Money troubles may be common, but constructively managing these troubles is less so. Affecting everything from relationships to sleep to mental health, financial stress has far-reaching consequences that go well beyond our bank accounts. And it can’t be overstated just how important it is to find effective coping mechanisms for these financial stressors when they arise.

If you’re experiencing this, take a breath. There are ways to be proactive in managing your stress while steadily tackling the obstacles in front of you, even if it means taking one baby step at a time.

The Impact of Money on Stress

Financial stress and mental health have an undeniable link. According to a 2024 Bankrate survey, 47% of adults claim that money has a negative effect on their overall mental health. In another 2024 survey, MarketWatch found that 65% of respondents cited finances as their most significant source of stress. It’s clear that worrying about money is not only common but rampant, and this can lead to many negative consequences in day-to-day life.

Being overwhelmed with debt and financial obligations can put immense strain on your mental, physical, and emotional well-being. Financial stress can trigger depression and anxiety over making ends meet, covering monthly payments, or facing an unexpected expense. This can lead to poor sleep, lowered energy levels, unhealthy coping mechanisms, and a subsequent decline in cognitive function—all concerning issues that can go on to affect your productivity, relationships, and social life.

The repercussions of financial stressors are multifaceted, and managing them requires a multifaceted strategy. But with proper planning and an actionable approach, you can take steps in the right direction.

How to Manage Financial Stress in 8 Steps

1. Create a Budget
2. Make a Plan
3. Look for Ways to Boost Your Income
4. Contact Your Lenders
5. Save, Save, Save
6. Avoid Unhealthy Coping Mechanisms
7. Tap Into Your Support Network
8. Make Self Care Part of Your Routine

1. Create a Budget

It’s a myth that budgeting is stressful. In fact, having a clear roadmap of your financial health can take the stress out of the unknown, leaving you better equipped to pay bills, chip away at debt, and plan ahead.

A detailed budget gives you a crystal-clear snapshot of where your money is coming from and going. Your impulse buys and discretionary spending will be laid bare for you to see. Maybe you’re spending more on nonnecessities than you originally thought. Or maybe your household is chronically spending more than it’s bringing in, which may be the nudge you need to find additional income. Maybe you need to downsize. Maybe you’ll learn that credit card debt is the real culprit behind most of your financial worries. Maybe your financial issues actually aren’t as bad as you feared.

Regardless of what the budget shows, having one can only help you; knowledge is power. It will grant you the clarity you need to take the next step below.

2. Make a Plan

Now that you have a budget, you can leverage that information into a plan. The first thing you should do is set realistic, tangible goals that are within reach. Write down each of your goals and create a timeline; give yourself some wiggle room so you don’t get discouraged. Then, decide on a strategy.

You may not want to make your first goal paying off a $15,000 credit card balance when you owe a few hundred dollars on another card. Instead, consider the snowball method—where you pay off small debts first to give yourself a satisfying sense of accomplishment. While it may not save the most money over the long run in accrued interest, it can encourage you to keep the momentum going. This keeps you from becoming overwhelmed and tapping out early. Remember that debt repayment not only requires a financial strategy, but a psychological one, too.

Think about what other financial goals you hope to achieve. Maybe you want to build an emergency fund, save for a home repair, or replace an old car. Break things down into increments so you can make progress markers and see the proof of yourself closing in on your targets.

3. Look for Ways to Boost Your Income

No matter how much we scrimp and save, sometimes what we really need to do is bring in more money. If cutting costs isn’t enough to assuage your financial stress, boosting your income might be the next logical step. This can make a real difference in fast-tracking debt repayment, bulking up your savings, and breaking free from the paycheck-to-paycheck cycle.

There are a few ways you can try to do this. Consider taking on a side gig, looking for a second job (or part-time work), job hunting for a higher salary, or even negotiating a raise. In doing so, you’ll likely find that an increase in income leads to a decrease in stress.

4. Contact Your Lenders

If debt is the primary culprit of your financial difficulties, and you’re struggling to make payments, proactively reach out to your lenders and explain the situation. Whether it’s your mortgage servicer or your credit card provider, lenders would usually rather hear from you than see you lag in payments and rack up fees, penalties, and hits to your credit—all of which have potential to be substantial.

Explain to them that you’re experiencing financial hardship. Be honest and respectful, and ask if there are any options available to you at this time. There’s no guarantee, but you may be offered a special repayment plan, an extension on your due date, a temporary deferral, and/or restructured terms on a reduced balance or interest rate.

Don’t put this step off out of fear of embarrassment; the faster you act, the more options you might have. Remember that it’s in the lender’s best interest to help their clients fulfill their financial commitments. They are often willing to provide pathways that help you do just that.

5. Save, Save, Save

It might go without saying, but saving as much money as possible can significantly reduce your overall financial stress. This is another area where your budget can help. Once you have a clear picture of which discretionary expenses to scale back on, you can free up cash to put toward savings goals.

Prioritizing savings puts you in better standing to be able to handle an emergency—like a surprise medical bill or a major home repair—without having to resort to credit cards or loans. It gives you a sense of control over your finances, freeing you from the constant worry over where you’ll get the money to cover a big expense. This feeling of stability is worth its weight in gold.

6. Avoid Unhealthy Coping Mechanisms

During any time of extreme stress, the temptation to turn to unhealthy habits can arise. It’s crucial that you avoid falling into dangerous coping mechanisms. Things like overspending (aka, “retail therapy”), substance abuse, or shirking your responsibilities can quickly lead to additional problems. This can cost you even more money and potentially spiral you further into debt.

It can be a real challenge, but clinging to positivity and self-assurance can help you preserve your mental, physical, and financial health in times of debilitating stress. Self-destruction will do nothing but sink you further into a dangerous cycle, and it will become even harder to break free.

7. Tap Into Your Support Network

Sometimes, the best way to navigate stress is to lean on a support network. If you have trusted loved ones who can lend an ear, it can benefit you to have someone to vent to. They may even be able to share a helpful perspective or personal story about a similar situation so you know you aren’t alone.

There are professional support networks, too. You can always ask a financial advisor for help navigating your financial roadblocks, though it’s worth noting that they usually charge a fee for their services. Credit counseling may be another avenue you can explore, where an agency will review your credit and finances and offer advice on managing your situation. Credit counseling consultations are usually free, but there may be a fee to enroll in a debt management plan with that agency.

Finally, there is the option of speaking with a therapist. A mental health professional may not be able to advise you on the complexities of money matters, but they can help you find healthy, effective strategies for managing your financial stress.

8. Make Self-Care Part of Your Routine

One of the healthiest coping mechanisms you can engage in to mitigate financial stress is prioritizing self-care. Self-care does not have to be an additional line item in your budget. It can be as simple as going for a walk, chatting with a friend, losing yourself in a good book, or doing some mindful meditation.

It’s important to categorize self-care not as an indulgence but as a necessity for your mental well-being. These are the things that will help sustain you as you navigate the path of financial recovery.

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