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Financial Stress: The Physical and Mental Effects


Money may not buy you happiness, but studies show that your relationship with it impacts your health.

Did you know money is tied to our basic, hard-wired drive to survive? When that drive can’t be attained, it compounds into stress. Maybe it’s why the age-old saying, “health is wealth,” is more than just a cliché. In the last 30 years, our society has tripled its debt and simultaneously gotten sicker with heart disease, stroke, and mental illness on the rise. Coincidence or are finances partly to blame?

Financial Stress

It may surprise you to know that money and finances are one of the biggest sources of stress. Six in 10 adults mentioned it as a significant source of personal stress, according to results from an American Psychological Association (APA) 2019 Stress in America study. This study is conducted each year and each year, money tops the list. It’s not surprising though… Think about a time you’ve been stressed about money. It can be small things, like that time you lost your wallet or were late paying a bill to bigger ones, like when an emergency or medical bill crushed your credit, you had a large amount of debt, or you spent money irresponsibly. It’s not hard to come up with an example or 10.

Signs of financial stress can include:

  • Worrying and feeling anxious about money
  • Arguing with loved ones about money
  • Feeling guilty when you spend money
  • Being afraid to answer the phone or open your mail

Financial stress manifests itself in numerous physical conditions like mood disorders, migraines, cardiovascular disease, insomnia, and more. Being in a perpetual state of unease and anxiety about finances—like when a person is living paycheck to paycheck—increases the body’s cortisol levels and puts them at risk for:

  • Anxiety and depression
  • Digestive problems
  • Headaches
  • Heart disease
  • Sleep problems
  • Weight gain
  • Memory and concentration impairment

Impact on Physical and Mental Health

Stress is normal and, to some extent, a necessary part of life. What causes stress can differ from person to person. But keeping stress in check is important to mitigate the effects it can have on your physical and mental health.

Anxiety and depression are two of the most common effects of financial stress. These two conditions usually go hand-in-hand. Stress resulting from financial struggles such as unexpected expenses, saving for retirement, and out-of-pocket healthcare expenses are the major culprits.

A report published in Clinical Psychology Review found a direct correlation between mental illness and financial problems. The researchers concluded the likelihood of having a mental health problem is three times higher among people who have debt. There was an even higher link between suicide and debt; people who complete suicide are eight times more likely to be in debt.

Confronting the Source of Your Financial Stress Head-On

Not opening bills, avoiding phone calls from creditors, or ignoring credit card statements will only leave you more overwhelmed by your money worries. No matter what your circumstances are, taking action will provide much needed relief. Knowing you are moving forward with a plan can have a very positive effect on your emotional and physical well-being. One first step you can take is to opt-in to automatic Credit Card and Month End eStatements with your Credit Union. This gives you easy access to your account information, which you can use to develop a debt-reduction plan and monitor its progress.  

Identify methods to ensure on-time monthly payments.

Nothing causes stress like realizing a bill is due when you didn’t plan for it. To combat the anxiety that arises from a “surprise” monthly due date, create a bill calendar where you note the due date of each bill so you can quickly see at any point when your bills are due. You can find many free calendar templates to download online. You can also use a reminder app on your phone to setup recurring monthly notifications to help you remember to pay your bills on time.

You may realize a lot of your bills are due around the same time of the month, which can cause challenges in having the funds available depending on when you receive your paycheck or other source of income. If this is the case, contact your creditors to see if you may be able to change your due date to coincide with a time of the month where you have less bills that are due.

It can also be helpful to set up automatic payments for the minimum amount due. This will help to ensure that even if you forget about a particular due date, you won’t receive a late fee as a result. If you haven’t already, set up Online Banking and use its convenient Bill Pay feature to sign up for automatic, recurring bill payments.

Talk to someone.

A great place to start? Your Credit Union! Our free-to-members Financial Wellness Check is an easy, no-strings review of your finances with a Branch Counselor. They can help you find easy ways to save, earn more and cut costs.

Another step you can take to reduce stress, and your debt, is financial counseling. Non-profit financial counseling agencies, like BALANCE, can help to evaluate your situation and review a Debt Management Plan. This can help you make a three to five year consolidated repayment plan for debt, including credit card balances. The savings in interest and time in paying back the debt through this kind of plan can provide a good deal of peace of mind, in addition to only having to worry about one payment per month as opposed to several.

DIY debt reduction.

If you prefer to do-it-yourself, you’ll want to create a budget to identify how much you can allocate towards debt and credit card repayment. Using the snowball method, you’ll want to rank your loan balances from smallest to largest. Pay more than the minimum amount due on the loan with the smallest balance to aggressively pay down your debt. Pay the minimum on all your other loans. Once the smallest debt is paid off, take everything you were putting toward it and add it to the payment for the loan with the next lowest balance. Repeat this process until you’ve paid all debts. You’ll want to stop adding to your credit card balances or you will never truly pay down the debt.

Adopt a proactive mindset.

Plan ahead rather than react. Strive to be in control of your finances as opposed to them controlling you. Take an active role in managing your money by identifying the steps needed to achieve your goal. Then create your plan that includes a timeline for completion (e.g. in order to save $600 in six months, I won’t eat out as much which will free up $100 in my budget that will be assigned to savings.)

Read: Five Easy Ways to Cut Monthly Expenses

Identify your starting point and recognize your progress.

Use a journal to benchmark your emotional state by writing down how you feel today when you think about your finances before implementing your plan. Once you begin working the plan, spend time each month reflecting on how you feel about your finances. Doing the above will take time, but as you start to change your behaviors and adjust your habits around money, you’ll see how beneficial it is on your stress/anxiety levels.

This article was developed in partnership with Balance Pro.

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