A certain amount of financial stress can be helpful in guiding good decision making. “Stress as a speed bump can be healthy,” Agnew says. Think the small flutters of anxiety you might feel when making a big purchase. “It’s your financial gut-check in many cases,” Agnew says — or a reason to pause and think twice about whether the action you’re going to take aligns with your bigger goals and financial plans.
Too much financial stress, however, can deeply affect our emotional well-being.
Part of the reason financial stress tends to be so toxic is because of how all-consuming this kind of stress is. Money affects a lot of day-to-day activities (like buying groceries, paying rent or a mortgage, accessing healthcare, and providing for our families). Worrying about money can lead to worrying about all of these things.
“When a person is experiencing financial stress, it is pervasive,” says Alex Melkumian, PsyD, licensed marriage and family therapist, a financial psychologist and founder of the Financial Psychology Center in Los Angeles. “You feel like there is nowhere to turn without being stressed or traumatized by your financial situation.”
Over time, having lots of financial stress —particularly when combined with the lack of sleep that such stress can cause (more on that below) —can lead to complex trauma, Dr. Melkumian says.
Research shows that adults who experience major financial stressors — falling behind on bills, being unable to afford basic necessities, or experiencing a worsening financial situation — report greater levels of psychological distress and lower levels of psychological well-being, for example.
There’s evidence that financial stress is associated with depression across all income levels, although the relationship is stronger in low-income populations.
All of the financial decisions we’re forced to make each day can really add up, Agnew adds. “Some are as small as whether or not to purchase the sale or full priced item at the grocer, and some are as complex as whether or not to lend a large sum of money to a family member or change jobs,” she says. And the bigger decisions can have huge ripple effects in pretty much every aspect of your life.
FAQs
They can lead to relationship problems, physical health problems and mental health issues, such as depression or anxiety. You can minimise the impact of financial stress by looking after your health and seeking support from loved ones or professionals.
What is the root cause of financial stress? ›
Low financial literacy. Financial abuse. Family obligations, such as the need to financially support family members. Economic conditions, such as living through an economic recession.
How to survive financial stress? ›
How to survive financial stress
- Stay active. Keep seeing your friends, keep your CV up to date, and try to keep paying the bills. ...
- Get advice. If you're going into debt, get advice on how to prioritise your debts. ...
- Do not drink too much alcohol. ...
- Do not give up your daily routine.
Financial issues can also lead to physical health symptoms, such as migraines, a weakened immune system, high blood pressure, digestive issues, muscle tension, heart arrhythmia, and sleep problems. This all can lead to you needing to spend money to treat these issues, which can lead to more financial stress.
What is financial anxiety? ›
Financial anxiety, or money anxiety, is a feeling of worry about your money situation. This can include your income, your job security, your debts, and your ability to afford necessities and non-essentials.
Can financial stress cause trauma? ›
Financial trauma can lead to significant mental health consequences, including increased stress, anxiety, depression and feelings of shame, guilt or worthlessness.
What is the biggest financial stress? ›
Inflation/rising prices is a top financial stressor among all races/ethnicities.
How to recover from financial ruin? ›
How to get through a personal financial crisis
- Minimize the damage. ...
- Document the damage. ...
- Cut back on expenses. ...
- Use other people's money before your own. ...
- Assess your savings. ...
- Examine your bills closely. ...
- Develop a new budget that focuses on financial recovery. ...
- What caused the biggest financial impact?
A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression, anxiety, and substance abuse. Financial problems adversely impact your mental health. The stress of debt or other financial issues leaves you feeling depressed or anxious.
What to do if I'm struggling for money? ›
If you owe money and you're struggling to pay
You should speak to the organisations you owe money to – they might let you pay smaller amounts or take a break from payments. Don't ignore bills or letters about money you owe. You can find out how to start dealing with your debts.
High levels of financial stress manifest through physical symptoms like sleep loss, anxiety, headaches/migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression and a feeling of being overwhelmed.
What is financial insecurity? ›
“Financial insecurity” is used broadly to describe living paycheck to paycheck and/or concerns about making ends meet. People who are financially insecure are economically vulnerable; they have little savings, often spend as much as or more than they make, and are frequently crippled by unmanageable debt [6].
What are the consequences of financial problems in a family? ›
Mental health issues, such as stress, anxiety, confidence and esteem loss, and depression, in adult and child family members. Behavior issues, academic issues, and issues of negative activities and peers, in children and adolescents. Couple and marriage issues, reducing financial strain effects on relationships.
What is financial trauma? ›
Financial trauma is often the result of chronic financial stress, like having your finances controlled by someone else or living in poverty for an extended period of time. Some symptoms of financial stress include: Negative perceptions about money, which may include blaming yourself for monetary failures.
What does the Bible say about money worries? ›
In Hebrews 13, Paul reminds us to “keep our lives free from the love of money, and be content with what you have.” No matter how big your dreams are, remember to be content now. The God of the universe is for you, and that is more than enough.
What to say to someone who is struggling financially? ›
Reassuring someone that they don't have to bottle things up and pretend that everything is fine can be a real comfort, especially if they're going through a tough time financially. Being patient and empathetic may also help them take the necessary steps towards getting debt help.
Why do people have financial stress? ›
2 Stress can result from not making enough money to meet your needs such as paying rent, paying the bills, and buying groceries. People with less income might experience additional stress due to their jobs. Their jobs might lack flexibility when it comes to taking time off.
What is a common underlying cause of financial crises? ›
Financial. crises can be precipitated by any number of specific events and underlying risks, such as asset. bubbles, debt crises, or inadequate supervision or regulation of financial markets.30 Generally, financial crises result in financial market disruptions, declining asset prices, tightening credit.
Why am I always struggling financially? ›
Some of the most common reasons include: Lack of financial education: Many people do not have the basic financial knowledge they need to make sound financial decisions. This can lead to them making poor choices with their money, such as taking on too much debt or not saving enough for retirement.
