How to deal with financial stress

With the rising cost of living, an unpredictable job market, and a housing crisis thrown in for good measure, it’s no wonder we’re all facing financial stress in the UK right now. And considering that one in 10 working adults in the UK struggles with low income, debt, and expensive housing costs, it’s easy to see why so many of us are stressed about money.

Money worries can affect our health and mental wellbeing, and stress can affect how we manage our finances. From budgeting methods to helpful resources, we’ve gathered a range of tips and tools to help you manage money worries and overcome financial stress, one step at a time.

And remember, you don’t need to face any of this alone. We’ve compiled a list of free and independent organisations who can help you with debt, money worries, bereavement, housing, and much more.

In this guide:

• What is financial stress?
• How does financial stress affect our health
• How to reduce financial stress 
• Getting professional advice

What is financial stress?

If you’ve ever felt worried about money, from paying for bills, living costs, or credit repayments, then you may have experienced financial stress. Many people in the UK experience stress as a response to financial concerns – so you’re certainly not alone.

Money worries can look different from person to person. Perhaps an emergency expense has you feeling stretched until payday. If you’re freelance, self-employed, or on a zero-hour contract, you may feel stressed about when your next paycheque will come in.

Financial stress can also be a result of something outside of your control, such as bereavement costs, or an unexpected job loss.

How does financial stress affect our health?

It’s common to experience money stress from time to time. But if you’re consistently worrying about money, it can impact your health and wellbeing.

• Financial stress and mental health: Money worries can trigger feelings of panic, dread, anxiety and even depression. For instance, if you’re concerned about how you’ll pay for certain bills, or you feel like you can’t seem to save money for the future.
• Sleep problems: If you’re worried about making ends meet, you may find it difficult to sleep at night.
• Financial stress can be isolating: If you feel like you can’t afford to participate in certain activities and hobbies, money stress could also impact your relationships and social life. This might also make you feel low.

How to reduce financial stress

Financial stress can be overwhelming. Give yourself a moment to take a deep breath and calmly evaluate your situation. There are various reasons why you might be stressed about money, but there are plenty of ways to help manage this feeling.

Follow our tips for how to cope with financial stress below:

1. Create a budget

The first step to dealing with money stress is to assess your finances.

1. Take a look at your total income: Review your bank statements and compile your wages and any benefits or pension you may receive to get your total income.
2. List your priority bills: This includes mortgage and rent payments, council tax, credit card and loan repayments, and phone and utility bills.
3. Review your spending: Write down your typical spending habits for buying food, fuel, groceries, eating and drinking out, clothing, and toiletries.
4. Subtract your expenses from your total income: Once you know how much you earn, the cost of your priority bills, and how much you typically spend, subtract your expenses from your income to find your personal cash flow statement.

If your expenses equal more than your income, or you have a smaller pot of money left over than you’d prefer, there are plenty of ways to address this.

Review your spending and see where you might be able to reduce costs. That could be making small changes to your groceries, switching to better utility deals, or cancelling subscription services you no longer use.

Meanwhile, following budgeting methods such as the 50/30/20 rule can help you prioritise your finances into categories – dedicating 50% towards needs, 30% towards wants and 20% towards future savings.

If you’re paid weekly, you may be scared of spending money in case you stretch your budget, but don’t panic. Explore our guide on how to budget when you’re paid weekly for more advice.

2. Address any existing debt

Debt management is a key factor of effective budget planning and should be considered as part of your priority bills. But there are various ways to help make repaying your debt easier, and potentially more affordable.

The debt snowball method can help you prioritise your debts and focus on paying them off one at a time, targeting your smallest debts first. This approach may help you make consistent progress on your debts. For more guidance on paying back debt, read our debt snowball method guide.

But what about if your current debt repayments and interest fees have become unaffordable? This approach might not be enough to help manage your finances. In this case, there may be alternative solutions available.

Debt consolidation loans can help combine loan and credit repayments into one monthly repayment, often with lower interest rates.

Meanwhile, debt management plans may help you negotiate smaller and more affordable payments over time.

3. See if you could be eligible for benefits

If you’re suffering from financial stress due to a loss of income or a long-term health condition, you may be eligible to claim benefits to help you. You can also be eligible for government support if you’re caring for children or someone else.

For more information on how to find out if you could be claiming benefits, read our helpful guide.

4. Talk to someone

It’s common for people to feel afraid to talk about money worries. But when more than five million UK adults experience financial stress due to the current financial climate, you may find that you’re not the only one feeling the pressure.

Talking about anxiety is proven to help relieve stress. Sharing your financial stress with someone you trust may help make things feel less daunting, as you’re no longer dealing with it on your own.

You might find that friends and loved ones not only understand, but relate to your money worries. They may be able to offer advice and help you put things in perspective.

And if you’d rather not turn to someone you know, charities such as StepChange or Citizens Advice could be good places to turn.

5. Practice mindfulness

When life comes at you fast, taking a moment to breathe and take a step back may help. Mindfulness is all about slowing down and being aware of the present moment. Paired with gentle breathing exercises, studies show that mindfulness can help reduce racing thoughts and symptoms of anxiety.

We know that practising mindfulness isn’t the same as having a steady source of income, cheaper groceries, or reduced money worries. However, combatting feelings of anxiety with active meditation techniques can help you regulate your body and reduce stress responses – enabling you to take control of the situation.

Learn more about the potential benefits of mindfulness on the NHS website.

6. Be kind to yourself

Taking steps to address and combat financial stress can be exhausting. As you work toward coping with and reducing money stress where you can, remember to be kind to yourself. Being in the right mindset can make a world of difference, whether you’re creating a new budget, searching for a new job or looking for support.

Don’t give up on your normal routine, and make sure to get fresh air and exercise to help your mental wellbeing. If you’re worried about how money stress might affect your social life, don’t forget that there’s plenty of free and budget-friendly activities out there. Money stress doesn’t have to steal your time from the people who make you happy.

For more tips and ideas, explore our guide to free and low cost weekend activities.

Getting professional advice

You don’t have to tackle financial stress alone. There’s plenty of free help and support out there, from dedicated financial advice to mental health support.

Financial advisors

If you’re in a financial crisis, or you need to talk to someone about debt, help is available.

Reach out for free, confidential financial advice from third-party organisations such as MoneyHelper, Citizens Advice and StepChange.

They’ll help break down your concerns and come up with a plan to address your money worries.

Mental health professionals

Money stress can also trigger severe emotional distress. If you ever feel like you can’t cope, there’s always someone you can speak to. Don’t hesitate to reach out to NHS mental health services , available 24/7 if you need urgent support.

You can also find free mental health support from organisations such as Mind and Samaritans.

Visit our complete list of third-party organisations and charities for more guidance and support.

Moneyboat is here to help

Coping with financial stress can feel overwhelming. Getting into the right mindset is half the battle. And while budgeting tips can help you evaluate your finances and find potential solutions, it’s important to remember that you’re not alone.

To help you feel more financially confident, explore our range of helpful guides – including everything from financial wellbeing tips to money lessons we learned from our mothers.