Financial Stress? Here's How to Improve Your Relationship with Money

If you find yourself feeling anxious about money, know that many others are in the same boat. According to a recent CNBC survey, 70% of Americans are experiencing financial stress, especially women. While 67% of men reported anxiety over money, 72% of women said they’re financially stressed, often living paycheck to paycheck with no emergency funds.

Although that might seem like a dire statistic, achieving freedom from financial stress is possible—with an understanding of your situation and the necessary effort to get there. 

So, what exactly is financial stress? How does financial stress affect your health? And most importantly, how can you manage financial stress and improve your relationship with money? We asked financial experts what steps you can take to improve your financial security—and your peace of mind.

What is financial stress?

While everyone worries about money from time to time, financial stress, as defined by the Financial Health Institute, is “a condition that is the result of financial and/or economic events that create anxiety, worry, or a sense of scarcity, and is accompanied by a physiological stress response.”

When you feel like you can’t keep your head above water financially, it can snowball into other areas of your life—like your ability to focus on everyday tasks, relationships, and your physical and mental health. 

Factors that contribute to financial stress

A recent survey found that almost half (47%) of adults report that money has a negative impact on their mental health, with more women (51%) reporting financial stress than men (42%). In fact, financial stress ranked higher than work, health, and current events. 

The high cost of everyday living has the greatest negative impact on Americans, with 65% citing inflation/rising costs as the top stressor, 59% concerned about paying for basic necessities like groceries and utilities, 47% worried about paying off debt, and 40% citing the cost of housing/rent. In the first quarter of 2024 alone, Americans’ total credit card balance was $1.115 trillion.

It’s those high costs of everyday living that are also contributing to a lack of financial security for the future, with only 45% of Americans saying they have an emergency fund, and of that 45%, about 26% polled said they have less than $5,000 saved. 

High earners aren’t immune. Around 33% of people earning at least $100,000 said they are living paycheck to paycheck, and more than 25% report having no emergency fund.

The effects of financial stress on your health 

Dealing with constant anxiety about money can take a hefty toll on both your physical and mental health. It’s been shown that chronic financial stress is associated with increased levels of anxiety, depression, sleep and anger issues, and problems in relationships, which can lead to unhealthy coping mechanisms like overeating or drug and alcohol abuse. 

“What I see most often with my clients is loss of sleep, nervousness or anxiety around any money-related topic, and a constant weight of financial fear,” says Cara Macksoud, Certified Financial Behavior Specialist with Money Habitudes. 

“This doesn’t always mean you don’t have any money,” Macksoud says. “Financial fear can be fear of making a monetary decision or fear of a financial situation that you may have experienced and you never want to experience again. All these stressors affect us emotionally, making us short-tempered or unable to fully be present for other parts of our lives if we’re distracted by these thoughts.” 

From a physical standpoint, a recent study found that people who are under financial strain had a nearly 60% greater risk of developing serious health problems, which was higher than any of the other stressors evaluated in the study.

How to deal with financial stress and improve your relationship with money

It can feel like a vicious cycle: You’re stressed about money, which affects your health, which makes it harder to manage your money or may result in additional medical bills, which adds to your financial stress. But there are strategies and tips that can help get both your finances and holistic health back on track.  

1. Become financially literate

Shang Saavedra, a national personal finance and retirement expert, recommends dedicating at least one hour a week to learning about personal finance. Macksoud agrees: “Understanding your wants and your true money motivations can limit your financial stress with awareness alone.”

This can be done by listening to podcasts, reading personal finance books or websites, or using social media to follow financial professionals. “Get intimate with your money,” Macksoud says. “If you fear it or feel you don’t understand it, start small—digest basic financial education and then build up.” 

2. But use social media wisely

According to a recent survey, 79% of people between the ages of 18 and 41 turn to social media for financial advice, which has the added bonus of being a free resource. However, while it can be useful, it can also contribute to financial stress, with more than 25% of people saying it makes them feel less satisfied with the amount of money they have.

