How to Deal With Financial Stress: 7 Strategies to Solve Financial Problems

Published: 4 years ago, Last Updated: 3 months ago
Daniel Brown
Writer: Daniel Brown
Jackson Rhodes
Reviewer: Jackson Rhodes
Listen minutes

Financial stress impacts individuals across a range of professions, with 67% of workers reporting feeling stress due to financial issues. This stress not only affects job performance but also poses risks to overall health and well-being.

In this blog, we explore various strategies designed to empower you to master your finances. From creating a robust emergency fund to maximizing your savings, these tips aim to restore balance and harmony to your financial and physical health.

Read more to find out how to deal with financial stress successfully and prevent it from impacting your health.

5 Money Problems That Cause Financial Stress

From the ever-mounting monthly expenses to the complexities of debt management, the financial hurdles encountered daily can be daunting. Here are the top five daily issues that cause the most financial stress:

Monthly Expenses 

The cornerstone of financial stress for many is the balancing act of monthly expenses. With the average American household spending about $1,981 monthly on rent and additional sums on utilities and transportation, simply maintaining a standard of living can be overwhelming.

Housing costs, including mortgage or rent, utilities, and other associated expenses, can quickly consume a significant portion of monthly income, leaving little room for savings or discretionary spending.

Budgeting Challenges

Even with a keen eye on spending, many find themselves underestimating their expenses, especially with the advent of subscription services. The ease of automatic renewals and the allure of various streaming, club memberships, and digital services can lead to monthly costs upwards of $219, often catching budgeters off guard. This underestimation complicates financial planning, leading to stress and potential overspending.

Having Too Much Debt 

Debt, particularly from credit cards and student loans, takes a significant psychological toll. On average, paying off student loans within five years can result in monthly payments of around $560.

Overhead view of young adult calculating credit card debt

Similarly, managing credit card debt to clear it within a year requires monthly payments of approximately $544. This not only impacts current financial freedom but also casts a long shadow over future financial planning and saving goals.

Loss of Income

Nothing triggers financial stress quite like the loss of income. It instantly transforms manageable monthly expenses into looming uncertainties. Without a steady income, maintaining regular payments for necessities, let alone servicing debt, becomes a Herculean nightmare, plunging individuals into financial distress.

Tax Issues

Taxes represent a significant but often overlooked cause of financial stress. For property owners, taxes can fluctuate based on local government assessments and changes in property values, adding an element of unpredictability to household budgeting. Rising property taxes could exacerbate tight budgets, leading to further stress. 

Furthermore, individuals may encounter unexpected tax liabilities due to changes in their income, employment status, or new tax legislation, which can disrupt family financial planning and savings goals.

How Financial Stress Can Affect Your Mental Health 

As we already mentioned, financial stress doesn’t just strain your wallet. Financial stress and mental health can go hand in hand, and let’s see why.


Financial uncertainties can lead to chronic anxiety. Constantly worrying about having no money can trigger the body’s stress response, leading to feelings of fear, apprehension, and nervousness about the future. This can exacerbate or lead to generalized anxiety disorder, where the focus is often on finances.


Stress from financial worries can disrupt sleep patterns, leading to insomnia.

Stressed woman having insomnia

The inability to fall asleep or stay asleep is often rooted in racing thoughts about financial insecurity or debt, which significantly impacts one’s ability to function during the day.

Money Dysphoria

What is money dysphoria? This term, though not officially recognized in clinical settings, describes a profound dissatisfaction or unhappiness related to one’s financial situation. It can manifest as a persistent sense of hopelessness or defeat when thinking about the lack of money, significantly affecting mood and overall well-being.

Relationship Issues

Financial problems are notorious for straining relationships. Disagreements over spending, saving, and financial goals can lead to frequent arguments, resentment, and a breakdown in communication between partners, often exacerbating the stress and impacting familial harmony.

Lack of Self-esteem

Chronic financial struggles can lead to feelings of inadequacy and low self-esteem. The societal pressure to achieve financial success can make those struggling feel like failures, impacting their sense of self-worth and confidence.

Poor Concentration

The mental load of serious financial problems can detract from one’s ability to concentrate on tasks, affecting productivity at work or school. This cognitive impairment is often due to the preoccupation with financial challenges, making it hard to focus on anything else.

