When you’re stressed over money, the best way to stop the stress is to track your money. You can’t fix stress if you don’t even know what your money position is in the first place. Tracking your net worth, income, expenses, and cash flow is the best step to fixing the stress.
When I was stressed over money, I had $50k of debt to my name and was on the verge of getting laid off after going through a horrible bear market. It was one of the worst periods of my life because I felt stuck. I didn’t know how I was going to get out of it.
Luckily, I took intentional steps to get out of it and am now stronger than ever for it. Once you feel the sting of failure and learn from it, you never go back to it. You become stronger than ever and that was the best lesson I could’ve learned ever.
However, while you are fixing the problem, it still doesn’t make it any better. You don’t know whether you’ll ever make it out of the tunnel. You don’t even know the right path to get there because you’ve never been in the situation in the first place before.
The great part is, I went through the financial stress myself and below are the things I learned to combat the stress. Once I fixed the stress, time became my friend again instead of my enemy. The more time passed, the richer I became.
That’s the position you want to be in and you can absolutely take steps to put you in that place.
Stressed Over Money? 9 Ways to Stop the Stress
Below are the 9 ways to stop the stress if you are stressed over money. It’s so common that 77% of Americans were stressed over money in December 2022. You are not alone!
1) Track Your Finances
What isn’t measured isn’t improved. If you’re stressed over money and no longer wish to be stressed, then it’s time to track your finances. Things like net worth, assets, and liabilities are numbers you should know like the back of your hand.
You can’t pay off debt if you don’t even know how much savings you have in the first place. Then numbers like income, expenses, and profit are all important numbers to keep in mind of as well. Many go through life thinking things will just “work out”.
If you don’t have a plan to succeed, you are planning to fail. There’s not a single wealthy person I know who doesn’t track their finances, assets, and liabilities. Money is too important of a subject to just hope things will work out. It won’t.
It takes effort and hours of planning to optimize your finances to move up in life.
2) Stressed Over Money? Have a 6 Month Emergency Fund
Saving money is the antidote to money stress. An emergency fund is a crucial component in your money journey. In 2020 – 2021, people were investing their emergency fund, thinking the good times will last forever! Good times never last forever.
2022 taught us just how valuable emergency funds are. We think we don’t need it until we do. When I had a year’s worth of emergency funds, I felt free. I felt like I had standing. It allowed me to be less stressed over money because a job loss wouldn’t be as devastating.
A 6 month emergency fund is the bare minimum. It’s even better if you have a year’s worth of emergency funds. In a bull market, people don’t care about emergency funds. In a bear market, emergency funds are everything. I personally have 1 year’s worth of emergency funds.
Your life can change in a matter of days. You never know when a financial hurricane hits your life.
3) Be Debt Free
The number one reason people are stressed over money is because they have debt. I know firsthand exactly just how bad it feels to have debt on the balance sheet. I had $50k worth of debt at one point. It just felt so bad because the money I held in my hands weren’t mine.
They were someone else’s. Therefore, I had to work hard and put in the hours just to pay that someone else back. When you have debt, someone else owns your time. That doesn’t feel good. It’s one thing when someone else owns your money.
It’s another when someone else owns your time. You are working hard not to get yourself rich but to get someone else rich at your expense. Even when I had a multi-six figure net worth, debt still felt like it was holding me back. Even though I could pay it off in a second if I wanted to.
Debt is the mortal enemy of financial progress. Just having that in your psychology doesn’t do good things for your money stress.
4) Invest Your Money
When you invest your money in appreciating and cash flowing assets, you sleep better. That’s how you make money while you sleep. If you don’t make money in your sleep, you will work until you die. Investing in quality assets that pay you monthly, quarterly, or yearly is key.
I personally was in cash for 2023, because money market accounts were earning a sweet 3%+ yield. Saving actually became cool again! Even with 6%+ inflation prints, I was happy with my 3% yields. With $400k in money market accounts, it was enough to pay my rent of $800/mo.
Even then, I missed investing in quality assets so much. When you’re stressed over money, it’s time to invest your money so it can grow into larger amounts. AND pay for your lifestyle forever. Too many people think income is the path to freedom.
It’s not. It’s investments that build wealth. Every paycheck, I contribute money to max out my 401k. It’s a rewarding feeling.
5) Build Net Worth
Net worth is wonderful. The first $100k changes your life. That’s when all the fun of compound interest begins to happen. The first $100k was life changing for me. The next $100k was easier and easier after that. Building net worth becomes easier the more you do it.
The secret to building wealth and eliminating being stressed over money is to increase savings and invest more. It’s mathematically impossible to build wealth without savings in the first place. Saving too much in 401k is a real problem and it needs to be planned accordingly.
Net worth is wonderful because it’s the number leftover after subtracting liabilities after assets. My net worth is what gives me cash flow to fund my lifestyle. Already on top of my high paying job. I want to be a millionaire by 30 and I want to get there so that I can eliminate money worries down the road.
Building net worth is quite fun, as well. You can’t go wrong by becoming wealthier every year.
6) Diversify Your Income Sources
Many are stressed over money because their income solely depends on their employer. They don’t have a fallback plan. If you’re married, your income sources are diversified. If you’re single, you need additional income streams to build net worth with.
I personally have 3 income sources. 9-5 income, investment income, and side hustle income. My side hustle income is miniscule because I’m working on it part-time. However, I wouldn’t be surprised if my side hustle income surpasses my day job income one day.
