The best way to cope with money stress is to fix the problem. When you are in high amounts of debt, the best way to get rid of the financial stress is to pay off debt. Actually making the problem better helps with coping through the stress.
I’ve been there before. In January 2023, I was under a significant amount of financial stress because I had $15k of credit card debt to service. I had no idea how I was going to get out of the mess. Every paycheck felt like something was weighing down on me.
It felt like I wasn’t in control of my own destiny. Like the banks owned my time, paycheck, and everything in between. I was under a significant amount of money stress. Then in February 2023, when the debt became due, I paid off every penny. Then I started to feel better.
No one else owned my money. I owned 100% of my money and no one could annoy me to pay them. It’s a completely whole other feeling when you feel like your money isn’t yours. It was the most financial stress I’ve ever felt in my life.
And that’s even considering, I could have paid off the $15k debt 30 times over! Even with that level of financial power, my psyche was still bothered by the small debt I held on my balance sheet. Money stress is a normal, emotional, and psychological response to money troubles.
The months after I fixed my bad money situation is when everything felt better. My mind was free and clear.
Money Stress: 9 Ways to Cope
Below are the 9 ways to cope from the money stress. Consumers held a record amount of debt in 2023 amidst record multi decade high inflation. It’s no wonder many felt the financial stress weighing down on them. But with every problem has a solution.
1) Fix the Problem
It doesn’t matter what the problem is. Money stress could be due to low income, high expenses, bad credit, or high amounts of debt. Whatever the problem is, the best way to solve the money stress is to solve the money problem causing it in the first place.
I didn’t know it at the time, but I felt poor when I was making $100k. Yes, I was only in my 20s and I was making six figures. But I still felt poor because after 401k and HSA contributions, there wasn’t a whole lot of money leftover.
Then when I fixed that problem and increased my income to $200k, that’s when everything felt better. My money stress was almost nonexistent. I could contribute towards my investments AND have money leftover to enjoy life with.
Whatever is causing the financial stress, the best coping mechanism is to solve the problem.
2) Money Stress: Make More Money
No one has money stress if they already make more money than they ever will need in their lives. Billionaires do not have financial stress. They may have personal struggles but money isn’t one of them. The best way to solve money problems is to make more money.
That’s when you have a good surplus to enjoy life with. When you don’t have enough money to spend on your needs AND wants, life just doesn’t feel so good. Our wants are almost a necessity. We need to spend money on our wants because it’s how we reward ourselves and give ourselves a break.
The more money I make every year, the less my money stress becomes. I know that once I finally break the $300k income level, everything will more than fall into place. I can buy a house, contribute towards my investments, and be on the fast track to build wealth.
Many think saving money is the way to wealth and freedom. It’s not. Making more money is.
3) Pay Off Debt
This is the biggest problem facing millions of Americans today. Credit card debt reached all time highs near $1T in 2023. Inflation hit consumers’ wallets like no one else has ever seen before. Whether we like it or not, debt is the biggest cause of money stress today.
When I was $15k of debt, I felt burdened. Even though I could pay off that debt 10 times over if I wanted to, I still felt stressed. Like someone else owned my money. The debt amount doesn’t matter. Rather, the fact that we are in debt is what matters.
I’ve been there before. Debt is the enemy. Mortgages used for real estate investing is one thing. But debt to pad up the balance sheet is another. In my finance classes at university, I learned that companies use debt to “boost returns”.
While it may be true. what they leave out is many companies went out of business because of debt. Debt has the potential to wipe you out. It’s better to not have any debt on your books.
4) Spend Less Money
After a record bull run in 2021, I was ready to spend to my heart’s desires. I mean, I deserve it for Christ’s sakes! After years and years of saving and investing my money, I wanted to spend as much money as I could. Then the bear market of 2022 hit, leaving me feeling demoralized and decimated.
One way to cope with money stress is to spend less money. In 2023, I went back to the basics and back to my roots and tightened the belt to as much as I possibly could. There was record high inflation so saving money was even more difficult.
Even for a frugal person such as myself. The best way to cope with money stress is to limit spending. Spending money is one of the worst things you can do for your psyche when you are starting out. When you are first starting out, saving as much money as you possibly can is the way to go.
It hurts for the first weeks, months, or years of doing it. But it’s well worth it, if it’s to protect your future.
5) Create Multiple Sources of Income
Layoffs ran rampant to begin 2023. Many tech companies laid off employees without warning. Tech giants whose profits seemed unstoppable. Google, Meta, and Microsoft started the year with tens of thousands of employees.
Not thousands, as many predicted. But tens of thousands of employees. Those employees saw their $300k incomes vanish overnight. The best way to cope with money stress is to create multiple sources of income so if one income source vanishes, you can rely on another one.
This is a long term play. There’s no need to try to create the next six figure side hustle in a year. While it’s certainly possible, those results are in the minority of the minorities. The best way to cope with money stress is multiple sources of income.
That way, if you lose your 9-5 income, then you can rely on another income stream to pay the bills. Whether we like it or not, bear markets will happen in our lifetimes. It’s best to prepare for them.
6) Work Out
Working out is good for stress levels, in general. It’s even better to cope with money stress because it releases dopamine levels for your brain to enjoy. I personally work out 5x a week. It helps that my company has a gym inside the building so I can work out to beat the rush hour traffic.
