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4 Strategies to Deal with Money Stress

By Colleen Travers
July 28, 2023

No matter the size of your salary, there’s a good chance that if you had to list the top sources of stress in your life, money would fall near the top. In fact, a recent BlackRock survey found that money is often the number-one reported cause of stress, above health and family. You can try to learn to live with a constant knot in your stomach caused by financial anxiety, or you can take steps to gain some control over your relationship with money.

Here are some of the most common financial stressors, along with expert advice on the practical steps you can take to regain control.

Out-of-Control Spending

We can put pressure on ourselves to spend money we don't have on things we don't need, because we're afraid to look like we're not in the same league as our friends and the people we follow on Instagram. But this sense of FOMO can put our financial security at risk. “Fear can drive poor financial decisions, and that’s especially the case with spending,” says Joyce Marter, author of The Financial Mindset Fix. “People spend more than they should for fear of being judged or thought of as not succeeding if they don’t have the right clothes or car."

Paying attention to how much someone else is spending, and what they are spending their money on, gets tricky because it’s all relative, says Robert Wootton, a senior wealth advisor and partner at Capstone Financial Advisors in Downers Grove, IL. So while you think you and your co-worker make a similar salary (and you may), they could have additional assets and financial resources you don’t, which allow them to spend more than you should.

The fix: If you've been ignoring advice to save for a rainy day because, well, what exactly does that mean? Just consider what we all went through in 2020, and think about how much better it would feel to be prepared for the next unexpected calamity. Then start to take small steps. Wootton advises squirrelling money away in an emergency fund that covers roughly three to six months of expenses. Once you have that base, you can focus on saving for short-term goals, so that you can enjoy that new wardrobe, jewelry, or vacation debt-free, guilt-free, and stress-free.

Living Paycheck to Paycheck

Leaving yourself with no financial cushion between pay periods is super-stressful, but as Marter points out, “This isn’t just a mental hurdle, for many it’s a reality.” If this is more of an option rather than a necessity for you, she says, it may be a holdover from when your money was tighter and your take-home pay was less. Now that your circumstances have changed, you're still falling into old patterns. "It may have been your reality for so long that it feels normal. It can take a lot of hard work, effort, and self-discipline to make the shifts necessary to stop living this way.” What’s happening here is called learned helplessness, adds Marter, which is when people feel like there’s nothing they can do to improve their financial situation.

The fix: It can take a long time to rewire your brain if you tend to spend all your money as it comes in. Wootton recommends starting by tracking your monthly expenses. There are several apps, like Tiller and Mint, that can help you get a clear picture of where your money is going. “You may be surprised at how much you spend on the things you don’t need,” he says. By being diligent, you can begin to reduce or avoid unnecessary expenses in the future. "This can help get you back on track to saving a little bit more each month,” he says.

Crazy Credit-Card Debt

According to Marter, credit-card debt is easy to accrue because it feeds on our need for immediate gratification—the basis for so much consumer behavior. But spending freely without feeling the immediate budget bite has a steep downside: Before you know it, your balance is sky-high. And this can often lead to a kind of financial denial where you willfully "forget" your card's interest rate and your balance.

The fix: Although conventional wisdom has it that any credit card with an interest rate of more than 10 percent should be paid down first, Wootton says, “When it comes to paying off a balance or a card with a high interest rate, you should do whatever gets you to pay down your debts. Some people need the psychological benefit of completely paying off a card that may have a smaller balance or interest rate, while others see the financial benefit of paying down bigger interest rates or debts first.”

Failing to Plan for Retirement

Retirement funds often get put on the back burner because it’s not an immediate need like your mortgage or weekly food shopping, says Marter. And that back burner gets further and further away as we rationalize that we'll start getting serious about our retirement planning later. But the more you put off planning for the future, the less time you give yourself to do it.

The fix: This is where getting some extra help can come in handy in the long run. Both Marter and Wootton recommend sitting down with a financial advisor to get a realistic picture of what you’ll need to save to hit your long-term goals. In the meantime, Wootton says a good starting point is to try to save 15 percent your gross income as your nest egg. And if all this sounds like less than a good time, remember that a little temporary discomfort now can save you years of worry later.

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