7 Ways to Reduce Financial Stress

There’s no one-size-fits-all solution for reducing or eliminating financial stress. Following are seven tips worthy of consideration. 

Be specific. Creating a ranked list of specific money issues that are stressing you the most can be the foundation of a good plan to reduce financial stress. Keep your list short – too many items may overwhelm – and try framing each with a positive vibe, such as, “I would feel so much better if I did X, Y, and Z.”

 
If you’re married or in a long-term partnership, consider creating individual lists and then comparing them to see whether you’re on the same page. Disagreements about money can stress a relationship. If you’re having trouble finding common ground and devising a unified plan, consider turning to a financial planner or perhaps even a “financial therapist” – it’s a newly emerging discipline.²

Behavioral psychology shows the formal act of committing to a goal by writing it down motivates action. Having someone hold you accountable may also be helpful, providing a sometimes-needed reminder, or “behavioral nudge,” to stick with your goals. You may also consider rewarding yourself – within reason – for sticking to or reaching your goal by spending some money on something that brings you pleasure.

Laying out all your expenses – such as creating a monthly budget – can help you better understand where your money goes. While it may be possible to identify and eliminate a single line item that on its own relieves your financial stress, you’re more likely to find smaller places where you can trim and save $10, $25, or $50 a month. Examples may be cutting back on food and grocery delivery costs, switching your auto insurance plan, stretching the time between haircuts, or cancelling subscription-based services you no longer use.  

Perhaps a fresh approach to the way you prioritize your spending is in order. One option is zero-based budgeting, in which you assign a specific “job” – including savings – to every dollar of your income. Each dollar must be used and accounted for. The goal is that each month the income you bring in, minus the expenses you pay during the month, will net out to zero. If that’s not the case, you’re in control of making the changes to get you there. What expenses might you trim? Or eliminate? Granted, a zero-based budget may take some work, but it can help you take control of your finances and, in turn, relieve stress.

Say you’re looking to borrow money for a mortgage or car. You may qualify for a high amount – and hopefully at a low interest rate if your credit score is high enough. That may sound great in itself, but in the broader context of your other expenses, goals, and stress points, you may be adding to your financial stress. Generally speaking, opting for a less expensive home or car means lower payments and more money to use toward other expenses.

Paying down high-rate credit card debt can help alleviate stress. If your credit score is in a higher range, you may qualify for a 0% intro APR credit card. This might let you move credit card debt to a new card that doesn’t charge interest, or offers a lower rate than what you have, for an introductory period.

 
If you have multiple credit cards, another strategy for paying down their debt is to send extra payments on the card that charges the highest interest rate. This “avalanche” method reduces the total amount of interest you pay while reducing your debt. Conversely, you may prefer the quick win of the “snowball” method, which prioritizes the card with the smallest balance before you pay off the next card. Ultimately, which method you choose is a personal decision that will likely hinge on what keeps you motivated and eases your financial stress. If you need a hand getting started, a nonprofit debt management program may be helpful. 

Whatever financial problems are causing stress, understand they will typically take time to resolve. In the meantime, celebrate that you are on the path toward that goal. Every month you start with a smaller debt load is an important step toward financial security and less stress.   

Debt can be a big source of financial stress. Reducing both your debt and your financial stress usually involves figuring out what’s worrying you most and then analyzing your current spending to see places you can cut out or cut back. But if you end each month with a little more tucked away in your emergency savings account, you’ve made an important step to reduce your financial stress. And every month you start with a smaller debt load is a step toward greater financial security.