How to deal with financial stress

This article will cover:

  • What is financial stress?

  • How does financial stress impact my health?

  • How can I reduce financial stress?

  • Video: How young people deal with financial stress

‘I don’t have much money for my weekly expenditures, and I have very low savings for future purchases such as a house and a car. There’s not a lot of security. I’m a bit worried now, but I’m more worried about how it’s going to affect me in the future,’

Eleisha, a full-time uni student.

If you’re worried about money, you’re not alone. The rising cost of living, wages not keeping up with high inflation and increasingly unaffordable housing have put more pressure on our pockets and stress levels than ever before.

What is financial stress?

Financial stress happens when you’re feeling worried or anxious about money. Many different situations can cause you to experience financial stress, including not being able to pay your bills or not having enough money to access job opportunities.

‘There are fewer jobs in the rural places ... For sure, there is pressure on you to try to find a job, and it's not always easy. Some people have a lack of transport or funds to even have that option to move closer to where the jobs are,’

Jakob, on the ReachOut Online Community

How does financial stress impact my health?

Financial stress can take a huge toll on your mental and physical health, relationships and overall quality of life. Some signs to watch out for include: you’re arguing with family or friends over money; you’re having difficulty sleeping; you’ve lost your appetite; you feel angry or fearful; and you don’t want to socialise with other people. If these symptoms continue for more than a few weeks, they can affect your mental and physical health in the long term.

How can I reduce financial stress?

1. Use calming breathing techniques and look after your physical and mental wellbeing

Financial stress is made up of two challenges: dealing with your money worries; and coping with the stress that comes with those worries. In order to take control of your financial situation, you need to reduce your immediate stress levels first. Practising breathing techniques, and doing mindfulness exercises such as yoga and meditation, will help to relax you so that you feel less overwhelmed by your worries. Regular exercise and a healthy diet will also make you feel healthier, stronger and better able to handle stress.

If you’re feeling overwhelmed or need extra support, contact your doctor or any of the following services:

illustration of person getting support from a friend

2. Turn to trusted friends and family for support

While it might be a hard and awkward conversation, talking to someone you trust about your money stresses will ease the pressure you’re feeling. It will help put things in perspective and you might learn something helpful from common experiences.

Talking to friends and family about your financial goals is also a good way for them to understand your situation. For example, by discussing your savings goals with your friends, they’ll be more likely to understand your preference for enjoying a home-cooked meal together, rather than eating out.

illustration of friends at a potluck

3. Pinpoint your spending triggers

Emotions can cause us to spend money impulsively, often without even realising it. For example, you might splurge on a pair of sneakers to make you feel better after you’ve had a bad day at work.

By identifying patterns in your spending habits, you’ll gain more control over them. Ask yourself questions like: ‘What do I buy impulsively? How much and how often do I spend? Are there certain times of day when I’m more likely to spend on unplanned purchases? How do I feel when I do this: sad, stressed or bored?’

Once you have a better understanding of your spending habits, you’ll be far more likely to stop and think before making emotional purchases. For example, if you know that you tend to spend money impulsively when you’re feeling sad, you could opt instead to talk to a friend or go to the gym when you’ve had a bad day at work.

illustration of person replacing spending habits

4. Understand how you behave when you’re stressed

Everyone behaves differently when they’re feeling stressed about money. Some people avoid checking their bank balance or discussing their spending altogether, which may cause problems in the future. Others increase their stress by obsessively checking their bank accounts.

It will help to ease the pressure if you choose an approach for managing your money that’s based on how you behave when you’re under financial stress. For example, you might stop checking your monthly statements because you’re scared to see your high credit card debt. But if you can identify expenses you can cut back on and create a budget for paying off your debt as quickly as possible, reviewing your statements will become a less scary exercise and one that you’ll likely do more regularly.

On the other hand, if you know that looking at your bank statement too frequently causes you to feel anxious, decide on a specific time each week to review your account balances, in order to contain and better manage your stress levels.

illustration of person marking in their calendar when to do financial planning

5. Focus on what you can control

It’s important to accept that you can’t change everything that is causing you to worry about money. Economic challenges such as higher costs of living and interest rates are out of your control.

Prioritise the things you can control. For example, sticking to a budget when you’re grocery shopping will minimise the impact of higher food prices. You’ll not only save money, but feel more in control and less stressed about the situation.

illustration of person focusing on what they can control

6. Prepare for the future

Developing good money habits today will better prepare you to handle money worries in the future. One good way to do this is by expanding your financial knowledge. Learning how to set goals, track your spending, create a budget and start an emergency fund are important ways to make sure you’re in control of your money and will reduce the risk and impact of financial stress in the long run.

We make many important financial decisions in our lives that we can learn more about. Whether it’s choosing a superannuation fund at work, or using ‘buy now, pay later’ services when shopping online, improve your financial knowledge here.

illustration of person juggling their different financial responsibilities

7. Get help with your finances

There are many resources and professional services you can lean on for support. Money Smart and Money Managed are government websites that offer tips, tools and guidance to help you take control of your money.

Financial counsellors can help you to assess your financial situation and can provide advice tailored to your specific needs. National Debt Hotline provides free and confidential financial counselling over the phone or by online chat.

You can find other financial counselling services here.

How young people deal with financial stress

Not having enough money sucks. If you want to get more ideas on how to deal with having no money and money stress, hear from these young people.

Read the transcript.

What can I do now?

  • Learn more about managing your money with our starter guide.

  • Watch Money Hacks Challenge: Earn More for some ideas from other young people on how to earn more money.