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Money & Mental Health: Why Financial Problems Cause Stress

According to a study from the American Psychological Association, 72% of Americans experience financial stress. The study’s findings also showed that millennials and Generation X have high anxiety levels about money compared to other generations. Around 70% of Gen Xers even expressed that they have barely enough or not enough money to make ends meet each month.


With so many Americans feeling the weight of their finances, one has to ask — what kind of toll is this stress taking on their mental health? As we celebrate Mental Health Awareness Month, we want to shed light on the very real and sometimes scary levels of stress we can feel about money. We also want to share some healthy steps you can take to help you manage and reduce your financial stress.  


Why Do Financial Problems Cause Stress?

What if a medical emergency were to happen and you’re not covered by health insurance? What if your car breaks down tomorrow — can you afford to fix it? What if you can’t make rent this month?


These questions, along with many others, can keep us up at night. If you’re a natural worrier, you know that there is no shortage of “what ifs” you can create for yourself to add even more stress.


Whether it results from a rational or irrational fear, stress ultimately stems from insecurity. If you feel insecure about your finances, you will feel stressed. Life can be full of financial obligations, and if you’re not confident in your financial assets, you can feel overwhelmed by upcoming expenses, debt, and “what ifs.”


We want to approach this topic with transparency and let you know that you’re not alone in your struggles with financial stress. You’ll see below that members of the Porte team have experienced financial stress at some point in their lives. Here’s what they had to say:



“Let’s be honest — in school, you learn many helpful and important things, but you don’t truly learn how to manage your money until you get out into the real world. I grew up in a low-income family and had to navigate opening a bank account and being responsible with money on my own. This resulted in a lot of lessons learned. When I had my first job as a college student, I would avoid checking my account balance because it gave me such stress and anxiety, and this caused me to overdraft at times. Now, as an adult, I understand how empowering it feels to have control over and confidence in my finances. I have healthy processes in place today so that I can always know where I stand with my money, and I utilize tools to alleviate stress like account alerts and a budget tracker to review and monitor my bills & expenses.”

-Abigail Monico, Social Media Director


“When I attended college, financial stress came with it. Even though I was a student-athlete with a full ride, I was still responsible for out-of-pocket expenses. Because of that, I had to juggle a part-time job, school, and the full-time commitment of being a collegiate athlete. Due to bad spending habits and a lack of budgeting, I added a lot of financial burden on myself. For anyone wanting to limit the financial stress in their lives, I highly recommend creating a budget and evaluating your spending habits.”

-Xavier Lofton, Digital Content & SEO Specialist


“When I was in my early 20s, I was working two jobs, had a side hustle, and still lived with my parents. I couldn’t even afford a car, certainly not a place of my own! Maybe it’s true that money can’t buy you happiness, but being in a secure place financially relieves so much pressure and frees you up to experience those small joys that ultimately make life worth living.”

-Mateeka Gonzalez, Marketing Senior Manager


How Does Financial Stress Affect Mental Health?

Financial stress affects your mood, self-esteem, and energy levels. When you’re in an unhealthy state of mind or don’t have the energy to pursue your passions, it can affect all areas of your life. Your money worries can have you feeling angry, ashamed, or scared. It can be an underlying cause of tension between you and your loved ones, fueling arguments that can result in you pushing away your family and friends.


According to HelpGuide, it can significantly increase the risk of insomnia, depression, and anxiety. In fact, 65% of Americans lose sleep over money. Another report in Clinical Psychology Review showed that those with debt are three times more likely to experience mental health problems. Depression, anxiety, and psychotic disorders were among the most common mental health illnesses reported.


Unhealthy Coping Cycles

To escape from financial stress, individuals can develop poor habits to help them cope. The study from the American Psychological Association revealed that millennials who reported that their financial stress was “extreme” were more likely to engage in sedentary or unhealthy behaviors to manage their stress.


By continuing to engage in unhealthy coping behaviors, a scary cyclical pattern can develop: poor financial health leads to poor mental health, leading to unhealthy coping behaviors and actions, which ultimately results in increasingly poor financial health. Then the cycle repeats itself, worsening your overall health each time.


So, how can you break this cycle? What are some healthy steps you can take to help alleviate the stress you feel from your finances?


Tips to Help Reduce Financial Stress


1. Build Your Emergency Fund

Emergencies are outside of our control. After all, if we knew when they would happen, they wouldn’t be emergencies. But while you can’t predict the future, you can prepare for it.


Having funds saved for emergencies will help alleviate the stress you feel from the million “what ifs” that keep you up at night. A good rule of thumb is to have around three to six months’ worth of expenses readily available.


Along with your emergency fund, creating healthy saving habits can provide you with many other benefits, including financial security for your future. Check out Why Save Money in Your Twenties to learn more!


2. Create a Plan to Reduce or Eliminate Debt

Debt is often the culprit behind financial stress. If it reaches high levels, it has the potential to strip away your joy and take a toll on your mental health. Keeping your debt down to a reasonable level, or eliminating debt completely, could be an essential step towards financial freedom.


3. Follow Your Budget

A budget will help mitigate your stress about upcoming payments and other recurring expenses. By creating and sticking to a budget that accounts for your costs, you don’t have to worry as much about having enough money to pay for things like rent or your food bill. A good budget should include these things, along with goals like saving for your emergency fund or retirement. For more information about budgeting, check out our Beginners Guide to Budgeting Like a Boss!


4. Take Advantage of Tracking technology

Today, numerous technological tools can help you keep track of your finances. For example, if you create and fund a Porte Account1 you can access Porte’s Spending Tracker. Here, you can input your monthly budget, and as you use your Porte Account throughout the month, you’ll be able to track how your spending aligns with your budget.


At Porte, our members can also receive account balance alerts2 to notify them anytime their debit card is used and when a withdrawal is made from their accounts. Accordingly, you won’t have to just hope and trust that your account is secure. With account balance alerts, you’ll stay apprised of any activity.


Open a Porte Account to take advantage of these tools and many other features!1,2


5. Don’t Overthink It & Trust the Process.

“Plan your work and work your plan.” - Napoleon Hill


Address the source of your worries by taking action. Sticking with your plan and following an effective budget will help you keep a cool head and can help reduce or eliminate the root of your stress. Once you’ve created a solid plan to help you manage your financial stress, trust in it! If you diligently follow your budget, try not to obsess over it. Trust in the process and yourself.


6. Don’t Be Afraid to Ask for Help

As you take the appropriate actions to help manage your finances and mental health, don’t be afraid to seek help along the way. If you suspect that you are facing mental health-related problems due to financial stress, you are encouraged to seek professional help. Consulting with a mental health professional can make a world of difference!


Key Takeaway: Financial stress is real, and it can affect your quality of life. However, by developing healthy financial habits, following your budget, and taking care of your mental health, you can reverse course and start your journey to financial freedom and find peace.



Are you ready to change how you bank?

Apply for an account using the Porte app.1 No credit check required.2

Porte is a mobile finance app, not a bank. Banking services provided by Pathward, National Association, Member FDIC

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