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10 Strategies to Reduce Money Stress and Improve Your Finances

You can can have money stress and feel anxious about your financial situation, no matter how much you make. Find out the root causes of money stress and 10 strategies to reduce it so you can have a more peaceful life.

By
Laura Adams, MBA
8-minute read
Episode #535
The Quick And Dirty
  1. Adopt a new money mindset.
  2. Focus on the positive in your financial life.
  3. Radically cut your expenses.
  4. Make saving automatic.  
  5. Get a handle on your debt.
  6. Create additional sources of income.
  7. Stop caring what others think.
  8. Stay informed about your finances.
  9. Take a stress break.
  10. Get professional help.

Many people mistakenly believe that if they just had more money, all their stress would disappear and they could finally be happy. In some cases, earning more is the solution to improving your financial health or dealing with a hardship.

But what’s surprising is that you can feel anxious about your financial situation, no matter how much you make. Oftentimes, having more money just causes you to inflate your lifestyle in a way that doesn’t reduce stress or bring you more long-term happiness.

In this post, you’ll learn what’s at the root of money stress, and develop ten strategies to reduce it and have a more peaceful life.

What causes money stress?

Stress is nothing more than your body’s response to a situation or a series of events. Think about a stressful situation, such as hearing the fire alarm go off in your office building or seeing a tornado barreling toward your neighborhood.

Some people would react by hyperventilating and other people keep calm and in control. The situation is the same for everyone, but the way each person perceives the situation is very different.

There are a few common stressors that can cause money stress. Understanding and avoiding them is the secret to achieving more with less anxiety.

One widespread problem is living above your means, which is when your living expenses exceed your income. You finance your lifestyle using some form of debt, such as a credit card, loan, or home equity line of credit. Or you might drain your savings or retirement account to pay your bills.

If your finances go in the red every month, or you’re living paycheck to paycheck, you can’t get ahead of your expenses and build wealth for the future.

If your finances go in the red every month, or you’re living paycheck to paycheck, you can’t get ahead of your expenses and build wealth for the future. Knowing that you’re going backwards or just treading water can cause worry and financial stress. 

For some people, owing any amount of money can be a source of stress—even if you’re meeting your expenses and diligently saving for the future. High earners can feel anxious if they have a complicated financial situation that’s gotten out of control.

This can happen when you’re unorganized, have too many accounts, begin managing your finances for the very first time, or don’t have a clear financial plan to achieve your goals.

10 ways to reduce money stress

While money stress or anxiety may never completely disappear from your life, reducing it as much as possible can improve your relationships, health, and general sense of well-being. Use these 10 strategies to stay calm, think clearly, and work on solutions to your financial challenges.  

1. Adopt a new money mindset

For many, financial stress comes from projecting a worse-case scenario into the future. You can exaggerate a situation in your mind to the point that your heart starts pounding and your palms start sweating. 


Remind yourself that you’re not in the future—you’re in the present moment where you have the power to make a difference. Choices always exist to take control and improve any financial problem. 


Actions are always preceded by thoughts and beliefs. So, reframe how you think and speak about your finances.

Never say that you can’t increase your income or that you should cut your spending. Instead, say I want to increase my income or I will cut my spending. A shift in your language is the first step to a shift in your mental attitude. 


Never believe that a financial challenge is a sign of personal failure or weakness. Whatever your situation, millions of people have struggled with the same thing. You and your family can grow stronger by proactively working through your money challenges.

RELATED: 14 Tips to Stop Impulse Buying and Save Money

2. Focus on what's positive in your financial life

Though it may sound cliché, keeping a positive attitude and using positive language can reduce your stress response to financial problems. Instead of dwelling on what’s wrong with your finances, think about what’s going right that you can be grateful for. I promise whatever your situation, there are many people going through tougher times who would love to switch places with you.

Instead of dwelling on what’s wrong with your finances, think about what’s going right that you can be grateful for.

Try keeping a gratitude journal as both an outlet for negative thoughts and a place to write down at least three things you’re thankful for each day. The Five Minute Journal: A Happier You In Five Minutes a Day or the mobile app are perfect tools for a daily gratitude practice.

3. Radically cut your expenses

If you’re spending too much due to a hardship or because you or someone in your family is a chronic over-spender, you’re probably seeing your savings dwindle and your credit card debt going up, right along with your anxiety level.

Decide what’s truly important to you. Then take control by aggressively cutting your expenses.

This is a dangerous situation because you can’t save if nothing is left over at the end of the month. And if you can’t save, you can’t get ahead and build wealth.

So, decide what’s truly important to you. Then take control by creating a spending plan and aggressively cutting your expenses.

Can you slash your housing costs? This is a difficult but good place to start because it’s probably one of your largest expenses. A good rule of thumb is to spend no more than 25% of your gross income on a mortgage or rent payment.

