Simple Ways to Reduce Money Stress
Financial stress is something many people experience at some point in their lives. Whether it's due to debt, unexpected expenses, or lack of financial management skills, financial worries can take a toll on your mental and emotional health. According to the American Psychological Association, money is a major source of stress for 66% of adults, with 57% stating current expenses, such as food and rent, as their main source of money-related stress.
Dealing with financial stress can be difficult, but thankfully, there are practical steps you can take to ease the burden and regain control of your finances. Here are some simple ways to reduce financial stress.
1. Face and accept your financial problems
The first and most important step in reducing financial stress is to acknowledge the problem. It can be tempting to avoid looking at your bank account or bills when you're feeling overwhelmed, but ignoring the issue only makes it worse. Accepting your financial situation is the first step toward fixing it. Be honest with yourself about your spending habits, debts, and financial goals.
Once you know where you stand, you can start working toward a solution. This involves reviewing your financial obligations and tracking your income and expenses. Facing your financial issues head-on is empowering and lays the foundation for resolving them.
2. Start small and take action
When you're under financial stress, it’s easy to feel like you need to solve everything at once. However, that can lead to more anxiety and burnout. Instead, focus on making small, manageable changes. Break down your financial goals into tiny, achievable steps. Whether it’s paying off a small debt or saving a little bit of money each week, these small victories can help build momentum.
For example, if debt is a significant source of your money stress, start by focusing on paying off a small credit card balance or contacting a creditor to see if they offer any hardship assistance. These actions can help reduce your overall stress and give you a sense of accomplishment.
3. Set clear goals and priorities
One of the best ways to reduce financial stress is to set clear financial goals. Creating these goals helps you regain control and focus, setting you on the path toward financial freedom. Take time to define your short- and long-term financial goals. What do you want to achieve, and why is it important? Maybe you want to build an emergency fund, pay off your credit cards, or save for a major purchase. Whatever the goals may be, write them down and prioritize them.
Having a clear direction allows you to make better decisions when money is tight. It also makes it easier to handle financial setbacks because you have a plan in place and know what to focus on.
4. Create a financial plan that matches your goals
A well-structured financial plan is essential to reducing financial stress. Your plan should align with your goals and priorities and be practical for your current situation. Start by creating a budget that accounts for your income, expenses, and debts. Be realistic about what you can achieve and ensure your financial plan is easy to follow.
Focus on building strong savings and positive credit. This can include contributing to an emergency fund or paying down high-interest debt. When you have a clear plan, you’ll feel more in control of your finances, and over time, it will reduce your stress levels.
5. Celebrate your progress
As you work through your financial challenges, it's important to celebrate the progress you make. Whether it's sticking to a budget, reducing your debt, or reaching a savings milestone, every achievement is worth recognizing. Celebrating your successes helps reinforce positive financial habits and keeps you motivated.
Financial progress doesn’t happen overnight, and setbacks are part of the journey. However, focusing on the small wins and celebrating them can help ease stress and make the process feel more rewarding.
6. Don’t be afraid to ask for help
Sometimes, financial stress can feel too overwhelming to handle alone. In these cases, seeking professional help can provide much-needed relief. Financial counseling, debt management programs, and talking to a trusted advisor can help you develop an actionable plan to tackle your financial issues, contributing to lower overall money stress.
For example, if you’re struggling with debt, a credit counselor can negotiate with creditors to lower your interest rates or waive fees. They can also help you create a debt management plan (DMP) that consolidates your debt into one manageable payment, making it easier to stay on track.
80% of MMI clients report immediate stress relief after their initial financial counseling session. If you're feeling overwhelmed, don’t hesitate to reach out for help.
7. Build an emergency fund
Having an emergency fund is one of the most effective ways to reduce financial stress. Unexpected expenses – like medical bills, car repairs, or job loss – can derail even the best financial plans. An emergency fund acts as a safety net, giving you the confidence that you can handle these surprises without going into debt.
Experts recommend setting aside three to six months’ worth of living expenses in an easily accessible savings account. Start by setting aside small amounts, and gradually increase your contributions over time. Even having a small emergency fund can reduce financial stress and give you peace of mind.
8. Address the root cause of debt
Debt is a common source of financial stress and reducing it should be a priority. However, it’s important to address the root cause of the debt in addition to paying it off. If overspending or poor budgeting is behind your debt, a debt consolidation loan or DMP can help reduce money stress by simplifying your payments and lowering interest rates. But you must also work on the behaviors that caused the debt to accumulate in the first place. That may mean adjusting your spending habits, cutting unnecessary expenses, and living within your means.
Financial stress doesn’t have to control your life. By taking small, manageable steps and seeking help when needed, you can regain control of your finances and reduce your stress levels. Whether it's setting clear goals, creating a financial plan, or building an emergency fund, the key is to take action and stay committed.
If you're feeling overwhelmed, consider reaching out to MMI for a free financial counseling session – with the right support, you can take control of your financial future.
