Key takeaways

  • Several factors can cause financial stress, from debt and market volatility to financial insecurity and a lack of financial confidence.

  • Acknowledging and understanding your fear is the first step in reducing your financial anxiety.

  • Other tips for managing financial stress include having a financial plan, maintaining an emergency fund and getting a professional perspective.

From inflation and higher interest rates to unpaid student loans and unexpected medical bills, there are plenty of reasons to feel anxious about money and the wealth you’ve worked hard to build. If you’re worried about your finances, know that you’re not alone.

A recent study by CNBC and SurveyMonkey found that 74% of Americans are experiencing stress about money and 61% consider themselves to be “living paycheck to paycheck.”

The good news? There are things you can do to reduce your financial anxiety and feel empowered to take control of your finances now and in the future.

“Anxiety surfaces with a loss of control. Regaining those feelings of control begins with formulating a plan. Once you have a plan in place, things seem less chaotic and more manageable.”

Ashley Norred, vice president and wealth planner, U.S. Bank Private Wealth Management

What is financial stress?

Financial stress is an emotional state of anxiety or worry about money that’s often accompanied by a physical response.1 Left unchecked, financial stress can lead to serious health consequences, such as cardiovascular disease, diabetes and obesity, as well as mental health issues such as depression.1


What causes financial stress?

Financial stress can make people emotional; when you’re emotional, you rarely think clearly. You may have trouble identifying the exact cause of your anxiety: Is it growing debt? Worries about future medical bills? Even a conversation with a spouse or boss about financial matters can trigger anxiety.

“There’s often a push and pull of wanting to enjoy your life but also knowing that things can take a turn for the worse,” says Yasmin Ghodse-Elahi, a behavioral scientist with U.S. Bank. “Finances are inherently fluid, and that's scary.”

Recognizing the events, situations, or emotional states that cause financial stress is part of managing financial stress. Here are some common stressors:

  • Insufficient cash flow
  • Mounting expenses
  • Credit-card debt
  • Minimal savings—or none at all
  • Student-loan debt
  • Medical bills
  • Lack of retirement savings
  • Market volatility
  • Avoiding financial conversations

Sometimes, financial stress isn’t even directly related to money. Other stressors include:

  • A sense of financial insecurity. Financial security doesn’t just mean being able to afford the basics; it also means the ability to maintain the lifestyle one has become accustomed to. “Where is your money coming from and where is it going?” says Ashley Norred, vice president and wealth planner with U.S. Bank Private Wealth Management. “If you don’t have a good handle on your income and expenses, you’ll be worried that your circumstances could change in an instant.”
  • A lack of financial confidence. “Financial mindsets are inherited across generations,” says Ghodse-Elahi. Growing up in a household that wasn’t financially healthy or transparent can affect your understanding of how the financial world works. Mindsets matter.
  • An emotional approach to financial decision-making. Financial anxiety can cause you to make poor decisions and act more impulsively with your money. “Most people think they leave emotions out of their financial decision-making,” Norred says. “But emotions are part of being human, and every one of us is prone to making decisions based on emotions. A financial professional can help you realize that.”

Fortunately, there’s plenty you can do to lessen financial stress. “Anxiety surfaces with a loss of control,” says Norred. “Regaining those feelings of control begins with formulating a plan. Once you have a plan in place, things seem less chaotic and more manageable. Everything is much less stressful.”


How to manage financial stress

If you’re experiencing financial stress, these five tips can help.

1. Understand your financial stress

Start by recognizing that you’re feeling stressed about finances. Acknowledging a fear is the way to overcome it.

Then, advises Ghodse-Elahi, pinpoint what’s causing your anxiety about money. “Are you afraid of the uncertainty in the market, or are you afraid you’ll make a bad decision that will negatively impact your finances? Those are very different fears,” she says.

2. Build a plan to reduce financial stress

While situational circumstances can occur that are totally out of your control, financial risk can often be mitigated with a comprehensive financial plan. Norred recommends working with a financial professional to build a budget with enough give and elasticity to adjust as your situation changes.

A financial professional can also run “what if” scenarios. With a better understanding of the probability of a particular risk, you’ll feel a lot more resilient in the face of uncertainty.

3. Assess your debts and their impact on your financial stress

Debt can weigh heavily on people, but not all debt is bad. Norred says it’s important to look at the debt terms and structure. A financial professional can assess which kinds of debt should be paid off quickly and which can be dealt with more slowly or when you have more resources. Debt should not automatically be a source of stress.

4. Maintain an emergency fund to ease financial stress

Having an easily accessible emergency fund can significantly reduce your financial stress.

If you lose your job or experience another unforeseen circumstance, there are expenses that will need to be handled right away. An emergency fund, ideally with enough money to pay for at least six months of living expenses, will provide a financial cushion until you can get on your feet again.

5. Get a professional perspective on the sources of your financial stress

“It can be hard to seek advice when you're anxious,” says Ghodse-Elahi. “It’s called the ostrich effect—we avoid that which makes us feel uncertain.”

However, an objective perspective can really help, says Norred. “A financial professional always has the bigger picture in mind. They can reassure you if something is commonplace, and even if it’s not, they can probably relate the experience of a client who was in a similar situation.

“Having a plan and having a perspective, those are huge benefits that come from working with a financial advisor,” Norred continues. “I can’t count the number of times a client has said, ‘Oh, I didn’t think about it that way’ or ‘You know, I forgot about the plan we put in place.’ It’s hugely reassuring.”


Ready to make a plan and take control of your finances? Learn more about our approach to financial planning.

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