Financial stress affects quality of life for many Americans
My husband and I lived paycheck to paycheck for most of our marriage.
Since I’ve always been in charge of our finances, I was the one looking at our mounting debt, our pile of bills, our dwindling savings, and that looming mountain up ahead that we’re going to crash into if we don’t find a better way.
It’s been hell on the thinker.
Living paycheck to paycheck creates a heavy burden on your wellbeing, and this financial stress affects your quality of life in a negative way.
According to a 2020 report by Discover and Thrive Global, approximately 65% of Americans feel that their financial problems are too difficult to overcome. In addition, 90% of those surveyed admitted that financial decisions created higher stress levels.
As these small, consistent financial stressors pile up, they take a serious toll on one’s overall health.
Besides the physical consequences, your mental health can really suffer when you experience excessive anxiety and distress over money problems.
If you’re struggling with financial stress (and, consequently, a lower quality of life), then it’s critical that you take time for self-care and keep your current circumstances in perspective. Developing healthy money habits and a positive money mindset can make a significant improvement on your financial wellbeing.
How financial stress affects your quality of life
According to the American Psychological Association, financial stress is the top cause of stress for Americans.
When you live paycheck to paycheck, most likely you are one setback away from not being able to pay your mortgage, and this can lead to a multitude of consequences that result in a lower quality of life.
There are many negative physical ramifications from stress, like having trouble sleeping, eating unhealthy food, getting headaches or muscle tension, and experiencing excessive fatigue.
Even worse, if your stress is chronic, these symptoms can develop into more serious health issues such as heart disease, obesity, and even cancer.
In addition, financial stress can negatively impact your close relationships. According to the financial wellness survey, about 30% of people experience adverse consequences in their family life due to money troubles.
Then, there’s the impact on your mental health.
Suffering from a state of hopelessness or guilt, or feeling shame over poor choices you’ve made, can actually perpetuate poor financial health. A constant state of worry, doubt and fear can make a person feel like there is no way out and lead to destructive habits.
This can be due to what some professionals call an “existential cost” to being financially unstable. If you’re wracked with a lot of debt, living paycheck to paycheck, unable to pay your bills on time, or all of the above, this can really take a toll on your sense of self-worth and purpose in life.
You may feel less motivated because you believe you’re stuck in your situation, and there’s no point in striving for bigger goals because that would require some risk you’re too afraid to take.
This mindset only confirms your limiting beliefs and low self-esteem, which can prevent you from enjoying life and ultimately cause you to turn to negative coping strategies, like excessive drinking or overeating.
Yep, living paycheck to paycheck doesn’t just affect what you’re having for dinner, or where you buy your clothes. Living under financial stress can have very real consequences on how you think and feel about yourself.
I know, because I’ve lived it.
How financial stress affects your mental health
When I really started to examine my thoughts in relation to our finances, I discovered that a lot of my negative thought patterns were connected to our financial problems.
I identified three mental stressors, each with a related feeling that compounds its effects:
- Lack of hope leads to loss of motivation
- Worrying about the future leads to persistent anxiety
- Low self-esteem leads to struggles with shame
Each has its own unique consequences, but they all build on each other and contribute to an unhealthy mentality called a fixed mindset, which I’ll explain below.
#1 Lack of hope, then loss of motivation
Financial stress can really kill your dreams. When you’re just trying to make ends meet, it’s challenging to have hope for a better future.
You see, when you’re so focused on just getting through the week,
(Can I be late on this bill and not be charged a fee?
Do I have enough to make all the minimum payments?
Is there enough left over for food and gas?
How are we going to pay for our son’s birthday gift?)
– it’s hard for your brain to be future-oriented.
When all your energy is going towards the mess that is right in front of you (what you consider urgent), then you don’t have any left for your dreams and goals (which are important but non-urgent).
And, if you’re just focusing on the urgent, then everything else gets pushed to the back of your mind, until you’ve practically forgotten all about the goals you used to have.
You get so used to your situation that you don’t think about how you could change it. Even with all the stress and frustration, you reach a strange level of comfort and never try to break the cycle.
You lose hope in fulfilling your dreams and motivation to reach your goals. And, when you lose both of those, it’s inevitable that you’ll lose your purpose and direction in life.
This is what’s called a fixed mindset, and it will keep you stuck in the paycheck to paycheck hamster wheel as long as you keep it.
