6 Ways to Take the Stress out of Stressful Money Situations

Stress over finances takes a psychological toll. Last year, a group of researchers from the UK, US, and Canada reported groundbreaking findings about the effects of chronic financial stress on the brain. In short, money problems place a disproportional cognitive load on people, who may find themselves short of the motivational and coping capacity necessary to address those problems. Coping effectively with financial stress is the first step to resolving financial difficulties. Here are 6 ways to take some of the stress out of difficult financial situations.

1. Concentrate on the Present

Everyone makes financial mistakes. Shame over them can become entrenched, causing a cycle of anxiety that doesn't help you make better financial decisions. Additionally, focusing too much on the future can be daunting. Conquering bad financial habits is a long term process, and focusing too much on the road ahead can increase stress. When you're under considerable about money, remain in the present and focus on what you can do now. Make longer term decisions once the stress is under control.

2. Face Your Problem Honestly

Your bank account status may make you cringe, but you need to know facts. Looking at your bank account, credit card balances, and credit history (which you can do once a year for free) doesn't mean you spring into action that moment. You want to make plans from a position of knowledge and understanding, and you can't do that when you avoid acknowledging reality.

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3. Move Around

Physical movement combats stress short term and long term. Short term, stress affects the memory centers of the brain, causing you to forget things (like paying bills on time). Exercise promotes production of neurological hormones associated with better mood and improved cognitive function. Long term, activity helps the div automatically cope with stressful situations better by curbing neural excitement that results from acute stress. By going for a walk or throwing a baseball with your kid in the backyard, you're not denying financial problems, but helping "reset" your stress response so you can deal with it from a stronger psychological vantage point.

4. Distract Yourself if Necessary

Perhaps it's Sunday, and you can't speak with the electric company until Monday morning about your late bill. Sitting around and stewing about it won't do you any good at this point. Distracting yourself by cleaning the kitchen, working on a knitting project, or inviting a friend over to watch the game keeps your mind off a financial problem you can't tackle yet anyway.

5. Create a Budget

You may think your finances are too much of a wreck for budgeting to help, but that's not true. You don't have to plan your entire financial life right now, but you can get started with positive habits at any time. Here are some pointers:

  • Review bills and expenses. Calculate your monthly income. This alone can show you where your biggest financial pain points are. Whether credit card interest is eating your lunch, or your utilities are unreasonably high, you can identify a starting point for handling your finances.
  • Examine expenses that can be reduced. Does anyone actually watch that premium cable you're paying for? Do you really need to be paying someone to mow your yard when you have two able-bodied teenagers in the house? You don't have to act on all these ideas, but knowing you have options can be empowering.
  • Organize revolving debt information. Knowing how much you owe on each credit card and the interest you're paying helps you devise a plan for paying them off. You could throw an extra ten dollars at all of them every month, or choose one to pay off as quickly as possible before moving onto the next.
  • Use a budget app like Mint to organize your bills and accounts. You can use the app's suggested line items, or create your own. Set up reminders to let you know when bills are due so you can avoid late fees. Link the app with your phone so when you're out you can get information you need about whether purchases are affordable before you buy.

6. Enlist in Professional Financial Help

Don't be afraid to enlist in professional financial help. If your credit is a mess, there are legitimate non-profit credit counseling services that know how to help people just like you, even if your credit situation is really bad. If your problem planning for retirement, a certified financial planner can get you on track with a realistic strategy for your future. Managing finances is complex, both short term and long term, but there are people qualified to help you learn how to do it.

Next step: Sign up for Mint and get free budgeting tools and tips.