Coping With Financial Stress And Economic Uncertainty

Financial stress has become an increasingly prevalent issue in recent years, affecting millions of individuals across the nation. From a rapidly changing economy to rising costs of living and a lack of emergency funds in many households, the weight of financial uncertainty can become overwhelming. Below, explore the causes of financial stress, the weight of economic uncertainty, and practical strategies to cope with and overcome these challenges.

What is financial stress? 

Financial stress involves persistent feelings of fear, anxiety, or helplessness surrounding your financial situation. Unlike fleeting concerns about affording a subscription service or luxury item, financial stress lingers and extends into everyday life. Though the direct source of financial worries tends to differ from person to person, like other forms of ongoing stress, financial stress can simultaneously significantly impact mental and physical health. 

What causes money stress?

Money stress can be the result of a variety of circumstances, including but not limited to the following:

• Debt: Struggling with credit card balances, student loans, or personal loans can be overwhelming, especially when interest rates accumulate faster than payments.
• Unemployment or underemployment: Job loss or earning less than needed to cover expenses is a significant source of stress for some.
• Rising cost of living: Inflation increases prices for basic necessities, including housing, groceries, and utilities, creating financial strain.
• Unexpected expenses: Medical emergencies, home repairs, or vehicle maintenance can disrupt even the most well-planned budget.
• Economic instability: Market fluctuations, economic recessions, and unpredictable financial conditions add another layer of worry.

Credit card debt statistics

Credit card debt is one of the most common financial burdens. Recent credit card debt statistics indicate ongoing financial difficulty for millions of Americans: 

• In 2024, U.S. credit card debt hit a record $1.17 trillion.
• The average credit card debt per household stands at approximately $7,951.
• Credit card delinquency rates rose to 3.1% in 2024, the highest since 2012, signaling growing financial challenges for many.

How financial stress and uncertainty affect mental health

Financial stress does more than deplete bank accounts. Stress profoundly impacts mental and physical health, potentially leading to anxiety, depression, and a pervasive sense of hopelessness. Though many aspects of financial planning are within one’s control, the current economic landscape in the U.S. is marked by heightened uncertainty. Changes in leadership, frequent natural disasters, and the lingering effects of global health crises have left many Americans uneasy about the future of the economy. 

Statistics on financial stress and uncertainty 

Uncertainty about the economy often translates into heightened financial stress as individuals grapple with unpredictable job markets, shifting policies, and fluctuating prices. The compounding effects of these challenges have made it increasingly difficult for people to plan for the future, further amplifying feelings of anxiety and insecurity.

According to a 2024 report by the TIAA Institute, 42% of U.S. adults report that money worries contribute to anxiety, depression, and anger, with external factors, such as inflation, rising costs, and an unstable economy, playing a significant role. Many individuals find themselves struggling to afford basic necessities like food, housing, and healthcare, leading to a cycle of stress and anxiety. Issues like the growing wealth gap, stagnant wages, and mounting student loan debt have also exacerbated financial insecurity among younger generations. A recent Harvard report found that 56% of young adults say financial stress negatively affects their mental health.

Physical symptoms of financial stress

While the psychological effects of stress are well-documented, recent studies suggest financial stress could be linked to worse overall biological health. The symptoms of financial stress vary, but some physical symptoms can include:

• Headaches and migraines: Persistent tension can incite debilitating headaches.
• Insomnia: Money worries often keep people awake at night.
• Digestive issues: Stress can disrupt gastrointestinal functions.
• Weakened immune system: Continuous stress compromises the body’s ability to fight off illnesses.

Additionally, chronic stress can elevate stress hormones, which, over time, may contribute to more severe health problems such as high blood pressure and heart disease.