Working out is a non-negotiable necessity. We, as humans, aren’t meant to sit at a desk most hours of the day. We were meant to create and go out and about into the world. Conquering the world as we see fit. The sedantary lifestyle hurt humans more than it helped.
It makes the money stress especially worse because we need an outlet to let out all that pent up emotions and stress somewhere. The most and best socially acceptable way is to go to the gym. Whenever I make my body exert exorbitant force is when all my work stress let out.
Great mental strength starts with great physical strength. Our bodies dictate our mentality.
7) Let the Stress Out
Whether it’s going to a mountain and yelling to the top of your lungs. Or whether it’s playing video games into the night, there has to be an outlet to let the stress out. It’s normal to feel stress in general. Everyone feels it at some point.
However, money stress is an even worse feeling because money is what we use to put food on the table.
It’s even worse because I couldn’t have any sort of outburst in my life. Otherwise, I would risk losing my job that was providing me with a steady income stream to pay my bills. Money stress is a normal part of life for the vast majority of Americans.
Financial literacy is at an all time low, no matter how much content creators teach it for free. I was stressed as I possibly could be in 2023 because of all the layoff news that was dominating the news. Especially since I didn’t have good relationships with past jobs I interviewed for.
It’s normal to feel stress and it’s necessary to use an outlet to let the stress out from your body.
8) Money Stress: Move to a Cheaper Apartment
Rent is one of the biggest expenses we incur on a monthly basis. It’s even worse because it’s one of the essential expenses. We HAVE to pay rent to survive. If we bought a house, then we need to pay off the mortgage. If you’re renting, it’s not a bad idea to move to a cheaper apartment.
I personally lowered my rent costs even though I moved to a higher cost of living city because I got a roommate. It was the best thing I ever experienced. I increased my income by 33 – 50% yet lowered my rent by 33%. That’s the life!
There’s no need to live the luxury lifestyle, especially when you’re in your 20s. I wanted to live in poverty when I was in my 20s so I could live in royalty in my 30s. I’m only paying $800/mo for rent. I can’t wait for what I can afford in my early 30s.
The low rent cost helps cope with my money stress because I can easily afford an $800/mo rent cost for more years.
9) Invest Money
We can’t save our way to wealth, we have to invest our way to wealth. The reason why we feel money stress is because we’re not rich yet. The best way to get rich is to invest money. High quality assets like a low cost index fund is the best way to passively get rich and wealthy.
Investments can be a source of money stress because of the high volatility of the asset classes we invest in. I can’t imagine what I would feel if I invested in cryptocurrencies, when they could easily go to 0 at any moment.
However, investing in high quality asset classes like the stock market and real estate is better for our psyche. Those asset classes are not as volatile as some of the other options that are out there. In the first months of my journey, It was difficult for me to sleep well by investing money.
However, after a while, you stomach the volatility. Investing money is the best way to get wealthier and cope with money stress.
Money Stress: My Story
My money stress came in stages. When I first graduated college, I worked in an unprofitable area of the company. Even worse, my salary was very high. Therefore, I moved to an unprofitable area of the company while getting paid very well. It’s only a matter of time before I get laid off! Was my thoughts.
Luckily, through some miracle, I avoided layoffs at the company for 3 years before I jumped ship to another company that was making money. It was a shaky period of my life. I saved as much money as I could by cooking, not eating out, and the like.
Then in 2018, I saw layoffs with my own eyes. My coworker, who I’ve been working alongside with for 2 years straight was gone in an instant. Poof. That inspired me to get my personal finances in order and kicked my desire to get rich into overdrive.
I spent even less money than before… And then… COVID hit! Which decimated my net worth from $250k to $150k almost overnight. It was a scary time. However, we all know how much of a wealth accelerant COVID actually turned out to be. So then, I was riding high at the end of 2021.
My net worth was at all time highs! So I took on $50k of low interest rate in case I would need it. It turned out to be a giant mistake. I lost another six figures worth in the bear market of 2022 and even worse, I had debt on my balance sheet.
Although I repaid everything in 2023 and got back on footing, the money stress I felt was unreal at that time.
Money Stress Can be Managed
The great thing about money stress, like with most thing in life, is that it passes. Some financial stresses passes quickly than others. Others don’t. The bear market of 2022 was a *years long* bear market. 2023 was a shaky time, as well.
Many people’s stress went up even more so than ever before. People were getting laid off from their jobs AND dealing with the most expensive world we’ve ever dealt with in 40 years. It wasn’t an easy time and it’s an even more of an anomaly to handle multi-years worth of shaky economic footing.
The great part is that you have control over your money troubles and problems. I knew I had control over my problems and started spending as little as I possibly could. Therefore, I also took advantage of many banks’ incentives to open accounts with them.
I started making $1.5k/month from savings accounts yields, which paid for my lifestyle expenses. Then I added as much value as I could to my employer. Then I started side hustles to earn extra income in case of a downturn.
It was a very shaky time for me and it left permanent scars on my investment psyche. It destroyed my confidence and it was a humbling experience. However, after going through the biggest money stress of my lifetime, I can honestly say that I’m stronger for it.
You have the power to change your financial life for the better.
Money Stress: 9 Ways to Cope Shortlist
- Fix the problem
- Money stress: make more money
- Pay off debt
- Spend less money
- Create multiple sources of income
- Work out
- Let the stress out
- Money stress: move to a cheaper apartment
- Invest money
