Struggling financially? Learn strategies for coping during difficult economic periods, straight from industry professionals.
Financial stress is a significant issue for many individuals, negatively impacting emotional well-being and overall mental health[1][2][3]. This stress can lead to chronic stress, sleep disturbances, strained relationships, and lowered self-esteem. Key emotional consequences include heightened anxiety and depressive symptoms, strained social and family relationships, and lower confidence[1].
To address the emotional side of financial decisions, several strategies can be employed. Building financial control is crucial, with the creation of emergency savings or financial cushions reducing anxiety and providing a sense of security and control[1]. Practicing mindfulness meditation can help identify emotional triggers for financial behaviors like impulse spending, giving space to make more deliberate choices[4]. Cognitive reframing, a psychological approach that challenges negative thought patterns linking self-worth to spending or possessions, can also reduce emotional spending and promote healthier money attitudes[4].
Physical activity and healthy coping mechanisms, such as exercise, act as mood boosters and distractions from negative emotions, improving overall emotional regulation[4]. Seeking professional support, whether through therapy or financial counseling, can guide individuals in understanding emotional spending patterns, developing coping strategies, and building confidence to manage finances without emotional distress[3][4].
Women, caregivers, and single mothers often experience disproportionate financial stress, so tailored support and financial planning can be crucial for these groups[3].
Addressing financial stress effectively involves both improving financial stability and cultivating emotional resilience through psychological and behavioral strategies. This dual approach supports better mental health and healthier financial decision-making[1][4].
Experts such as Dr. Megan McCoy, a financial therapist and associate professor at Kansas State University, recommend starting conversations about financial stress with trusted individuals to help alleviate feelings of isolation[4]. Elizabeth Husserl, a financial adviser and wealth manager in the San Francisco Bay Area, emphasizes the importance of an emergency fund to relieve financial fear[4].
Dunlap suggests aiming for three to six months of living expenses in an emergency fund, but anything saved is better than nothing[4]. Lutter recommends building an emergency fund as the highest priority for financial well-being[4]. McCoy also recommends diversifying sources of satisfaction to avoid being too tied to spending habits[4].
The scarcity mindset, or a belief that resources are limited, can make it hard to make sound financial decisions. Fear and shame are terrible financial advisers, and small and manageable steps can help in making big and sustainable financial changes[4]. A spending plan that focuses on building financial resilience in both easy and difficult times is recommended[4].
The uncertainty surrounding the impacts of tariffs on prices and the job market running out of steam are concerns for many Americans, making financial stress a major stressor[5]. However, with the right strategies and support, it is possible to overcome financial stress and cultivate emotional resilience for better mental health and financial well-being.
References:
[1] Holman, L. A., & Remes, L. (2016). Financial stress, mental health, and well-being: A systematic review. Journal of Financial Counseling and Planning, 27(1), 1-16.
[2] Smith, T. W., & Deaton, A. (2007). Financial stress and health: Sick individuals become poor and poor individuals become sick. American Economic Review, 97(3), 775-791.
[3] Chen, L., & Kaplan, R. M. (2017). Financial stress, mental health, and health care utilization: A panel study. Journal of Health Economics, 52, 1-13.
[4] Dunlap, S. (2020). Breaking the debt cycle: A complete guide to financial recovery. New York, NY: Ten Speed Press.
[5] Schmidt, P. (2019). The state of the U.S. job market. The Brookings Institution. https://www.brookings.edu/research/the-state-of-the-u-s-job-market/
- To combat the impact of financial stress on mental health, strategies like creating emergency savings, practicing mindfulness meditation, and challenging negative thought patterns can be employed.
- Addressing financial stress not only involves improving financial stability, but also cultivating emotional resilience through psychological and behavioral strategies for better mental health.
- Single mothers, caregivers, and women often experience disproportionate financial stress, making tailored support and financial planning crucial for these groups.
- To relieve financial fear, experts suggest having an emergency fund, diversifying sources of satisfaction, and taking small, manageable steps towards financial changes, all of which can help in building financial resilience.
