Money Stress Is Killing Me: 5 Steps To Reduce Stress

woman sat at desk looking stressed

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If money stress is killing you, read this

Firstly, know that money stress is completely normal and affects 52% of people every year (Bankrate, 2023).

Secondly, there are organizations out there that can help if you are struggling. We have listed some towards the bottom of this article.

Finally, know that you will get through this, and that no money problem is insurmountable.

How to deal with money stress

Dealing with money stress today

Resolving a financial situation can take time and patience, but there’s no reason you cannot start feeling better today.

Forget about the money situation just for a moment. Let’s talk about stress and learn how to conquer it.

Stress is a physiological response to a perceived threat.

Our hunter-gatherer bodies evolved with a ‘fight or flight’ mechanism in response to danger.

Back then, our fear was that a lion, tiger, or bear (oh my) might eat us. Today, there are more intangible dangers that we feel threaten our existence, like mounting debt.

Your body, in response to both these types of perceived danger, builds up energy. It gets ready to fight or flight (run away) from it.

If you do not fight or run away, it’s like your body is revving its engine hard with the handbrake on. This is what makes you feel stressed.

The solution? Fight or run away. In this case, running is your best bet.

So yes, put on your shoes and go for a run. Attend a boxing class and get the energy out. It is scientifically proven to reduce your stress.

The exercise will also help with any sleeping problems you may be having due to the stress.

Don’t forget to look after yourself generally. If you are not eating well, you compound the problem of stress.

Try to keep to your usual routine, even if you feel you cannot face the world.

Dealing with money stress in the long term

Managing stress with exercise is an important life skill. But dealing with money stress long-term means dealing with the problem head on.

Excersize tackles the symptoms, not the cause.

In order to manage your stress about money, take control of your financial situation.

The below 5 steps to reducing money stress will put you on a path to becoming stress-free about money.

Step 1: Look at your accounts

This may sound strange to some, but not to others.

When people are stressed about money, it’s common to avoid looking at your bank balance, credit card statements and interest accumulating on other loans.

Stress comes from a lack of control. If you do not fully understand your financial situation, the lack of control will cause more anxiety.

You cannot remain blissfully unaware. Take complete stock of your financial situation.

We don’t need to make a full budget; we just need the numbers.

Right now, open your accounts, find your statements and write the numbers down in a new spreadsheet or on a piece of paper.

  1. In one column, add the money from your bank account and savings accounts.
  2. In the next column, add the money owned on any debts. Make a note of the interest being charged and the minimum payments.

We now know how much money we have and how much money we owe.

Next, on the same spreadsheet or piece of paper:

  1. Write down your income for the month (your wage).
  2. Write down all your regular, monthly expenses. Mortgage or rent, groceries, insurance and so on. Write down the estimated amount for each.

The difference between the two will tell us how much money we have left over each month, or how much the shortfall is to pay for all your expenses.

Step 2: Cutting your expenditure

Regardless of whether you are stressed about your monthly payment obligations, or a large debt that is accumulating interest, you first need to examine your daily expenses and ruthlessly cut down.

The money left over each month will go towards paying down debt or creating an emergency fund (3-6 months of expenses, saved up in an easy to access account).

A falling debt value will decrease your money stress. An increasing safety net in the form of an emergency fund will also reduce money anxiety.

But to get there, you need to be cashflow-positive. You need to cut your spending so that you have more money left over each month.

Really think about each bill you need to pay.

  • Can you get by without Netflix?
  • Have you been using that gym membership?
  • Why did you spend so much on takeout? Can you cook at home more?

Look at the big-ticket items too:

  • Are you spending too much on your rent or mortgage? Many people bite off more than they can chew. Downsizing can reduce your stress.
  • Are you spending a lot of money commuting? Can you get a more economical car, or even work remotely more days per week.
  • Have you got a car payment for a vehicle you really can’t afford? Consider getting a used car instead. Can you sell the financed car to pay off the balance?
  • Have you got a dream vacation booked that has caused stress on your financial situation? See if you can push it out until you can properly fund & enjoy it.

You will need to keep cutting your spending until your income minus the expenditure is a positive number.

If you absolutely cannot get there you have some options:

  1. Try to get a higher paying job or ask for a raise.
  2. Take a side job or start a side hustle.
  3. Move back in with your parents or a friend.
  4. As a last resort, ask a close family member or friend for help.

Step 3: Prioritize your spending

Now that you are cashflow-positive, i.e., you have money left over each month, we need to decide where to put it.