Coping with financial stress

While financial stress can be overwhelming, there are practical steps individuals can take to regain control and alleviate some of the pressure. Focusing on what can be managed, even in the face of uncertainty, can be a helpful way to make changes proactively. To get started, consider the following steps: 

• Acknowledge the problem: Facing financial issues head-on may allow for constructive action.
• Seek professional help: Financial advisors and therapists can provide valuable guidance.
• Practice mindfulness: Techniques like meditation can help you manage anxiety.
• Set achievable goals: Break down financial challenges into manageable steps.
• Stay connected: Talking to friends or family can reduce isolation and the fear of losing those you love. 

Tips for creating a budget

A well-structured monthly budget can be an effective tool for reducing financial stress. By tracking income and expenses, individuals can identify areas where they can cut back, save more, and allocate funds toward an emergency fund or savings account. To get started, consider the following tips: 

• Track Income and expenses: Understand where your money goes by categorizing expenses.
• Prioritize essentials: Allocate funds for housing, food, and utilities.
• Build flexibility: Account for unexpected expenses by setting aside a small buffer.
• Adjust regularly: Revisit your budget frequently to adapt to changes.
• Automate savings: Even in uncertain times, automate small contributions to an emergency fund.

Making a budget in uncertain times

Creating a budget during economic uncertainty may seem daunting, but doing so may help you improve your situation. Allocating even a small portion of income toward an emergency fund can provide a safety net for unexpected expenses, reducing the stress associated with financial surprises. This sense of control can significantly alleviate money worries and improve overall mental health.

Coping with credit card debt and issues with credit cards

Credit card debt is often a significant source of financial stress for many individuals. High interest rates and the temptation to overspend can create a cycle of debt that seems impossible to escape. However, you are not alone, and there are strategies to manage and reduce this burden.

Tips for managing credit cards to improve your financial and mental health

One helpful approach for approaching credit card debt to save money may be to explore no-interest balance transfer options or personal loans that allow individuals to transfer existing debt to a new card with a temporary interest-free period. This option allows breathing room to pay the principal balance without accruing additional interest. Additionally, using credit cards responsibly—such as taking advantage of rewards programs for essential expenses—can help you maximize their benefits while minimizing their drawbacks.

The role of mental health in money management

Mental health plays a crucial role in how individuals manage their finances and spend money. Poor mental health can impair decision-making, making sticking to a budget or resisting impulsive spending more difficult. Conversely, financial stress can exacerbate mental health challenges, creating a vicious cycle. Low-cost or free financial advice can be helpful in these cases. 

Prioritizing mental and physical health can be essential when tackling financial problems. This process might include investing in nutritious groceries, accessing necessary medications, or seeking therapy to address the emotional toll of financial stress. By caring for oneself, individuals can build resilience and navigate financial challenges more effectively.

The BetterHelp platform is not intended to provide any information regarding which medication or medical treatment may be appropriate for you. The content provides generalized information that is not specific to one individual. Do not take any action without consulting a qualified medical professional.

Mental health support options 

Good financial health and good mental health often go hand in hand, with financial health often hinging on a healthy mindset. Therapy provides a supportive, judgment-free environment that allows individuals to speak openly about financial challenges, explore their relationships with money and finances, build resilience, and relieve stress as they navigate the journey. Additionally, therapy can help individuals reflect on spending habits, financial goals, and actionable steps they can take in the face of an uncertain economy. 

Though therapy may be perceived as an additional expense for those experiencing financial challenges, online therapy platforms like BetterHelp offer more affordable options. Online therapy sessions also tend to provide more flexible scheduling, allowing individuals to connect with a mental health professional on their own time. Moreover, research has shown that online therapy is equally as effective as traditional in-person sessions when facing stress or related mental health conditions. 

Takeaway

Financial stress is a widespread issue that can impact mental and physical health. However, individuals can navigate economic uncertainty with greater confidence and resilience by prioritizing financial planning and mental well-being. Improving financial health is often a journey. However, small, consistent changes can lead to long-term success. For personalized mental health support or financial coaching, consider contacting a counselor online or in your area.