Who Experiences Financial Stress?
While financial stress is widespread, even among individuals earning up to $99,000 annually, it’s more common among certain groups.- Low-Income Workers: Stress is more commonly cited among lower-income workers. 67 percent of workers earning less than $25,000 annually reported feeling anxious about their finances, compared to only 46 percent of six-figure earners.
- Unemployed People: 69 percent of unemployed people are worried about their finances, compared to 59 percent of working Americans.
- Young People: 66 percent of people ages 21-34 report financial anxiety, while only 51 percent of people age 50 and older do.
- Student Loan Borrowers: Student loan debt is often overwhelming for borrowers. In fact, one study found that one in 14 borrowers experienced suicidal ideation due to their student loans. For single women earning less than $50,000, that figure increased to one in six respondents.
- Women: 65 percent of women report financial anxiety compared to only 54 percent of men.
- Parents: Financial stress increases with more children. 66 percent of parents with three or more dependent children report financial anxiety, compared to 56 percent of non-parents.
- People Who Aren’t Financially Literate: People who struggle with financial concepts tend to be more anxious about money. 63 percent of people who aren’t financially literate report financial anxiety compared to 51 percent of financially literate folks.
How Does Financial Stress Affect Your Health?
At low levels, and in short bursts, stress can be healthy. But when money starts to feel upsetting to you and that feeling persists over time, you might notice your finances taking a toll on your mental health.- It Causes Physical Symptoms: You could experience headaches, digestive problems, trouble sleeping or exhaustion, muscle tension, high blood pressure, chest pain, and dizziness.
- It Causes New Mental Health Issues: Even if you have never struggled with mental health issues in the past, high levels of financial stress can lead to anxiety, depression, and panic attacks.
- It Causes Existing Mental Health Problems to Persist: It’s much more difficult to recover from mental health conditions while financial stress is at play. People with depression who also have problem debt are 4.2 times more likely to remain depressed 18 months later, compared to those who aren’t struggling financially. And 86 percent of people suffering with mental health problems said their financial situation exacerbated their issues.
- It Contributes to and Exacerbates Chronic Illness: Stress can make you more likely to experience heart disease and diabetes. It also can make autoimmune conditions worse, such as rheumatoid arthritis.
- It Weakens Your Immune System: Stress makes the immune system less effective at fighting off antigens, which means sufferers are more vulnerable to catching colds and viruses.
How Do Mental Health Issues Affect Personal Finances?
Lower Incomes
People with mental health problems are less likely to be employed. Only 43 percent of folks with mental health issues have paid jobs, compared to 74 percent of the population as a whole. When they are employed, it’s more likely to be in part-time or temporary work or jobs with low pay. Mental health issues also affect job performance, which can lead to income loss. The American Psychiatric Association found that employees with depression are 35 percent less productive. That costs businesses money, and it can also make it difficult for people experiencing mental health problems to hold down a job.Difficulty Making Financial Decisions
72 percent of people with mental health problems say it negatively affects their finances. People with anxiety and depression often experience more impulsivity and have trouble with memory, which can make it more difficult to manage money. While experiencing these issues, 93 percent of respondents reported spending excessively, 92 percent reported it was harder to make decisions about their finances, and 74 percent delayed paying their bills. 56 percent even took out a loan when they otherwise would not have.How to Prevent Financial Stress
Create a Budget
If you feel like your finances are out of control, one way to put yourself in the driver’s seat is to create a budget. Start by looking at your past spending to get an idea of what your necessary expenses are. Subtract those, along with recurring bills like mortgage or rent, from your household’s monthly income. Divide what’s left between saving and debt repayment until you get back on track. You can use an app, an envelope system, or a spreadsheet to keep track of your ongoing spending and make sure you stay within your budget.Choose a Debt Repayment Strategy
If you have a lot of credit card debt or other high interest debt, consider a debt consolidation loan. Or, use a debt repayment strategy such as the debt avalanche method, which is the fastest and cheapest way to pay off debt. It involves prioritizing your highest interest debts first while making the minimum payments on everything else.Improve Your Financial Literacy
Utilize books and online resources to learn more about money topics so you feel more confident managing your own finances. The following are good places to start:- CFPB’s Financial Education for Adults
- FDIC’s Money Smart for Adults
- MyMoney.gov
- Department of the Treasury’s Money Math: Lessons for Life