5 Steps to Help Lower Your Financial Stress

May 8, 2024 Susan Hirshman
Self-reflection, focus, and determination could help you take control of your financial life and help ease money stress.

Career demands, relationship concerns, family challenges, and health are just some of life's issues that can add to our stress levels and weigh us down. But the biggest culprit? Money worries. If money issues are creating stress in your life, you aren't alone. And it's more common than you may think.

Financial concerns top the list of stressors, among 18-34 and 35-44-year-olds, according to the American Psychological Association's 2023 Stress in America survey. What's more, two-thirds of each age group reported feeling "consumed" by their worries about money. Nearly 47% of those surveyed said they wished they had someone to help manage their stress, yet 36% don't know where to start. If you are feeling that way, it's okay to reach out and ask for help managing your stress. Many health insurance companies are now offering coverage for both physical and mental wellness.

If you are committed to tackling your money issues, take heart. There is a path to help transform your financial stress into feelings of strength and empowerment. It's not always easy, but with self-reflection, determination, and perhaps the help of a trusted friend or professional, there can be opportunity to gain more control over your financial life.

How did you get here?

Chances are that your stress about money didn't arrive overnight. The first step to help you take control is to identify the cause of your money concerns and reflect on how you got here. However, money issues are rarely just about money. They can be tied up with our deepest emotional needs (security, success, comfort) and fears (failure, poverty, inadequacy). This can be a lot to untangle, so give yourself some time to understand what attitudes might be driving your day-to-day behavior as well as longer term feelings and decisions about money.

To explore your relationship with money, ask yourself a few questions:

  • How was money treated or discussed in your family growing up? Positively or negatively or not at all?
  • Did you grow up with a sense of abundance or a feeling of shortage?
  • Did your parents teach you basic money skills?
  • How do your parents' behaviors and your own experiences affect your actions and feelings about money today?  

Be thoughtful and nonjudgmental about your past actions. The goal is self-discovery not self-shaming.

Shift your financial mindset to a focus on the future.

It can be hard to change course. I don't want to minimize how difficult it can be, and it can take a lot of introspection and determination. But shifting your mindset is possible. Instead of focusing on shortcomings and fears, look to the future and the positive outcomes you desire.  

As you make this shift, remember progress doesn't mean perfection! You might slip up here and there, splurge on a dinner you can't really afford, or forget to pay a bill on time, and that's okay. The important thing is that these missteps are the exception, not your usual behavior. And please, if you can, try and refrain from what I call "compare despair." That's judging yourself against your perceived image of others, whether that's friends, family members, or even more likely, celebrities or influencers on social media. This mindset could be self-destructive and may not even be rooted in reality.

Five steps that could help you take control of your financial life.

Once you have a handle on your money beliefs and the triggers that cause you stress, it's time to make a plan for your new financial future. Here are five steps to help you start.

1. Identify and write down your goals.

Think carefully about your goals—for the next year, for the following two to five years, and for your more distant future:

  • Do you want to buy a home?
  • Switch jobs?
  • Start a business?
  • Have a wedding?
  • Retire without fear of running out of funds?

Write down whatever is most important to you, with a specific timeframe, dollar amount, and priority level ("must-have" or "nice-to-have").

2. Review the numbers.

Now that you know where, when, and what you want to achieve, see if your current spending allows for savings toward these goals. In other words, after taking your net paycheck and subtracting your "must have" expenses—like rent, utilities, student loan payments—and then your discretionary expenses—like travel, entertainment, and dining—is there enough left each month to save for your desired goals?  

If not, let the tradeoffs begin! How can you adjust your discretionary expenses to achieve your goals? For example, are you willing to trade one vacation a year for a staycation in order to be able to have your dream wedding three years from now? Or are you willing to have a smaller wedding so that you can fulfill your desire for foreign travel? There is no one right answer. You must decide what is right for you. But compromises may be likely.

3. Prioritize saving.

Think of saving as paying yourself first. How much should you save? Aiming to save at least 10-15% of your income can be a good goal, especially if you are under 30. However, the later you begin to save, the more you should set aside to catch up.

4. Go on autopilot.

This may not sound important, but as much as possible, put your savings and bill-paying on automatic. A significant body of behavioral economic research supports the power of creating a path of least resistance for positive behaviors.

5. Continue to learn.

The last step in your journey toward financial well-being is to continue your financial education. You can do this by listening to podcasts, reading articles and books, consulting with a knowledgeable friend or family member, forging a relationship with a trusted advisor, or all of the above. When it comes to investing, make sure you understand the importance of compounding, diversification, and regular check-ins.

Not sure where to start? There are free educational resources available at SchwabMoneywise.com®. The key is to maintain an open and inquisitive mind, ask questions, do research, and evaluate your situation in terms of opportunities and challenges.

The solution for financial stress may not be as simple as having more money.

No matter how much you earn or have saved, the path to financial well-being and a more constructive mindset could start with:

  • Being clear and realistic about your goals.
  • Understanding the behavior patterns that could stand in your way.
  • Taking steps to take care of yourself now and into the future—emotionally, physically, and financially.

These steps could help you feel competent, confident, and in control versus "consumed" by worries about money. You've got this!

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.