Beyond Mental Health

Aside from mental well-being, financial stressors can affect physical health, too. A study by University College London (UCL) reveals the deeper health implications of financial stress, showing it disrupts the balance between the immune, nervous, and endocrine systems. This imbalance can lead to a higher risk of developing both mental and physical health problems, with those experiencing financial strain more likely to fall into high-risk health categories.

7 Strategies to Fix Financial Issues 

With the right strategies, it is possible to resolve financial issues and regain control. By addressing the root causes of financial stress and implementing practical solutions for financial problems, individuals can pave the way toward a more stable and secure financial future. Here are seven strategies to get you on a better financial path:

Identify Financial Problems

This process involves a thorough and honest assessment of your current financial situation, pinpointing areas that are causing strain or could potentially lead to trouble. Begin by compiling all your financial documents – bank statements, credit card bills, loan statements, and any other records that reflect your income and expenditure.

Couple reviewing finances

Next, scrutinize your expenses and income with a fine-tooth comb. Identify any recurring patterns of overspending or areas where your expenses consistently exceed your income. Categorize your spending to understand exactly where your money is going each month. Look out for high-interest debts and areas of unnecessary expenditure that can be trimmed.

Additionally, assessing your savings and debt ratios will highlight any immediate red flags, such as a lack of emergency funds or an unsustainable debt load.

Assess Your Income and Expenses

Next,  identify where cuts are feasible and where income can be augmented or stabilized. Sum up all sources of income after taxes. This includes your salary, any side gigs, and passive income streams. Knowing your net income helps set realistic budgeting goals.

Next, list all monthly expenses, starting with the essentials like housing, utilities, food, and transportation. Then, account for variable expenses such as dining out, entertainment, and shopping. It’s also wise to include periodic expenses like annual subscriptions or insurance premiums by averaging them every month.

Make a Plan and Implement It

Once you’ve assessed your income and expenses, the next step is to make a concrete financial plan and put it into action. This plan will serve as your roadmap to achieving your financial goals, whether you’re paying debt or want to save money for a significant purchase.

Young adult creating a budget

Here’s how you can create and implement your financial plan:

  • Set Clear Financial Goals: Define what you want to achieve with your finances, both in the short term (like paying off credit card debt) and the long term (such as saving for retirement or a home). Be specific about what success looks like for each goal, including the amount you need to save or pay off and the timeline for achieving it.
  • Prioritize Your Goals: Not all financial goals can be pursued with equal intensity simultaneously. Determine which goals are the most urgent to you and focus your resources accordingly. For instance, paying off high-interest debt might take precedence over other objectives.
  • Create a Budget: Develop a detailed budget that accounts for all your income and expenses, aligning it with your financial goals. Allocate specific amounts towards each goal, ensuring that you live within your means while still making progress towards your targets.
  • Automate Savings and Payments: One of the most effective ways to stay on track is to automate as much as possible. Set up automatic transfers to your savings account and automatic payment towards your debts. This reduces the temptation to overspend and ensures that you’re consistently working towards your goals.
  • Monitor and Adjust Your Plan: Regularly review your financial plan to assess your progress and make necessary adjustments. Your financial situation and goals may change over time, and your plan should be flexible enough to accommodate these changes.
  • Seek Accountability: Share your goals with a trusted friend or family member who can help keep you accountable. Regular check-ins can provide additional motivation and support as you work towards your financial objectives.
  • Celebrate Milestones: Recognize and celebrate when you reach significant milestones. Achieving financial goals is hard work, and acknowledging your progress can provide a boost of motivation to keep going.

Create an Emergency Fund

Creating an emergency fund is a foundational step toward financial security, providing a buffer that can save you from falling into debt during unexpected situations. Start by setting a clear target for your emergency fund – most financial advisors recommend saving enough to cover three to six months’ worth of living expenses. This amount will give you enough cushion to handle unforeseen events like job loss, medical emergencies, or urgent home repairs without restoring to credit cards or loans.

Automate your savings by setting up a direct deposit from your paycheck into a dedicated savings account, making it less tempting to spend. If saving several months’ worth of expenses seems daunting, start with a smaller goal, such as $1,000, and gradually increase your target as you become more comfortable with your budget adjustments.

