Many Americans are experiencing significant financial stress in today’s economic climate, and it’s understandable why: Persistent inflation and higher borrowing costs often lead to increased personal debt and difficulty saving for emergencies and retirement.

If you’re struggling with money worries, you’re not alone. Nearly half of Americans (47 percent) report that financial concerns negatively impact their mental health, according to a recent Bankrate survey.

Fortunately, there are several steps you can take to start improving your financial situation immediately, which can help reduce your money-related anxiety.

Feeling anxious over money can lead to various physical ailments, and it can even contribute to further financial mistakes. Common symptoms of financial anxiety include:

  • Aches and pains: Not having enough to cover bills or daily living expenses can cause ailments such as tension headaches or an upset stomach.
  • Loss of sleep: Feeling worried over high debt or lack of emergency savings may cause insomnia, which can also increase one’s risk for other health problems.
  • Overwork: You may feel compelled to take on a second job, just to be able to cover all your monthly expenses — which can create an unhealthy work-life balance.
  • Financial avoidance: To avoid the stress associated with high expenses or a low bank account balance, you might delay tasks such as logging into your bank account or paying your bills.

“Financial anxiety is more than just a bad feeling — it may really impact both mental and physical health,” says Julie Guntrip, Head of Financial Literacy at Jenius Bank. “The connection between financial stress and mental health may emerge as feelings of anxiety, agitation, or depression, which tend to spill into all aspects of life.”

Physical symptoms that can result from financial anxiety include fatigue, as well as trouble with concentrating and sleeping, Guntrip says — adding that the anxiety may also lead to strained relationships, as well as potentially a lower quality of life in the present and the future.

Feeling anxious about money can lead to various physical ailments and may contribute to further financial mistakes. Common symptoms of financial anxiety include:

  • Aches and pains: Worrying about covering bills or daily living expenses can cause ailments such as tension headaches or an upset stomach.
  • Loss of sleep: Anxiety over high debt or lack of emergency savings can cause insomnia, which increases the risk for other health problems.
  • Overwork: You might feel compelled to take on a second job just to cover your monthly expenses, leading to an unhealthy work-life balance.
  • Financial avoidance: To avoid the stress of high expenses or a low bank account balance, you might delay tasks like logging into your bank account or paying your bills.

“Financial anxiety is more than just a bad feeling — it can significantly impact both mental and physical health,” says Julie Guntrip, Head of Financial Literacy at Jenius Bank. “The connection between financial stress and mental health can manifest as feelings of anxiety, agitation, or depression, which tend to spill into all aspects of life.”

Physical symptoms resulting from financial anxiety include fatigue, trouble concentrating, and sleeping issues, Guntrip adds. The anxiety may also strain relationships and potentially lower your quality of life both now and in the future.

Various types of money problems commonly lead to feelings of financial anxiety. For instance, consumers often worry about covering unplanned expenses. According to a Bankrate survey, 56 percent of U.S. adults would not be able to pay a $1,000 expense from their emergency savings.

Credit card debt is another significant factor that can prevent people from saving for a rainy day. Currently, 36 percent of Americans have more credit card debt than emergency savings, as noted in Bankrate’s emergency savings report.

Despite a significant drop in the rate of inflation from 9 percent in June 2022, prices remain uncomfortably high for items such as shelter, motor vehicle insurance, and energy. Among U.S. adults who say money negatively impacts their mental health, 65 percent cite inflation and/or rising prices as a reason, according to Bankrate’s Money and Mental Health Survey.

Other common sources of financial anxiety include a projected job market slowdown and high borrowing rates. Additionally, financial anxiety often stems from past traumatic money situations, such as periods of unemployment or inability to cover living expenses.

If money problems are making you feel overwhelmed, there are several steps you can take today to start improving both your financial and mental well-being.

Also known as a budget, this plan will help you cover all your bills each month and leave some money to deposit into savings. It can improve your money management, reducing stress and providing peace of mind.

Popular budgeting methods include the 50/20/30 rule, zero-based budgeting, and cash stuffing. You can create your budget using pen and paper, a spreadsheet, or a mobile budgeting app.

“Financial stress typically occurs when we feel scared or unprepared,” says Jenius Bank’s Guntrip. “A budget is a preparedness tool. Best practices in budgeting start with tracking money flows — the money that comes in and goes out each month.”

Budgeting can assist with goal setting, spending, and saving, Guntrip says. “Making progress toward a goal can help create feelings of empowerment, confidence, and control, potentially countering the negative symptoms of financial anxiety.”

As you improve your financial situation through budgeting, keep track of your progress in saving money and paying down debt. This can include setting monthly goals and rewarding yourself when you reach milestones.

Monitoring your progress helps alleviate stress as you see your savings grow or debt decrease. Working toward clear goals can motivate you and build momentum.

“If someone sets a goal, such as getting out of credit card debt, but isn’t taking steps to reach it, they often feel disempowered and hopeless, which negatively affects their mental health,” says Jennifer Dunkle, financial therapist and founder of New Awareness Therapy.

“Conversely, tracking progress in saving money is a great example of setting a goal and actively working toward it,” Dunkle adds. “Even if the goal is far off, taking steps toward it helps people feel empowered and more hopeful.”

It helps to accept that certain events, such as sudden job loss, illness, recession, or a pandemic, are often beyond your control. In these situations, having some money saved can help you cover unexpected expenses without going into debt.

“It’s crucial to avoid the stress of being unprepared for life’s uncertainties,” says financial therapist Jennifer Dunkle. “We can cope much better with stressful events if we have a financial cushion to fall back on. Experts usually recommend having 3-6 months’ worth of savings in an account that’s not easily accessible, reserved for emergencies.”

A high-yield savings account is often the best place for an emergency fund. Keeping this money separate from other savings can help ensure it’s available when you need it most.

Gaining a better understanding of personal finance can boost your confidence and enable you to make informed decisions about your money. For instance, a lack of financial knowledge might lead to incurring unnecessary bank or credit card fees or missing out on better interest rates for savings accounts.

To increase your financial literacy, consider listening to money-related podcasts and following personal finance influencers on social media. These sources often offer easily digestible tips and insights. Additionally, money management books can provide more comprehensive information and advice for those seeking a deeper understanding.

To alleviate financial anxiety, consider incorporating these activities into your routine:

Breathing exercises and meditation: Deep breathing can help release tension and lower a racing heart rate whenever you feel anxious.

Find a stress-releasing hobby: Engaging in activities you enjoy, such as cooking, reading, bike riding, spending time with family, or playing with a pet, can boost your sense of well-being and reduce anxiety.

Keep a journal: Writing about your anxieties can help you identify harmful thought patterns and discover ways to improve your financial situation.

Speak to a mental health professional: Consulting a therapist can significantly reduce the burden of financial anxiety, providing you with strategies to manage your stress.

Money worries often stem from the high cost of living, excessive debt, and insufficient savings. The most effective way to ease financial anxiety is to enhance your personal financial situation. Even small actions taken today, like creating a budget or exploring ways to reduce expenses, can alleviate worry, boost confidence, and promote peace of mind, leading to improved sleep and less anxiety overall.