“The constant social media stimulation is messing up our ability to make sound financial decisions and we spend too much time comparing ourselves to others' highlight reels,” says Bernadette Joy, financial health activist and chief educator at Crush Your Money Goals. “I use Sundays to go completely screenless to reset my brain.”

3. Track all your income and spending 

Create a spreadsheet or use an app to track the income you know will be coming in every month, and also everything that you’re spending—even the latte you buy three times a week. Understanding exactly where your money is coming and going can help you identify areas that are adding to your financial stress, and how you can address those with your budget. 

4. Create a monthly budget 

Once you know what you’re spending, set a monthly budget to help keep you on track and regain your sense of control. Include your regular monthly expenses, as well as everyday items like groceries and commuting. 

Revisit your budget often and look for ways you can cut out discretionary spending, like canceling subscription services or choosing store brands over name brands at the grocery store, which are typically around 40% cheaper.

Joy also recommends you commit to a zero-based budget the last week of every month to ensure you’re not overextending yourself. “A zero-based budget is where you allocate all your income to your expenses so there is no ‘leftover’ money, because leftover money tends to disappear,” she says. 

5. Prioritize your expenses

If you’re having trouble covering your monthly expenses, prioritize where your money needs to go first, so you can ensure you have enough set aside to pay those bills without a late penalty. For example, it’s essential to make sure you have a roof over your head and electricity, whereas being late on a credit card payment—while not ideal—isn’t as important as taking care of basic needs.

6. Pay down debt

“Start with your highest interest rate loans and then work your way down,” Saavedra says. “Any savings, any extra money you can have, take that and make extra payments on that loan until you reach a zero balance.”

For credit cards specifically, Joy recommends that you pay them off weekly instead of on the due dates. “You’ll get a true sense of whether or not you are overspending,” she says.

7. Practice self-care

Your financial worry isn’t going to go away overnight, but that doesn’t mean you can’t take steps to ease your stress and find healthy ways to deal with challenges in the long term. Make sure that you include exercise, healthy foods, adequate sleep, and mindfulness exercises like yoga or meditation. 

This might give you some ideas: 13 Self Care Tips for Working Women

8. Build an emergency fund 

More than half of Americans (56%) who say money impacts their mental health cite a lack of emergency savings as a stressor. Adding even a little bit of money into a separate 

bank account designated for only unexpected expenses can provide peace of mind that if something should happen, you can at least pay for the basic essentials. 

“Set up an automatic savings transfer from checking to savings for the larger expenses that occur irregularly, such as car repair, vet bills etc.,” says master money coach Mikelann R. Valterra, MA, AFC. “If someone saves $200 a month, for example, this money can then be used the next time you have a large expense that would normally end up sitting on your credit card.”

Saving even a little bit every month can help you feel more in control. “Start with a goal of saving, finding, or making an extra $27.40 a day,” Joy advises. “If you save $27.40 a day, every day for a year, that’s $10,000. The point is to break it down into something doable.”

Read this next: Here’s How Much You Really Need in Your Emergency Fund

9. Find additional income streams 

Look for opportunities to work additional hours, sell things you no longer need, or find a side hustle like delivering food or walking dogs. The money can really add up, as it was found that the average person with a side hustle in 2023 made $810 a month.

And don’t be afraid to ask for a raise. “It doesn’t always occur to women to ask for more,” Valterra says. “But if it’s been more than two years since you had a raise, it is time to ask for one. More money can be a big help in reducing financial stress.” (Here's your ultimate guide on how to ask for a raise!)

10. Improve communication with family, friends, and partners

It can be uncomfortable to discuss money, but talking with friends and family can provide both emotional support and perspective. 

“Stress that stems from financial issues is less likely to be discussed with loved ones,” Valterra says. “They may talk about their difficult boss, for example, but be reticent to share their stress at not having enough money to cover important bills, which exacerbates financial stress even more.” 

Given the prevalence of financial stress, it’s likely others have experienced the same anxieties and can offer practical tips. If you can’t talk about it, you can’t change it, so she recommends opening up to those around you, which will help nurture both those relationships and the relationship you have with your money.