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Money & Mental Health: Overcoming Financial Stress & Anxiety

Money & Mental Health: Overcoming Financial Stress & Anxiety

Jenius Bank Team5/4/2023 • Updated 4/16/2025
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Keeping your finances healthy may lead to better mental health. Does the thought of managing your finances feel stressful and overwhelming? If it does, you’re not alone. In our Mind-Money Connection study, 50% of people reported their finances as a major source of stress and anxiety.In an ideal world, managing money would be easy, but if you feel like you’re in over your head, finding ways to reduce your financial stress could dramatically improve your mental health. Let’s take a look at a few strategies you could use to reduce your financial stress and help improve your mental health.

Key Takeaways

  • Your money and your mental health are often intertwined, meaning stress could lead to impulsive money decisions and poor finances may lead to stress and anxiety.
  • There are things you could do to help reduce your anxiety and help you feel more secure about your money, like having an emergency fund and creating a debt management plan.
  • Being smart with your finances and achieving financial wellness is about making financial decisions that help make you happy rather than trying to please others.

6 Tips to Help Reduce Financial Stress and Anxiety

While financial stress may not seem like a major issue to your parents or grandparents, it may be especially tough for millennials who entered adulthood (and the workforce) during a time of major economic uncertainty. Rather than accepting financial stress as a negative force in your life, try being proactive. Here are a few tips to help you reduce your stress around money.

1. Don’t Avoid Your Finances

Though it’s tempting to put off making decisions when you’re stressed, doing so could make your anxiety worse. By putting off financial decisions, you may end up making the situation worse and more stressful. Instead of avoiding those tough decisions, be proactive. Track what you spend each month and see if any patterns emerge. Once you identify those patterns, you could start addressing them by building a budget.

2. Build an Emergency Fund

Surprise expenses could lead to a major strain on your mental health. And nearly 44% of American adults can’t handle a $1,000 emergency without taking on debt.1 And adding more debt to the picture may increase your financial stress and worry.One simple way to help offset the stress that emergencies bring is to set up an emergency fund. An emergency fund is savings set aside specifically to help you pay for unexpected or emergency expenses like medical bills or car repairs.While you’re free to set aside however much you’re comfortable with, experts recommend having three to six months’ worth of household expenses set aside in an emergency fund. You may want to keep these emergency funds in a designated high-yield savings account. These accounts earn compound interest on the money you contribute to the account, as well as interest already earned over previous months, helping you build your savings faster.Just make sure that the account you choose is FDIC insured. This way, your money is safe, up to specified limits, even if the bank goes under.

3. Focus on Paying Down Your Debt

Debt comes in many forms, from installment loans like personal loans, mortgages, student loans, and car loans, to revolving lines of credit, like credit cards. It’s common to take on debt at some point in your life, but carrying excess debt could become a burden, especially if you don’t see a way out of it.Having a plan to handle your debt may help improve your financial situation and reduce your overall stress level. Here are a few options to consider:
  • The snowball method: To use the snowball method, you start by paying off your smallest or lowest balance debt first. Then, you pay off the next smallest debt, and so on, until you’ve paid off all of your debt in full. Keep in mind that you still need to make the minimum payments on all of your debts while you’re focusing on paying off one faster.
  • The debt avalanche method: The debt avalanche method focuses on paying off the largest or highest rate debt first before focusing on the next highest rate debt. Again, you need to make the minimum payments on all of your debts as you go.
  • Debt consolidation loans: Debt consolidation loans let you combine multiple debts into one loan with a single payment each month. You use the money from the loan to pay off your current debts and make a single payment toward the loan each month until you pay it off in full.
Creating a debt repayment plan may help you stay motivated and get out of debt faster. And try to celebrate and reward yourself when you hit a milestone in that plan.

4. Spend Money Intentionally

When you’re stressed, buying things to make yourself feel better may seem like a good idea. And there’s a science to it—for many people, buying items gives them a feeling of accomplishment or pleasure, much like eating chocolate or indulging in your favorite coffee drink.2 But when you’re buying items for the sake of a dopamine rush or to match your peers’ lifestyle, it could lead to stress.Instead, try to make intentional purchases. Think about the item and the role it’s filling. Is it going to bring you joy equal to the cost? Or will it help you achieve your long-term goals? If the answer is yes, then buying it makes sense. But if the answer is no or you’re not sure, consider putting it back on the shelf.

5. Automate Your Savings

Building savings is a priority for many people, but actually setting money aside each month may be tough, especially if you spend most of what you make. But what if you transferred funds to savings each paycheck before you had a chance to spend it? Consider automating your savings. Ask your employer to direct deposit a set percentage or amount of your paycheck into your savings account. Or schedule regular transfers from your checking account to your savings account each month. Making a routine out of saving not only helps to build that discipline, but it also helps to reduce the mental load of remembering to save.

6. Reach Out for Help

If you’re overwhelmed by your finances and find that it’s impacting your mental health, you’re not alone. Seeking guidance from trusted friends, family, or a financial professional may help to get you on a better path with your money and potentially help you feel more in control. In addition, seeking help from a mental health professional may also be beneficial when dealing with feelings of financial anxiety.

Final Thoughts

Money and mental health often go hand in hand, and taking control of your finances may go a long way toward reducing stress and improving your financial health. But it’s important to remember to take a holistic approach to your financial wellness journey. Keep tabs on your finances and your mental health at the same time. If anything doesn’t feel right, make changes as you see fit. Not sure where to start? Check out our guide on how to help achieve financial wellness. And remember, financial wellness is a journey. It’s okay to make mistakes… learning from mistakes may help us be wiser with our money in the long run.
LifestyleFinancial Wellness