If your housing expense is a source of financial stress, take a hard look at downsizing or relocating to a different neighborhood or town. Taking a similar or better job in a less expensive area is another solution to get ahead financially.

Vehicles are another expensive category to cut, when possible. According to Kelley Blue Book, in its first year alone, the average new car depreciates 36%.

So, buying a pre-owned vehicle is a much better deal than buying a new one. Also consider other options to save, such as using public transportation, working from home, or moving to an area where you could drive less.

See also: 7 Financial Resolutions That Will Save You Thousands

4. Make saving automatic

If you have a simple plan in place to achieve your goals, such as retirement, building emergency savings, or buying a home, that can be the secret to alleviating money stress. Automate as many of these transactions as possible so they happen without you having to think about it.

If you have a simple plan in place to achieve your goals, such as retirement, building emergency savings, or buying a home, that can be the secret to alleviating money stress.

Workplace retirement plans work so well because contributions must come from your paycheck before you have the chance to spend them. Always participate and contribute at least enough to max out any employer matching. Make small increases every year until you’re contributing at least 15% of your gross income.

Don’t have a 401k or 403b at work? No problem, you can automate contributions from your bank account to an IRA or an account for the self-employed, such as a Solo 401k or a SEP-IRA.

Also work on building an emergency fund at the same time. Having just a few hundred dollars set aside can reduce stress if you have an unexpected expense. Ideally you should work up to having three to six months’ worth of living expenses in a bank savings.

It’s okay to start small. Even if you can only set aside $25 a month for savings and $25 for retirement, you’ll be surprised how quickly balances can grow over time. Treat savings like mandatory bills that you owe yourself and automate them when possible.

RELATED: 7 Pros and Cons of Investing in a Retirement Account at Work

A good rule of thumb is to keep the total of all your monthly debt obligations below 40% of your gross monthly income.

5. Get a handle on your debt

If debt is stressing you out, get serious about reducing expenses so you can pay it off as quickly as possible. A good rule of thumb is to keep the total of all your monthly debt obligations below 40% of your gross monthly income.

Even if you don’t have extra money to whittle down debt balances faster, you drastically cut your interest expenses. Consider options such as refinancing, doing a balance transfer, or changing payment plans on student loans to make debt more manageable.

Get Out of Debt Fast—A Proven Plan to Stay Debt-Free Forever is my online class that teaches multiple ways to reduce and eliminate any debt you owe. Understanding all your options to deal with debt and getting reliable resources can help relieve financial stress.

6. Create additional sources of income

It can be difficult to reach your goals when you’re living paycheck to paycheck or sliding backwards financially. To break the cycle, brainstorm ways to earn more income, such as looking for a higher paying job, getting a second job, starting your own business, or doing a side gig.

Having multiple streams of income is like an insurance policy. Not only does it help you pay the bills and eliminate debt faster, but it helps you maintain security if one of them dries up.

Having multiple streams of income is like an insurance policy. Not only does it help you pay the bills and eliminate debt faster, but it helps you maintain security if one of them dries up.

How can you leverage the skills you already use in your job to create a profitable project or side business? What interests do you have that other people would pay for, such as music, gardening, designing, caring for pets, writing, or tutoring?

7. Stop caring what others think

Sometimes we get stressed about what other people think about our finances or that we don’t appear to be as successful as others. If that’s you, stop trying to keep up with other people’s lifestyles and focus on what you want to achieve.

Use your resources to create a secure financial future instead of spending it on material possessions.

The homes, cars, clothes, and vacations many people buy are sinking their financial ships, so don’t go down with them. Instead, be your own independent spirit and take pride in going a different direction.

If you have children and tend to buy them anything they ask for or demand, you’re not setting a good example. Turn things around by creating a realistic household spending plan and sticking to the guidelines you set.

Using your resources to create a secure financial future, instead of spending it on material possessions, will give you a feeling of freedom that expensive toys never deliver. 

8. Stay informed about your finances

If you delay opening bills because you don’t want to deal with them, you’re not helping ease your money stress. Open all mail right away and set a current or future payment date for all bills to make sure you never miss a deadline.

Keep track of how much you’re spending, how much you’re saving, and whether you need to tweak your monthly budget. Use desktop software, such as Quicken, or apps such as Mint or Personal Capital.

9. Take a stress break

Once you’ve taken actions such as focusing on the positive, cutting expenses, putting savings on auto-pilot, and looking for extra income sources, you’ll probably feel more in control. But as I mentioned, you may never eliminate all money stress.  

If you begin feeling anxious about money, do something healthy to take your mind off your stress. Maybe it’s playing with your dog or kids, going for a run, enjoying a hobby, watching a movie, listening to music, or doing yoga.

10. Get professional help

If you have persistent financial problems that you can’t solve on your own, talk to a wise friend, family member, or a financial professional. They may help you see options and solutions to financial problems that you’re overlooking. That goes a long way toward gaining control and reducing anxiety about any financial challenges.

About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlersbook is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.