Cut Your Expenses

Identify where you can reduce spending without significantly impacting your quality of life. Begin by revisiting your budget to pinpoint non-essential expenses that can be minimized or eliminated. This could include subscription services you rarely use, dining out frequently, or high discretionary spending on items like clothing or electronics.

Close up on someone cutting a credit card

Focus on larger expenses as well. For example, refinancing your mortgage or negotiating lower rates on insurance could yield substantial savings. Consider utility costs, too. Simple home improvements like LED light bulbs or a programmable thermostat can reduce your monthly bills. Also, evaluate your transportation costs; using public transit, carpooling, or even renegotiating your car insurance can offer savings.

Track Your Finances

Tracking your finances involves closely monitoring your income, expenses, savings, and investments to ensure you are on track to meet your financial goals. Start by selecting a method or tool that suits your lifestyle, whether it’s a simple spreadsheet or a budgeting app that syncs with your bank accounts.

Review your financial tracking data bi-weekly or monthly to identify trends and areas for improvement. Use these reviews as opportunities to adjust your budget. For instance, you may decide to stop overspending on discretionary expenses and redirect funds towards repaying your debt. Over time, you may discover that eating out less or minimizing spending on entertainment can help you save a substantial amount monthly, which could then accelerate your debt repayment plan.

Consult With a Financial Advisor

Consulting with a financial advisor can be a game-changer in managing your finances and achieving your financial goals. They can offer personalized advice on a range of topics, including debt management and tax preparations, tailoring their guidance to meet your specific financial goals and situation.

To find a reputable financial advisor, consider using online matching services like Zoe Financial, Harness Wealth, or Facet. Additionally, the CFP Board and professional finance advisor organizations like The Financial Planning Association of NAPFA can be valuable resources.

To make the most of this opportunity, prepare a summary of your financial situation. Research advisors with reputable credentials and experience relevant to your needs, such as debt management or investment strategies. Many advisors offer a free initial consultation, so take advantage of this to gauge their compatibility with your financial vision and goals.


Navigating financial stress demands strategy and perseverance. Effective management involves identifying spending patterns, prioritizing savings, and meticulously planning to reduce debts and expenses. This journey enhances both financial and mental well-being. By embracing these principles, you can mitigate financial stress, paving the way for a more secure future.

FAQ on Financial Problems

Check out this FAQ section for further clarification:

Which Are Common Financial Obstacles Faced by Newly Financially Independent Adults?

For starters, many find themselves grappling with managing regular expenses against a backdrop of fluctuating income. Then there’s the daunting task of debt management, be it student loans or credit card debt, which often feels like a juggling act. Not to mention, saving for the future – whether it’s an emergency fund or retirement – can seem like a distant dream rather than an achievable goal.

What Common Money Mistakes Do People Make When Dealing with Financial Problems?

One classic blunder is ignoring the problem, hoping it’ll vanish like a coin in a magician’s hand. Then, there’s the temptation for quick fixes like payday loans, which exacerbate the issue more often than not. Many also fall into the trap of making minimum payments on debts, a slow leak that can sink the ship over time due to mounting interest. Lastly, neglecting to create and stick to a budget is a surefire way to get lost in financial turmoil.

Who Can Guide Me in Overcoming Financial Difficulties?

A good starting point is seeking advice from a financial advisor, who can chart a course tailored to your situation. Non-profit credit counseling services offer guidance and sometimes negotiate with creditors on your behalf. And don’t overlook the wealth of knowledge in free personal finance books, blogs, and podcasts.

What Are Some Tips for Creating a Realistic Budget?

First, track your spending to understand where your money is currently going. Next, categorize your expenses into needs and wants, ensuring the essentials are covered first. Allocate savings as a non-negotiable expense to build that financial cushion. Remember, flexibility is key, so revisit and adjust your budget as life throws its curveballs.

How to Survive Financial Collapse?

The first rule is to stay calm, as panic leads to bad financial decisions. Assess your financial inventory – know what resources you have at your disposal. Cut unnecessary expenses immediately to conserve cash and prioritize debts with the closest maturity terms. Communicate with creditors, as many may be willing to negotiate an alternative repayment schedule. Finally, keep an eye out for ways to make extra money, be it through side gigs or selling items you no longer need.

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