Managing financial stress: Strategies for a brighter future
Financial stress is extremely common these days, with a recent CNBC study finding nearly 3/4 of Americans are worried about personal finances. This burden is particularly heavy for younger generations, with a significant majority of both Gen Z and Millennials feeling like they’re behind financially compared to previous generations. The impact of financial stress can be profound, affecting not only mental and emotional well-being but also physical health. If you’re feeling like your income isn’t keeping pace with your financial obligations, never mind your financial goals, you’re not alone. However, there are steps you can take to get control of your finances, alleviate stress and take steps toward helping to achieve your future financial goals.
For many Gen Z and Millennials the challenges of financial planning are linked to factors that are common in the earlier stages of your career. You may be just starting out in your field so your salary may leave something to be desired. Combined with the high likelihood of having student loans debt as well as the impact of inflation and high cost of living and it’s understandable that planning for the future can seem almost impossible.
Starting with a comprehensive overall look at your finances will help you really understand your income flow alongside your expenses, debts, and future goals. If this feels stressful, it’s ok! Tackling financial stress means being able to identify and understand its triggers, from debt burden to spending habits.
Common sources of financial stress
Student loan debt: Student loans are often the most substantial debt held, especially for Gen Z and Millennial workers, due to constantly rising higher education costs and the imperative to have a degree for most careers. The high balances of student loans can cause serious mental and emotional strain. One study found student loan debt was linked to problematic levels of drinking, depression, and anxiety.
Credit card debt: Due to high interest rates this debt can accumulate quickly. Because some people turn to credit cards when cash flow is inadequate, this debt can be risky. The New York Fed found recently that credit card balances and delinquencies were especially high amongst borrowers aged 30-39, likely because of the coinciding student debt burden.
Economic downturns: economic uncertainty, recession fears, unstable job markets, and the lingering impact of upheaval that began with the 2020 pandemic can exacerbate financial stress and complicate financial planning.
Emergencies: Whether it's a medical emergency, car repairs, or home maintenance issues, unforeseen expenses can wreak havoc on even the most carefully planned budgets.
Uncertainty about the future: Concerns about job stability, financial well-being and the ability to meet future financial obligations can contribute to ongoing stress and anxiety for Gen Z and Millennials. Add in the rising cost of living, including housing, healthcare and education, and it’s easy to see how financial stress can compound.
Impact of financial stress on mental and physical health
If you are dealing with any of the factors above you probably already know that the resulting financial stress can take a toll on both mental and physical health This may manifest in symptoms such as anxiety, depression, headaches, or insomnia. Studies have also shown possible links between financial stress and an increased risk of chronic diseases like heart disease and diabetes. Moreover, the constant worry about money can strain personal relationships and lead to a decline in overall quality of life.
Acknowledging the impact of stress to your physical and mental well-being can be part of the process of taking action to mitigate it. You deserve to feel in control and able to manage your financial responsibilities and help is available.
Steps to alleviate financial stress
Create and prioritize your budget: Budgeting is a fundamental tool for managing finances and reducing stress. By tracking income and expenses, you can gain clarity on your financial situation and identify areas for improvement. It's essential to differentiate between essential expenses (e.g., housing, utilities, groceries) and discretionary spending (e.g., dining out, entertainment) and prioritize accordingly. Once your basic budget is defined, you’ll have a better sense of how much you have leftover to create an emergency fund or save for larger goals.
Set realistic financial goals: Setting achievable financial goals is important practice for long-term financial well-being. Whether it's building an emergency fund, paying off debt, buying a home, taking a trip or saving for retirement, clear objectives provide direction and motivation. When setting goals, make sure you’re being realistic about your finances and give yourself a timeline that works with your unique situation.
Strategies to stay motivated and focused on goals: Break goals into smaller, more manageable tasks; celebrate small victories along the way, and visualize your eventual success. Additionally, look to friends and family, or even online communities, to get support, encouragement and accountability.
Holistic strategies: In addition to practical financial strategies, broader coping mechanisms for stress are vital for overall well-being. Practices such as deep breathing exercises, meditation, and physical activities like yoga can help individuals manage stress and maintain perspective. It's essential to prioritize self-care and seek professional help if needed.
Recognizing the interconnectedness of financial and mental health is crucial. Poor financial health can exacerbate mental health issues and vice versa, while addressing mental health can lead to better financial decision-making.
Importance of seeking professional help when needed
Just like how you might seek a therapist or psychiatrist to treat mental health challenges, when financial stress becomes overwhelming, professional help can be life changing. Financial professionals, counselors, and other experienced professionals can provide guidance, support, and practical strategies for improving financial well-being. Whether it's developing a debt repayment plan, creating a budget, or addressing underlying emotional issues, seeking professional help can provide the support you need to make real changes and progress.
Managing financial stress is a critical component of overall health and well-being. By identifying sources of stress, creating a realistic budget, setting achievable goals, and implementing coping mechanisms, you can take control of their finances and reduce stress levels. Seeking support from friends, family, and professionals can provide additional assistance on the journey to financial stability. Reach out today to learn how a financial professional can help you find proactive strategies to help pave the way for a brighter financial future.
Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with an administrative office located in Charlotte, NC, and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN).