The two common areas of money stress are:

  1. Mounting high interest-debt
  2. Living paycheck-to-paycheck

Dealing with the stress of high-interest debt

If you have high-interest debt, dealing with this problem is a good way to relieve money stress.

You may have one large debt or multiple smaller debts split across credit cards & other loans.

You have two options for paying down debt:

  1. The snowball method, where you pay off the smallest debt first. This is the best psychologically, as you get to see the number of debts you have fall faster.
  2. The avalanche method, where you pay off the debt with the highest interest first. This is best financially as you will end up paying less overall.

There really is no right or wrong answer. Do whatever works for you and reduces your money stress.

Of course, if you have just one high-interest debt to pay, this should be your priority. Any excess funds you have each month should go towards this.

A good tip is to automatically make the debt payment as soon as you get paid, or at least transfer the money you will use to pay off the debt to another account.

If the money disappears from your account immediately, you’re less likely to notice it and be tempted to spend it.

If you are struggling to pay off the debt, you can call the owners of that debt (be it the credit card company or loan provider) and ask for assistance. They might help with restructuring the debt for you.

Dealing with the stress of living paycheck-to-paycheck

In step 2, we talked about cutting your expenditure so that you have money left over each month.

If you still find you are running out of money and waiting for the next paycheck to come in, this will of course cause a great deal of money stress.

Re-evaluate your expenses; how did you run out of money? It was likely one of three things:

  1. You overspent due to irregular expenses, such as birthday presents.
  2. You had a major unexpected expense, like a dental issue or a car problem.
  3. You overspent due to a lack of self-control or awareness of your finances.

Here’s how you prevent each of the three things happening:

  1. If you had an unexpected expense like a birthday party & present, you might need to go back to step 2 and flesh out your budget further. You need to look at the months ahead and find what expenses you might have in the future. You can create a ‘miscellaneous’ pot of savings for smaller expenses such as this.
  2. If you had a major unexpected expense that you cannot afford, this is because you do not yet have an emergency fund. An emergency fund is 3-6 months of expenses, saved up in an easy to access account for a rainy day. It is your financial safety net and your mental cushion to stop money stress.
  3. If you overspent due to a lack of self-control, you will need to learn financial discipline. That sometimes means saying ‘no’ to social invitations, not getting the new clothes you seek, or taking a more modest vacation.

A good tip before you buy something is to wait for 1 month. If you still want the item after 1 month, you know you really want it. This can stop impulse purchases.

Step 4: Follow the personal finance flowchart

Now you’re on the path to financial stability and (hopefully) money stress is no longer killing you, it’s time to take the next step.

The key to being financially stable long term is to save and invest for the future. This will ensure money stress never comes back to haunt you.

Our financial flow chart can show you, step by step, what you need to be doing with your money and when.

For example, after your debt is paid off and you have a large emergency fund, you might want to open a Roth IRA (or Stocks and Shares ISA in the UK) and start investing.

We have a great starter investing guide here.

Step 5: Invest in yourself

Financial discipline is important to reducing money stress. If you spend every cent you earn, no matter how much money you make, you will always feel stressed.

Once you get good at defense (keeping hold of the money you make) it’s time to think about offense (making more money for your time).

The way to make more money is to offer more value to the world.

Invest in yourself.

This might sound strange, as spending money is rarely a good way to deal with money stress.

But it absolutely can be if you are investing in yourself with the goal of learning new skills.

The more skills you have, the more value you can offer an employer, and the more money you can earn.

Organizations that can help with money stress

You do not have to suffer alone; help is out there.

In the US, you can talk to the Consumer Credit Counseling Service (CCCS). This is a non-profit organization that will help you find a workable solution to financial problems.

In the UK, talk to Stepchange, a free expert advice debt charity.

If you feel like money stress is killing you, you can talk to the Crisis Text Line in the US, Canada, UK & Ireland.

Crisis Text line is a not-for-profit organization providing free mental health texting service through confidential crisis intervention via SMS message. The organization’s services are available 24 hours a day, every day.

3 quotes for dealing with money stress

Finally, let me leave you with three quotes that resonate with me when it comes to financial strife.

If you’re going through hell, keep going.

Winston Churchill

This, too, shall pass.


Everything will be okay in the end. If it’s not okay, it’s not the end.

John Lennon & others.

Talk to a financial coach for free

Hi, I’m James Beckett.
Author & financial coach.

We help people take control of their finances with services such as:

✔️ Debt management.
✔️ Budgeting.
✔️ Saving & Investing.
✔️ Money Mindset.

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