Dealing with Financial Anxiety and Stress

The Covid19 pandemic has shone a light of awareness on an issue that many Americans already dealt with daily — money stress and financial anxiety. Now, more than ever, people are stressed due to the possibility of a layoff, a salary reduction, or growing debt, and an uncertain future.

“Depending on your personal finances, there are a number of ways that money stress can appear in your life,” says Jeffrey Basford, Senior Vice President of Investments at David Lerner Associates. 

Some common causes of financial anxiety are: 

1.    Not saving enough
In spite of being a nation of great wealth, the United States is in the midst of a personal and household savings crisis. 57 percent of Americans don’t have enough cash to cover a $500 unexpected expense. 

2. Debt
The average American has $90,460 in debt, according to a 2021 CNBC report. That included all types of consumer debt products, from credit cards to personal loans, mortgages, and student debt. 

3. Job Insecurity
Work-related worries are one of the biggest stress generators. Fear of a layoff, a furlough, or a salary reduction will keep you in a constant state of financial anxiety.  Having experienced a layoff or witnessing your parents dealing with the loss of a job can also make you more sensitive to job insecurity and stress. That is why it is so important to live below your means and build up that savings emergency account.

4. Spousal arguments
Disagreements over finances are cited as the leading cause of stress in relationships. According to a Citibank survey, 57 percent of divorced couples named money problems as the primary reason for the demise of their marriage. 

Preventing money stress is actually quite simple when you lay it out. The first and most important way to achieve this is to live within your means. Keeping a budget, and spending less than you make — it sounds almost too simple to be said out loud, but you’d be surprised at how many Americans don’t keep a budget or spend way more than they earn every month. 

Another key way to keep your head above water is to build up your savings for an emergency. If you were to put away 10 percent of every dollar that you earned into a savings account that you never touched and just let the money grow and grow over time, pretty soon you’d be happy to see a fair amount of cash sitting there at your disposal if you ever needed it. 

Getting yourself free of the shackles of debt is another vital way to reduce stress about money. Imagine the end of every month and you do not have to take a deep breath as you open your credit card bills. Paying down your cards one at a time, starting with the highest interest cards first, and consolidating cards onto 0 percent APR cards go a long way to achieving a debt-free life. 

Financial anxiety is a feeling that we can experience at any point in life. However, it can also be something you can manage and even prevent depending on how well you prepare your financial matters.

Money should not be something that divides a family but rather brings them together. If American families can learn to plan together then they will be one step closer to long-term security and happiness.