7 ways to manage financial stress during trying times

Burdened with stubborn inflation and paychecks that often can’t keep up with the cost of living, many consumers are coping with financial stress as they try to make ends meet, keep their money safe and plan for the future.

In fact, nearly half (47 percent) of adults say money has had a negative impact on their mental health at least occasionally, according to Bankrate’s 2024 Money and Mental Health Survey.

Impact of financial issues on mental health

• Nearly half (47 percent) of adults say money has a negative impact on their mental health at least occasionally.

• Women are significantly more likely than men to say money negatively impacts their mental health (51 percent versus 42 percent).

• Gen Xers (ages 44-59) are the most concerned, since 54 percent say money negatively impacts their mental health, compared with 50 percent of millennials (ages 28-43), 47 percent of Gen Zers (ages 18-27) and 40 percent of baby boomers (ages 60-78).

• More than half (53 percent) of those with annual household incomes under $50,000 say their mental health is negatively impacted by money matters. That figure falls to 48 percent in households that earn between $50,000 and $79,999, 39 percent in households that earn between $80,000 and $99,999 and 40 percent in households that earn $100,000 or more.

• Among adults who say money concerns have negatively impacted their mental health, inflation is the top concern — cited by 65 percent. Other worries include paying for everyday expenses (59 percent), not having enough emergency savings (56 percent) and being in debt (47 percent).

While financial stress can often be attributed to external factors, there are ways you can mitigate it and take steps to improve your financial security. Here are seven steps to help you manage financial stress during trying times.

1. Prioritize what you can control on discretionary spending

You probably can’t change everything that’s causing you stress. Focus instead on what you can control so you can improve your situation. For instance, consider your food budget. Look for ways to shave a few dollars off your grocery bill, like comparing prices on different brands. You’ll not only save money, but the feeling of accomplishment and being in control may help reduce your stress as well.

Lowering your food bills can improve your budget, since food prices are expected to increase 2.2 percent in 2024, according to the U.S. Department of Agriculture. One simple way to save on groceries is to buy store brands over name brands. Store-brand groceries tend to run around 40 percent cheaper than name brands, according to CNET research.

2. Find ways to earn more money

You can only cut a budget so far, and you’ll want to be careful that your tight budget doesn’t become a source of additional stress. With the price of consumer goods being higher than normal, line items in your budget are likely already under strain.

It might be worth looking for ways to increase your income instead. Some ways to do so include:

• Work a few extra hours: Try talking to your employer about putting in some extra time each week, if you’re paid hourly or at least eligible for overtime pay.

• Negotiating for a raise: If you’ve been performing well at work, you might ask for a pay increase. If a raise is off the table, consider negotiating for non-salary perks such as remote work — which, in turn, would save you commuting costs.

• Selling items you no longer need: This can include things such as old furniture, clothing, toys, pet items and tools.

• Taking on a side gig: A side gig can be a good option for those who want a flexible way to pad their income alongside a full-time job. This can include jobs such as delivering food, tutoring or running a blog. The money can really add up, considering the average person with a side hustle in 2023 made $810 a month, according to a Bankrate survey.

3. Pay essential bills

A majority of employed Americans (60 percent) say their income has not kept up with increases in their household expenses due to inflation, a recent Bankrate survey found. If you’re worried about being able to pay all your bills, prioritize essential bills first. Sorting through your bills and prioritizing them serves multiple purposes:

• Thinking through what you spend your money on can help you identify some bills that can be eliminated or reduced.

• Deciding in advance which bills you need to prioritize can help ensure you set aside enough money to pay them on time.

Paying close attention to your bills and prioritizing them will help reduce your financial anxiety and hopefully allow you to sleep better.

Some service providers and lenders may allow for payment extensions, which give you extra time to pay your bill. This can come in handy during a time of financial hardship. It’s important to read the terms of any extension agreement to understand whether associated fees will be charged and how the extension impacts any interest accrued.

4. Save money during trying times

It’s often hard to save money consistently, especially if you’re struggling just to make ends meet. In fact, economic factors such as inflation and rising interest rates were cited by 63 percent and 45 percent, respectively, as reasons people are saving less, according to Bankrate’s emergency savings report.

