stress.

Money Stress #3: Owing A third stress for some people is owing money—even if you’re meeting your expenses and diligently saving for the future. Having any amount of indebtedness can be a stressor if it causes you to feel trapped or to believe you’re wasting resources paying interest to a lender.

Money Stress #4: Complicating The last cause of stress that I’ll mention is feeling like your finances are too complicated or have gotten out of your control. This can happen when you’re unorganized, have too many accounts, don’t have a financial plan, or need to start managing your finances for the very first time.

Money and Happiness Many people mistakenly believe that if they just had more money, all their stress would disappear and they’d be blissfully happy. In some cases, earning more money is the solution to financial problems. If you’re unemployed or under-employed, for instance, your financial stress probably won’t go away until you have an income that you can count on. But for many people, having more money simply causes them to inflate their lifestyle in a way that doesn’t reduce stress or bring them more happiness. So remember that no one is immune from money stress, not even the super wealthy.

10 Tips to Deal with Money Stress For most people, the best way to deal with financial stress is to be smarter about how you spend and to change your perspective about your situation. Here are ten tips and techniques to build up your resistance to financial stress:

  1. Change your language. Though it may sound cliché, keeping a positive attitude and using positive language can reduce your stress response to financial issues in your life. Never say that you can’t increase your income or that you should cut your spending, for instance. Instead, say I want to increase my income or I will cut my spending. A shift in your language is the first step to a shift in your mental attitude.

  2. Reframe your thinking. How you view your finances and speak about them can change the way you feel about them. In turn, how you feel about your money will strongly influence how you manage it and deal with challenges. Remember that actions are always preceded by thoughts and beliefs.

  3. Recognize your power. In general, people tend to get more stressed when they believe a situation is out of their control. That’s why many people get really uncomfortable traveling on an airplane. When it comes to your money, you always have the power to make a difference, so recognize that choices exist for you to improve any financial problem.

  4. Focus on the positive. Instead of dwelling on what’s wrong with your finances, think about what you have to be grateful for. Notice what’s going right, make peace with your problems, and decide to learn from your challenges. Many people keep a gratitude journal where they write down a few things that they’re thankful for each day.

  5. Stay in the present. Many times financial stress comes from projecting a worse-case scenario into the future. You can exaggerate a situation in your mind to the point that your heart starts pounding and your palms start sweating. Remind yourself that you’re not in the future—you’re in the present moment where you have complete control.

  6. Reject thoughts of failure. Never believe that a financial challenge is a sign of personal failure or weakness. Whatever your situation, remind yourself that it’s nothing that millions of other people haven’t struggled with. Heck, some of the wealthiest people—like Donald Trump—have gone through serious financial rough patches. You and your family can grow stronger by proactively working through your money issues.

  7. Take a stress break. Make a conscious decision to do something healthy to take your mind off your stress. Maybe it’s playing with your dog or kids, going for a run, enjoying a hobby, watching a movie, listening to music, or doing yoga.

  8. Get financial help. Talking to a wise friend, a family member, or a financial professional can help you see options and solutions to your financial problems that you might be overlooking. Working with a financial coach or planner is a smart way to get back on track so you feel more in control and optimistic about your situation.

  9. Reduce your debt. If debt is stressing you out, get serious about creating a spending plan so you can free up more discretionary money and pay it off as quickly as possible. According to financial planners, try to keep the total of all your monthly debt obligations below 40% of your gross monthly income.

  10. Choose to build wealth. Using your money to create a secure financial future, instead of spending it on material possessions, will give you a feeling of freedom that expensive toys never deliver. You can reduce stress by purchasing less stuff that you really don’t need and making a commitment to save and invest at least 10% of your income.

Bahareh Talei, Psy.D.

Clinical Psychologist PSY21252 Diagnostic & Counseling Center, Inc. Phone: (818) 324-6594 Email: Website:

Dr. Bahareh Talei received her Doctorate of Psychology (Psy.D.) from Pepperdine University, Graduate School of Education and Psychology. Dr. Talei is a licensed psychologist and is co-founder of Diagnostic & Counseling Center (DCC). Her experience has primarily been in working with children and adolescents with various disabilities such as autism and difficulties with learning and attention. Throughout her career, Dr. Talei has been actively engaged in the assessment of a diverse population (e.g., pervasive developmental disorder, learning disorders, central nervous system damage) and training of other professionals. Her experience and interests also includes conducting individual and group psychotherapy with family members of children with developmental disabilities and other populations (e.g., depression, anxiety disorders, and infertility).

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