The coronavirus pandemic has increased awareness on a huge issue that many Americans deal with daily, money stress and financial anxiety. Now, more than ever, most people are stressed due to the possibility of a layoff, a salary reduction, or growing debt.
To help you navigate these feelings, let’s tackle five common causes of money stress and financial anxiety, and ways you can overcome them.
Editor’s Note: This article was written in collaboration with guest contributor Patricia Sanders.

Related Articles:
- 10 Rules Financially Smart Women Must Live By To Win With Money
- 7 Tips To Improve Your Financial Wellness
- How to Save Money and Stop Living Paycheck-to-Paycheck
- The Budget Pad: Organize your Income, Track Expenses & Save Money
- Five Steps to Relieve Stress And Anxiety
Money Stress And Financial Anxiety
Anxiety due to poor money management can happen to any of us at any point in time. Like it did to Barbara, a 32-year-old single mom who ended up broke, without a job, and moving into her mom’s place in Chicago along with her son.
She used to be married to a well-paid architect. But Barbara was a shopaholic and relied on credit cards to enable her vice. Four years into her marriage, she found herself depressed, divorced, and drowning in debt.

Barbara had to start from zero, moving in with her mom, and getting a low paying job at a grocery store. As you can imagine, money stress and financial anxiety were a constant in her life. But little by little, she made progress.
Now, Barbara has a better paying job, is on a budget, and saves money every month. More importantly, she is aware of these common causes of financial anxiety, and she has taken action to prevent money stress.
Five Common Causes Of Money Stress And Financial Anxiety
Frequently, we are so caught up in everyday life that we don’t recognize the source of our financial concerns. To avoid this toxic feeling, take a moment to reflect on the following factors that may be contributing to your stress:
1.- Having Little Money Saved
Having no money saved up for emergencies can cause you to live in a constant state of worry. To become financially secure, you need to save up a good emergency fund of at least six to eight months of expenses.
At first, saving up so much money may sound overwhelming, but get started with a baby emergency fund of $1,000. Knowing that you have a little money to fall back on will boost your financial confidence.
2.- High Amounts Of Debt
Having high amounts of debt, such as lines of credit, mortgages, credit cards, payday loans, etc., keeps your anxiety levels high. Not only that but trying to figure out a plan to get out of debt can also trigger more anxiety.
To avoid overwhelm, follow the snowball method to organize your debt. Then, make an effort to focus on tackling only the smallest balance first. Stay current o all your other debts by making the minimum payments, and focus on eliminating one at a time in order.

3.- Job Insecurity
Work-related worries are one of the biggest stress generators. Fear of a layoff, a furlough, or a salary reduction will keep you in a constant state of financial anxiety.
Having experienced a layoff or witnessing your parents dealing with the loss of a job can also make you more sensitive to job insecurity and stress. That’s why it is so important to live below your means and build up that savings emergency account.
4.- Dissatisfaction With Your Salary
One of the main reasons for money anxiety is not being happy with how much you get paid. A low salary can make you feel inferior to others, which in turn leads to feelings of shame and low self-esteem.
If you feel like you are underpaid, focus on making a plan to advance in your career. Perhaps you will have to learn new skills, take a class or a course, or make a career move. The most important thing to know is that you are in control of your destiny, not your employer.
5.- Fear Of Identity Theft
Our financial information is supposed to be secure online. However, with so many cases of security breaches, it is hard to believe it. The reality is that identity theft is for many Americans, a source of real concern.
To tame the fear of somebody using your credit card to make crazy purchases or borrowing money on your name, check your credit reports frequently. You can get a free copy once a year from each of the three major reporting bureaus. Also, consider a credit freeze on your profile to ensure that people can’t borrow money in your name.
Five Ways To Prevent Money Stress And Financial Anxiety
Now that we have acknowledged some of the most common forms of financial anxiety, let’s look at what we can do today to prevent stress.
1.- Live Within Your Means
The best way to ensure you are living within your means is by planning your monthly budget on purpose. We recommend doing it on paper, but you can also use apps or an Excel spreadsheet.
Understand how much you are spending and for what reason. Keep an eye on every transaction and avoid overspending. The cash envelope system is a very effective method to control spending.

2.- Build An Emergency Fund
You need to expect and be prepared for a financial crisis because they are inevitable. A six-months emergency fund will give you so much peace of mind and options to deal with the emergency.
It is amazing how having money saved can incredibly relieve stress, keep you from living paycheck-to-paycheck, and give you clarity in difficult times.
3.- Automate Your Finances
Today’s digital world makes it easy to automate good financial habits. Consider the following ways you can save time, avoid late fees, and reduce financial stress:
Set up direct deposit for your paychecks.
Automate your bill payments, including credit cards, rent, insurance, and utilities.
Schedule automatic deposits to your savings fund and contributions to your retirement account.

GOAL SETTING WORKBOOK
Set and keep track of your money goals with our FREE financial goal-setting workbook.
4.- Start A Side Hustle
If you budget and spend consciously and still find yourself short of cash every month, you may not have a spending problem, but an income problem. In this situation, a side hustle or an additional part-time job is the best way to generate extra income.
Ideally, a side hustle is something you enjoy doing, and that has the potential to generate significant income. For example, carpentry, cooking, or proofreading. Who knows, your side gig could even become a full-time business that can bring you more joy and satisfaction than your 9-5 job.

5.- Get Out Of Debt
Paying off your debt ASAP should always be a priority. High-interest debts can especially be a source of increased financial anxiety. Stress over money issues can have a severe impact on your relationships and well-being.
As you make progress getting out of debt, make the decision to get rid of your credit cards. Those who keep them “only for emergencies” tend to end up racking up debt again. Instead, work on building up that emergency fund we already discussed.
In Conclusion: Dealing With Money Stress And Financial Anxiety
Financial anxiety is a feeling that we can experience at any point in life. It could be due to our own financial mistakes, like in the case of Barbara. But financial anxiety can also be caused by circumstances beyond our control, like a pandemic.
Be aware of these five frequent sources of stress:
- Having Little Money Saved
- High Amounts Of Debt
- Job Insecurity
- Discontent With Your Pay
- Fear Of Identity Theft
And also, keep in mind the following ways you can take control of the situation and prevent financial anxiety.
Five Ways To Prevent Financial Anxiety:
- Live Within Your Means
- Build An Emergency Fund
- Automate Your Finances
- Start A Side Hustle
- Get Out Of Debt
Ultimately, the most effective way to reduce money stress and financial anxiety is by feeling in control of your future. So, focus on budgeting and living below your means. Those two actions will enable you to have money left to save and build up a cushion. Peace of mind will come from knowing that you have your own back, financially speaking, even in tough times.
This post was written in collaboration with guest contributor Patricia Sanders. She is a financial content writer passionate about helping others improve their finances. She has been praised for her easy to follow money tips. Besides writing, she loves traveling and reading.
Related Articles:
- 10 Rules Financially Smart Women Must Live By To Win With Money
- 7 Tips To Improve Your Financial Wellness
- How to Save Money and Stop Living Paycheck-to-Paycheck
- Net Worth And Budgeting Journal
- Five Steps to Relieve Stress And Anxiety
Related Video: 5 Must-Do Things To Get Control Of Your Finances
Pin It!

Leave a Reply