Following a savings plan and building up your emergency fund will not only help you feel more in control, but it will also relieve some stress.

Shopping around for the best high-yield savings account is worth your time, considering these accounts often earn exponentially higher yields than the near-zero rates commonly offered at big banks.

Many consumers continue to earn lackluster rates on their savings accounts, however. Only around 1 in 5 Americans (22 percent) with short-term savings say they’re earning a yield that’s 4 percent or higher, according to Bankrate’s Online Savings Survey. Nearly a quarter (22 percent) earn mediocre annual percentage yields (APYs) of 1 to 2.99 percent, while 17 percent report earning a rock-bottom APY of less than 1 percent and the same percentage (17 percent) say they’re earning no interest whatsoever.

If you want to contribute a certain amount to your savings each month, you can set up an automatic transfer from your checking account.

Once you’ve built an emergency fund, you may want to put any extra savings into a certificate of deposit (CD). In exchange for keeping the money in the account for a set time frame, you’ll earn a guaranteed return rate that may be higher than traditional savings accounts.

Other places to save your money include money market accounts, cash management accounts and individual retirement accounts (IRAs).

5. Track your money-saving progress

You won’t really know if you’re making progress if you don’t track it. Make sure you know where you stand.

“Do the work to figure out your exact financial situation,” says Tracey Bissett, president at Bissett Financial Fitness. Tracking your progress lets you know whether the actions you’re taking are moving the needle.

Tracking your progress in adding to your emergency fund over time can have a positive impact on your wellbeing. Of all U.S. adults who say concerns about money have negatively impacted their mental health, 56 percent cited not having enough emergency savings as a stressor, Bankrate found in its Money and Mental Health Survey. Increasing your emergency savings means you’ll likely worry less, knowing you can handle unexpected expenses without going into debt.

“Having good financial health and a positive mindset is really all about understanding your opportunities, your options and how your money is working for you,” says Cara Macksoud, a certified financial behavior specialist and CEO of Money Habitudes, a financial personality assessment provider.

“If you don’t have a positive mindset currently, understanding your finances will let you know what story your money is telling, and that may be the check-in that helps you begin to have a positive mindset around money,” Macksoud says.

Bankrate’s savings calculator is a handy way to determine how soon you can reach a financial goal based on how much you save every month.

6. Talk to your lenders

Debt can be both a financial and mental burden. Before you let debt and the stress it causes overwhelm you, talk to your lenders.

“Always remember that lenders are often open to discussing your issues and finding at least a short-term solution,” says Anna Barker, personal finance expert and founder of personal finance website LogicalDollar.

The lender may be willing to make a modification on the loan, such as extending its term or lowering the interest rate, to reduce your monthly payments. You could also try refinancing.

7. Consult with an expert financial advisor

Consider talking to a financial advisor to help take some of the weight off your shoulders when it comes to things like setting goals, saving money and decreasing debt.

Working with a financial advisor on aspects that include financial planning and investment selection can add around 3 percent to your portfolio annually, based on research by consulting group Envestnet | PMC.

“In times of stress, a financial advisor should be there to validate your feelings [and also] show you why you should feel calm with the plan you have in place,” says Money Habitudes’ Macksoud. “If you have a longer-term relationship with an advisor, the greatest part of that is you can see where you were, where you are, and where you’re going. And if you’re still on track, even with market uncertainty as it is, you should find peace with the diversification you have.”

Bottom line

Financial stress and anxiety are common nowadays, whether you’re struggling to make ends meet due to inflation or you’re worried about the safety of your money in the bank after several high-profile bank failures in 2023.

Though it will take some effort, you can work to stay ahead of expenses and curb financial worries. This can be accomplished through steps like creating a budget and tracking your savings progress. Also, don’t hesitate to reach out to a financial advisor or a trusted friend or relative for advice.

Various online resources are available for free to help you save money, spend wisely and live within your means. Bankrate’s money-saving calculator can help you determine how long it’ll take to save for goals. What’s more, you can help build up your nest egg through a money-saving app or any savings features available in your own bank’s app.

— Former Bankrate writer René Bennett and freelance writer Brandon Renfro, CFP, contributed to previous versions of this story.