Your 5-Step Guide to Reducing Financial Anxiety

If you’ve found yourself worrying about money recently, you are not alone. Growing evidence reveals that financial strain plays a key role in mental health. According to a 2024 Bankrate mental health survey, almost half of US adults, 47%, reported that money negatively impacts their mental health.

Additionally, financial strain can lead to broader mental health challenges, including anxiety and depression. However, there are tools that can help to manage and reduce stress, such as financial planning and education.

Here are five steps you can take to feel more empowered around money and achieve peace of mind.

Step 1: Create a plan

Build clarity on what is happening with your finances by developing a financial plan for yourself. Being realistic about your expenses is important because your plan won’t be successful if you aren’t accounting for the reality of your current spending. A budgeting tool to help you get started can be found here.

Start by writing down all your bills and expenses. If you do not currently have a budget for an emergency fund, now is a great time to create one, as unexpected events will happen. Next, think about what expected events should be included in your budget. Are you planning to take a trip or buy a new car? Make sure to include those things.

Now, take a good look at your plan and make sure it will work for you. If you need to reevaluate your expenses, try to see where you can trim the fat. Or vice versa, to increase income if needed.

The goal is to prioritize what is most important to you. A financial plan will only work if it addresses the things that are weighing on your mind.

Step 2: Track your expenses

Once you have a plan, you must have a way to track your progress. Here are the four most common methods used for tracking. Select the one that works best for you:

1. Phone applications: There are various applications, including EastRise’s mobile banking app, which can connect to your bank account and categorize transactions. This will give you access to monitor your spending in real time and reduce work for you.
2. Save receipts: Some people opt to save their receipts and then add each one to a running tally of spending throughout the month.
3. Manual tracking: Write down each expense as it happens on a spreadsheet.
4. Account structuring: Keeping spending money separate from bill money could be a clever way to ensure that you do not overspend. You will only be permitted to spend what is in your account, like keeping the candy in a different kitchen cabinet than the nutritious foods.

It is important to keep an eye on your expenses throughout the month so that you don’t find out at the end of the month that your plan didn’t work. This way, if your spending goes off course, you have time to re-evaluate your plan and adjust.

Step 3: Build the plan into your routine

Make sure that the expense tracking method that you select is one that can easily be added to your routine. If it requires too much effort in the long-term, it might be hard to maintain.

It can seem daunting to make substantial changes to your spending habits, but don’t worry! Take the changes step by step. For instance, if you go out to eat several times a week, it won’t be sustainable to go cold turkey and suddenly eat every meal from home.

Instead, set limits for yourself. You only eat out two times a week, and then when it feels comfortable, you reduce it down to one time a week, then bi-weekly.

Taking some time to think about the reasoning behind your habits is also important. Do you eat out because you don’t like grocery shopping? Or maybe you don’t think about cooking ahead of time? Getting to the root cause will help to determine the action you need to take.

Make sure to work with your family to share your routine. Communicate your shared goals and how you are going to stay on track together. Having family or friends who are not on board with your goals can derail any good financial plan. Everyone needs to be on the same page for it to be successful.

That means having regular check-ins with your plan to make sure nothing has changed with your bills, spending, or goals. If things do change, update your plan.

Step 4: Understand your debt approach

The type of current financial debt you have will inform how you pay it down. That is why it is critical to know whether you have high-interest or low-interest debt.

Here are three common options for approaching debt:

1. Snowball: This strategy focuses on paying off the smallest debts first while maintaining minimum payments on larger debts. As smaller debts are eliminated, it will create a sense of accomplishment and reduce stress around the number of payments you need to make.
2. Consolidation: The consolidation of your debt into a new personal or home equity loan.
3. Alternative paydown options: Your financial situation could be eligible for alternative options, such as working to negotiate payments with creditors or utilizing a debt management program. It is important to be aware that this option could have an impact on your credit report, depending on your approach.

You are the best person to make the decision on how to approach your debt. No matter what happens, it will reduce stress if you can find a way to save a little money at the same time, too.

Step 5: Loud budgeting

The practice of loud budgeting is to openly share your financial priorities, plans, and goals with others. It doesn’t matter whether it is friends, family, or a broader community—the practice of transparency and accountability are powerful tools for empowerment.

When you vocalize your intentions, you not only create a sense of ownership over your finances, but you also invite support and collaboration from those around you. Additional benefits of loud budgeting include reduced stress, strengthened relationships, improved accountability, motivation, and increased emotional support.

It is common in our culture to feel shame around financial stress. But, putting these five steps into action could give you a big sigh of relief. Having clarity, focus, and reduced stigma around money-related issues could be the key to finding the peace of mind you’ve worked so hard to achieve.