That day may never come but it feels great having an extra $50k – $100k in extra income. Not yet, but some day. That way, if bad economic events cause me to lose 100% of my day job income, I at least have 1 – 50% of my side hustle income. That’s income no one can take away from you.
The possibilities to earn more money are endless nowadays. Opportunity exists everywhere.
7) Increase Cash Flow
Net worth doesn’t pay the bills but cash flow does. If I want to pay for bills with my net worth, I have to sell investments and interrupt the flow of compound interest to do so. That’s not good for me, compound interest works best when it’s uninterrupted.
If you’re stressed over money, it’s time to increase cash flow. I used to get $1k/mo by having money in high yield savings accounts. That would pay for my rent and then some. That additional cash flow on top of my day job income gave me protection.
If I get laid off, then that would pay for my rent and I wouldn’t have to get kicked out. Even though it would only be temporary protection, the cash flow was invaluable to my sanity at the time. Then once I paid off debt, that security feeling amplified even more.
Additional cash flow is what pays the bills, not your assets and not your net worth. It adds great peace of mind.
8) Stressed Over Money? Manage Your Health
It’s one thing to be stressed over money but it’s another to actually add health problems on top. Now’s not the time to neglect health by eating fast food. Spending $20 on fast food to save money can result in $2,000 hospital bills down the road. It’s not worth it.
It’s time to sleep well, eat well, and exercise regularly. The simple pleasures in life give you happiness. It’s not the Rolexes, lambos, or the newest Apple computer that gives you happiness. Wealth stress shouldn’t translate to health stress.
I worked out 5x a week for the past year and a half. It’s completely worth it. Gym memberships are worth the money, especially if you regularly use it. At the end of the day, all you have is your health, not your wealth. If your money disappears, you can get it back.
If your health disappears, you can’t get it back. Health is priceless.
9) Treat Yourself Once in a While
Even if you’re stressed over money, you can’t last the journey if you focus on getting out of that situation 100% for years on end. Too many underestimate just how long months worth of time is. When I wanted to pay off $15k of my credit card debt, the time passed slowly.
It was all I could think about and every paycheck, I would wake up and contribute money towards the debt. It was the first thing I did and I obsessed over it every 2 weeks. Time moved so slowly then. The only thing that kept me going was buying treats for myself, from time to time.
I would balk at spending $100+ on groceries but I would buy $150 worth of groceries at Costco without a minute’s thought. Or when I wanted to buy weighted blankets, I would normally wait but I would buy without hesitation.
Small weekly treats are helpful to encourage you to keep going. You’re only human. You have wants and needs to take care of, too.
Stressed Over Money: My Personal Story
In the start of 2022, I was on top of the world! My net worth hit an all time high of $444,000 and I JUST turned 27! I got a job that came with a 30%+ pay raise, more upside opportunity, AND my boss was the best boss in the entire world. I felt like I made it and I felt invincible!
So then I took on $50k of debt because I thought, “nothing could go wrong”. Something did go wrong. Not only did something go wrong, it went wrong quickly and to the point where it wasn’t reversible. To say I was stressed over money was obvious because the bear market hit hard, as well.
It’s one thing to lose $100k and gain it back quickly over months like in 2020. It’s another to lose $100k over an entire year with no end in sight and no path to profitability. By the end of 2022, I was scared to invest. That’s the first time I truly felt stressed over money.
Then, it was time to get back to the basics. In 2023, I saved as much money as I could and by March 2023, I was completely debt free. I saved all of my bonus and banked all of my equity awards. There was no time to mess around because I didn’t want to give up this opportunity.
It’s one thing to lose money but it’s another to lose everything after spending your entire life building up your castle. It took a lot of digging and hard work but I got over being stressed over money and was at the strongest financial position I’ve ever been in.
THAT felt amazing. Although it feels like there’s no end in sight, there is a light at the end of the tunnel.
Stressed Over Money is More Common than Ever
With record high inflation and the government doing everything it can to cause a demand destruction to lower inflation, more Americans are stressed over money than ever before. Not only that, mass layoffs are on the table.
Google started 2023 announcing 12k layoffs. That’s a lot of money that just vanished into thin air! No more employees enjoying $500k jobs to sit around in their desks. It’s one thing to lose investment gains but another to lose investment gains AND your job.
No matter how much we dislike our 9-5, it provides money and cash flow for us to stay strong with. The basics of personal finance works no matter what the market. A bear or a bull market. It’s time to make more money, minimize expenses, and invest the difference.
Holding over the long term generated immense wealth for millions of people across the world. More and more Americans are one paycheck away from declaring bankruptcy because they don’t employ the basics of personal finance and save during the good times to prepare for the bad.
When I ignored the basics of personal finance is when I paid for it with my sanity. I learned my lesson and I don’t ever want to be put in that position ever again for the rest of my life. I’m helping others do the exact same thing and highlighting the steps onto my blog!
It’s time we stop being stressed over money and live our best lives.
Stressed Over Money? 9 Ways to Stop Shortlist
- Track your finances
- Stressed over money? Have a 6 month emergency fund
- Be debt free
- Invest your money
- Build net worth
- Diversify your income sources
- Increase cash flow
- Stressed over money? Manage your health
- Treat yourself once in a while
