If you go by the numbers, financial anxiety is becoming something of an epidemic. Heading into 2023, more than half of Americans said they’ve faced financial challenges over the last year, according to a recent study — nearly a 20% increase over the year prior. But did you know those money woes could be taking a toll on your mental and physical health — in addition to your pocketbook? And while some levels of stress can be motivating, too much can be paralyzing.
But don’t lose hope. Here are five ways to combat your cash concerns and take control of your finances.
1. Face Your Financial Fears
Fear of the unknown can be a powerful force — and this is certainly true when it comes to your finances. It’s often more stressful to be in the dark about your situation than to face reality. So take a financial inventory. Write down your income, expenses, assets, debts, savings and retirement account balances — and more. If you know where you stand, you won’t add to your stress by playing out worst-case scenarios in your mind.
2. Make a Written Plan with Actionable Steps
Once you know your situation, creating a written financial plan can help further lower financial anxiety. Your plan should include a budget you can stick to, a strategy to pay down debt and specific action steps to help meet your goals. You could start saving a certain percentage or dollar amount from each paycheck by upping your 401(k) contributions, cutting certain discretionary expenses or picking up a side hustle.
3. Create an Emergency Fund
Having an emergency fund means you’re less likely to drain retirement savings or take on additional debt to cover unanticipated expenses like car repairs and medical bills. A good guideline to aim for is to keep at least three to six months of your regular expenses in a highly liquid savings or money market account (but not under the mattress). Knowing you can cover an emergency can give you greater peace of mind and help alleviate the kinds of worries that might be keeping you up at night.
4. Practice Self-care
Coping with economic fears isn’t just about adjusting your finances. It’s also important to make sure you’re practicing good self-care and maintaining the types of habits that support your overall physical and mental health. Getting enough sleep and exercise, maintaining a healthy diet and practicing stress management techniques such as meditation can help you process your financial fears in a healthier way.
5. Seek Support
Simply knowing that you're not alone can help. But seeking support from trusted friends and family, as well as expert help from a financial professional or licensed therapist, can be instrumental in putting financial anxiety in the rearview mirror. Some companies offer employee assistance programs that can be a valuable resource — check with your HR department to see if yours does. And if your employer offers a financial wellness program, you may have access to online tools and resources, group education or even one-on-one sessions to get the information you need.
Tackle Financial Fears Head-on
Financial stressors are a part of life that we can’t always avoid, but we can control how we deal with them. Creating a systematic plan and developing skills and tools to shore up your finances and improve your financial health is achievable no matter what your current situation is. Overcoming fears and regaining financial control can bring a sense of empowerment, reduce stress and pave the way for a brighter financial future.