#2 Worry leads to anxiety
Being financially unstable can create a lot of worried and anxious thoughts. These thoughts feed the fixed mindset and keep you responding to situations from a place of lack.
For example, maybe you worry about your husband ordering a beer with dinner because you know it will add $8 to the tab. Or, you feel nervous when your child hands you a permission slip that requires a check. Perhaps you have anxiety about not having the money to help your kids get through college or not having enough in your retirement fund so you think you’ll have to work until you’re 80.
I worry about all of these things.
And all this worrying can really suck the joy out of life. It can prevent you from being fully present and engaged. It steals the fulfillment that generosity can bring.
And, it creates an unproductive mentality of limiting beliefs, which keeps you stuck in the fixed mindset. Where all your worries come true.
However, financial instability can also cause feelings of shame and insecurity, which makes it difficult to break unhealthy thought patterns.
#3 Low self-esteem feeds shame
When I struggled getting our own finances under control, I sometimes felt like a failure. Then, when I was around others my age, I would feel like I didn’t “measure up” as a grownup.
This is called money shame, and it’s a real thing.
In many cultures (including America), people are often judged based on their financial standing. And if you’re not keeping up with the Joneses, you can feel like a failure.
You’re ashamed of your small paycheck, or your low bank account, or being irresponsible with money.
You see your experience with money as an extension of who you are, rather than what you’ve done.
This negative self-perception not only leads you to think less of yourself than you should, but may also interfere with how you interact with other people. When you avoid others or choose to not be authentic, you miss out on deeper relationships and subsequently a greater quality of life.
Feeling inferior then feeds into a lack of motivation to improve your situation because this would require some risks, which low self-esteem will keep you from doing.
And the cycle starts all over again.
A fixed mindset only confirms the negative thoughts and actions that create poor financial habits, so you stay stuck in a paycheck to paycheck lifestyle.
By developing a growth mindset and better money habits, you can break this cycle and eliminate its effects on your psychological health.
Video: How To Manage Financial Stress
How to handle financial stress and improve your quality of life
If you’re living paycheck to paycheck and dealing with financial stress, I know what you’re feeling.
Money has its hand in so many areas of our lives, so the anxiety you might be experiencing can reach far beyond just the budget.
Your situation isn’t going to change overnight, but you can practice mindfulness to help keep things in perspective right now. There are literally hundreds of coping skills to help with this.
And, when you can see your financial mess for what it is – something temporary that you’re capable of turning into a financial success – then you can also give yourself the space to start dreaming big again. This will give you a renewed sense of purpose and motivation.
Something else that’s helpful is scheduling more time for self-care. In other words, *me time*.
Be intentional about taking care of you, which will also help minimize the effects of stress. This means adding leisurely activities that you enjoy doing to your daily schedule. Because, although it’s not urgent, it’s extremely important!
Some ideas for self-care could include:
- Doing something creative
- Going on walks
- Getting a massage or pedicure
- Practicing gratefulness
- Having your own space where you can be alone
Finally, developing positive money habits will increase your confidence in financial matters. Consistently making small, productive decisions with your finances will strengthen your ability to minimize stress.
Use some of these good money habits to start taking control of your finances:
- Create short-term and long-term financial goals
- Get on a budget you can stick to
- Start automating your savings
- Have weekly or monthly money meetings with your partner
- Practice delayed gratification and stop impulse spending
- Start living on last month’s income
All of these money habits will reduce the financial stress in your life, as you gain confidence and control over your money management.
Related post: How To Build A Stress Management System
Overcome financial stress and boost your quality of life
When finances are unstable and you can’t see a way out, negative thoughts can become overwhelming. These thoughts create feelings like stress, worry and anxiety, which then drive unproductive behaviors that lead to negative results. Those results then confirm the thoughts that started it all.
This cycle strengthens a fixed mindset, which keeps you stuck in this pattern until eventually, you feel like it’s normal. You start to *believe* that this is just how life is.
But, you can challenge your thoughts. And when you identify which thoughts are wreaking havoc on your mind, you can take steps to take better care of your mental health.
- Find coping skills that work for you
- Practice mindfulness and meditation
- Schedule enjoyable activities
- Develop positive money habits
Taking care of your mental health is just as important as taking care of your physical one. But, just like working out and finding healthy recipes, you need to be intentional about how you cope with stress and scheduling time for self-care.
Because, once you have a healthy mindset, it’s easier to keep problems in perspective and see the bigger picture. And for me, that includes financial freedom!