Managing finances and preparing for your financial future can definitely be stressful, especially in such a turbulent economy. While some may be feeling the pressure and frustration more so than others, it is so important to approach financial challenges with a positive mindset. The impact on your mental health is real, but manageable with the right tools. At Colmina, our team of financial advisors are here to guide you through whatever financial challenges you may be facing and help you improve your financial well-being.
What Is Financial Stress?
Financial stress is that gnawing feeling of worry or anxiety about your financial situation. It could be the stress of paying bills, managing student loan debt, or simply trying to make ends meet. For a lot of us in the early stages of our careers, the weight of financial responsibility is new and overwhelming.
Whether it’s struggling to cover rent, making credit card payments, or saving for long-term goals like buying a home, it’s common to feel like you’re constantly playing catch-up. But know this: you're not alone, and you can take control.
"Money is one of the biggest stressors in life," says Carolyn McClanahan, M.D., CFP, founder of Life Planning Partners. She’s right—financial stress can affect everything from your sleep to your overall well-being. When stress builds up, it can mess with your physical health, leaving you feeling rundown and anxious.
The Effects of Financial Stress on Your Health
Money stress doesn’t just stay in your wallet—it leaks into your mental and physical health. A Harvard study found that over half of young adults (56%) say financial worries negatively affect their mental health. And that makes sense; everything’s connected. If you’re constantly stressed about money, it can take a toll on your mood, your sleep, and even your relationships.
Here are some common ways financial stress shows up in our lives:
Anxiety and depression: Constantly worrying about money can increase feelings of anxiety and even lead to depression. It’s easy to fall into that spiral, but recognizing the signs is the first step toward getting help.
Sleep disturbances: According to the American Academy of Sleep Medicine, 87% of people admit they’ve lost sleep over money worries. And honestly, when you’re lying awake at night thinking about your finances, everything seems worse in the dark.
Physical health problems: Financial stress can actually mess with your body—headaches, stomach issues, and even a weakened immune system can all be linked to stress. The American Psychological Association says stress affects nearly every system in your body.
Relationship strain: Money is a common point of conflict in relationships, especially when finances are tight. A whopping 29% of Gen Z says money is their biggest relationship challenge. Financial tension can lead to arguments or just a general feeling of unease with the people closest to you.
Reduced work performance: Ever felt so stressed about money that you couldn’t focus at work? You’re not alone. Morgan Stanley found that 71% of employees say financial stress impacts their productivity. When you’re preoccupied with your bank account, it’s hard to stay focused on the job.
Avoiding social interactions: Money stress can even push you to isolate yourself. Maybe you skip a friend’s birthday party or pass on a concert because you can’t afford it. One study found that 72% of people have skipped social events because of financial concerns.
Negative impact on self-esteem: Sometime money and self-worth can feel really connected. When you’re struggling financially, it’s easy to feel like you’re failing, even though that’s not true. Remember, financial ups and downs are a normal part of life.
The Pressure of Finances on Young Adults
Financial stress varies depending on your life stage, but for those of us in our 20s and early 30s, it often revolves around today’s expenses rather than long-term retirement planning. It’s more like, "How do I pay my rent without sinking deeper into credit card debt?" or "How do I save when everything feels expensive?"
At this stage, young adults are navigating new jobs, new cities, and full independence, all while trying to keep their finances in check. Curtis Pope, CFP, founder of Pope Wealth Planning, nailed it when he said, "If personal finances feel unstable during this time, it's another layer of new challenges during an already tricky time of navigation."
Throw in student loans, and it’s easy to see why stress is common place. More than half of bachelor’s degree holders from 2021-22 graduated with an average debt of nearly $30,000, according to The College Board. That’s a heavy burden to carry, especially as you’re just getting started in your career.
The Financial Pressures of Mid-Life and Planning for Retirement
As people move into their 40s and 50s, financial stress often shifts from the day-to-day expenses of early adulthood to more long-term planning and family responsibilities. This is the phase where you're likely juggling multiple financial goals—raising children, saving for college, paying off a mortgage, and building a retirement fund—all while still managing regular living expenses.
For many in this stage, the pressure to catch up on retirement savings becomes real. According to a 2023 study by Transamerica, nearly 40% of Americans in mid-life worry they won't be able to retire comfortably. This stage also comes with its own unique stressors, like supporting aging parents or dealing with unexpected medical expenses. Balancing these competing financial demands can feel overwhelming, especially if you're playing catch-up on savings.
"Mid-life can feel like you're being pulled in multiple directions financially," says Curtis Pope, CFP. "It’s essential to set priorities and develop a solid financial plan, so you're not feeling constantly stretched thin."
The Realities of Retirement
Retirement should be a time to enjoy the fruits of your labor, but for many, it brings a new set of financial pressures. Those in retirement face the challenge of making their savings last, often while navigating unexpected healthcare costs or rising living expenses. While Social Security may provide some income, it rarely covers all the costs associated with retirement, making it crucial to manage retirement savings strategically.
In fact, a 2022 survey by the Employee Benefit Research Institute found that nearly 60% of retirees worry about outliving their savings. Additionally, retirees often face the challenge of balancing a fixed income while accounting for inflation and potential emergencies, like health issues. Without the security of a regular paycheck, the psychological pressure of managing money can be daunting, even for those who have planned ahead.
"Retirement isn’t just about having enough money—it’s about feeling secure in your financial decisions," says McClanahan. "The key is to create a retirement income plan that adapts to changes, so you don’t feel financial stress when life throws surprises your way."
Final Thoughts
Yes, managing finances can be stressful, but it’s also something we can learn to manage with the right strategies and support. Building financial stability takes time, especially when you’re just starting out. If you’re feeling overwhelmed, take small steps. Prioritize what you can, learn as you go, and remember that it’s okay to ask for help—from a financial advisor, a mentor, or even your friends.
Balancing financial goals with mental well-being isn’t easy, but it’s entirely possible. Your financial journey is just that—a journey. And with every step, you’re getting closer to where you want to be.
Who We Are
At Colmina, we are dedicated to building a community centered around the well-being of those we care for. Our commitment to fiduciary advice ensures our decision-making is always in the best interest of our clients. No matter the twists and turns of the financial market, our advice will adapt to match so that your plans can stay true to the course.
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