Dealing with persistent inflation and paychecks that often fall short of covering the rising cost of living, many people are feeling the strain of financial stress as they try to balance their expenses, protect their savings, and plan for the future.

In fact, nearly half (47 percent) of adults say money has occasionally had a negative effect on their mental health, according to Bankrate’s 2024 Money and Mental Health Survey.

Financial Struggles and Their Impact on Mental Health:  

Almost half of adults (47 percent) report that money negatively affects their mental health at least from time to time. Women are more likely than men to say money is a source of stress (51 percent vs. 42 percent). Generation X (ages 44-59) is the most affected, with 54 percent saying money impacts their mental health, compared to 50 percent of millennials (ages 28-43), 47 percent of Gen Z (ages 18-27), and 40 percent of baby boomers (ages 60-78). 

More than half (53 percent) of those in households with an income below $50,000 say money issues hurt their mental health. That number drops to 48 percent for households earning between $50,000 and $79,999, 39 percent for those earning between $80,000 and $99,999, and 40 percent for households making $100,000 or more. 

Among those who report financial stress, inflation is the top concern, affecting 65 percent. Other issues include covering daily expenses (59 percent), a lack of emergency savings (56 percent), and being in debt (47 percent). 

While financial stress is often due to external challenges, there are ways to manage it and improve your financial stability. Here are seven strategies to help you manage financial stress during tough times:

1. Focus on What You Can Control in Your Budget  

You can’t always change everything that’s causing stress, but you can focus on what you can control. For example, look at your food budget. You might save money by comparing prices and choosing store brands, which are often cheaper. Not only will you save, but the sense of control may reduce your stress.

Reducing food expenses can improve your overall budget, as the U.S. Department of Agriculture expects food prices to rise by 2.2 percent in 2024. A simple way to save is by buying store-brand items, which can cost about 40 percent less than name brands, according to CNET research.

2. Look for Ways to Boost Your Income  

Cutting your budget can only go so far, and you don’t want a strict budget to add to your stress. With the cost of goods on the rise, you might need to find ways to increase your income. Some options include:

– Working extra hours: See if your employer can offer additional hours, or if you’re eligible for overtime pay.

– Asking for a raise: If you’ve been doing well at work, ask for a pay raise. If a raise isn’t possible, you could negotiate for perks like remote work, which could reduce commuting costs.

– Selling unwanted items: You could sell things like furniture, clothes, toys, or tools.

– Taking on a side job: Flexible side gigs, like food delivery, tutoring, or blogging, can add to your income. On average, people with a side hustle earned about $810 a month in 2023, according to a Bankrate survey.

3. Pay Essential Bills First  

According to a Bankrate survey, 60 percent of employed Americans say their income hasn’t kept up with rising expenses. If you’re struggling to pay all your bills, start by prioritizing essential ones. Sorting through your bills helps you:

– Identify bills you can cut or reduce.

– Ensure you set aside enough money for the most important bills.

– Reduce financial anxiety by knowing you’ve taken care of the essentials.

Some lenders or service providers may offer payment extensions, giving you more time to pay. Be sure to check for any fees or interest charges.

4. Continue Saving, Even in Tough Times
 

Saving money can be difficult when you’re just trying to make ends meet. Inflation and rising interest rates are reasons many people are saving less, according to Bankrate’s emergency savings report.

Following a savings plan can help you feel more in control and reduce stress. It’s worth shopping around for high-yield savings accounts, as they often offer much better rates than big banks.

You can also set up automatic transfers to build your emergency fund. Once you’ve saved a decent amount, consider placing extra savings into a certificate of deposit (CD), which guarantees a return in exchange for keeping the money for a set period.

5. Track Your Savings Progress 

It’s hard to know if you’re making progress unless you track it. Knowing where you stand is key. 

“Figure out your exact financial situation,” says Tracey Bissett, president of Bissett Financial Fitness. Tracking your progress lets you know if your actions are working.

Building your emergency fund over time can reduce stress. Bankrate found that 56 percent of adults who experience financial stress worry about not having enough emergency savings. Growing your emergency fund can help ease this worry.

“Good financial health and a positive mindset come from understanding your financial situation and how your money is working for you,” says Cara Macksoud, CEO of Money Habitudes.

6. Talk to Your Lenders About Debt  

Debt can be overwhelming. Before it adds to your stress, reach out to your lenders. 

“Lenders are often willing to discuss your situation and find a short-term solution,” says Anna Barker, founder of LogicalDollar. They might offer to extend the loan term or lower the interest rate, which could reduce your monthly payments. You could also look into refinancing.

7. Seek Help from a Financial Advisor

If managing your money feels overwhelming, consider consulting a financial advisor. They can help with goal setting, saving, and reducing debt. Research shows that working with a financial advisor can add about 3 percent to your portfolio each year.

“In stressful times, an advisor should validate your concerns and show you why you should feel confident in your financial plan,” says Macksoud. “A long-term relationship with an advisor helps you see where you were, where you are now, and where you’re headed. Even with market uncertainty, this can give you peace of mind.”

Conclusion: 

Financial stress and anxiety are common, especially with inflation and concerns about the safety of money in banks following recent events. However, by creating a budget, tracking your savings, and seeking support from financial advisors or loved ones, you can take steps to manage your finances and reduce stress.