10 Best and Worst Ways to Handle Financial Stress

Money is a significant source of stress for a staggering 64 percent Americans, and that stress can cause health, personal and relationship problems, according to data recently released by the American Psychological Association. The way in which you deal with your money problems can have a substantial impact on your circumstances in the long run.

GOBankingRates.com talked to financial experts, who shared the 10 best ways to handle financial stress, as well as the 10 worst. Whether you’re managing debt, living paycheck-to-paycheck, or considering a bankruptcy, practice these expert tips to deal with financial stress in the best way possible.

Some stress-busting strategies are far more effective than others. Here are some of the best ways to overcome the stress that accompanies money problems.

If you’re stressed out over your finances, consider opening up to financial planner, a spouse, a friend or someone else you can trust, said Clint Haynes, founder and financial planner at NextGen Wealth.

“In my experience over the years, the best way to deal with financial stress is to actually talk about it,” he said. “Not only will it be a relief to get it off your chest, it’s the first step towards doing something about it.”

Shining a spotlight on your financial situation can create much-needed clarity, which is often the first step to finding a much-needed solution to money problems. “Get organized with your money,” suggested personal finance expert Brian Brandow. “Understand your income and bills. Once you have all of that laid out, you can make a plan, typically in the form of a budget.”

Getting organized and developing a roadmap for change can go a long way toward creating peace of mind, he added.

Money problems often won’t resolve themselves without some sort of intervention. If you don’t have the know-how to create a plan for yourself, consider reaching out for some help.

“If you are having credit or debt issues, reach out to a firm in the National Foundation for Credit Counseling,” said Katie Brewer, certified financial planner with Your Richest Life. “If you need help putting together a budget, a financial coach or financial planner may be able to help.”

You might also consider talking to a therapist. Affordable treatment options might be found through a community center, a social worker or, for those with mental health insurance coverage, through a traditional therapist who accepts your plan.

“If you feel hopeless about your financial situation, you should talk to a professional immediately, both about your finances and about the emotional struggles that go along with them,” said Benjamin K. Glaser, features editor with DealNews. “Some clergy members might have experience with these issues, or be able to point you in the right direction.”

It’s important to know what resources you have available to meet your financial needs. To get out of debt or to build financial security, you have three options, said Chantay Bridges, a real estate agent with TruLine Realty in Los Angeles. “You can increase your income, reduce your expenses or a combination of both.”

Bridges believes it’s often more immediately viable to reduce expenses. She suggested taking a hard look at spending patterns to find where to cut costs. Then, “swallow your pride and be willing to do anything that is not illegal or immoral to generate more income,” she said.

Not everyone will be in a position to pay off all of their debt and might need to consider other, more drastic options. Choosing to settle debt for less than owed or considering a personal bankruptcy can be emotionally taxing.

“First, recognize you are not alone,” said Bruce Ailion, RE/MAX Town and Country real estate expert in Atlanta. “Bankruptcy is not a moral failing. It’s a government-guaranteed right.”

If you’re deeply in debt and unable to pay it off, a bankruptcy attorney can help you develop a plan. “Many people have settled hundreds of thousands of dollars of debt without filing for bankruptcy,” Ailion added. “Having a professional assist you will make [the process] easier and more successful.”

People who struggle to pay off debt are two times as likely to experience depression and anxiety, according to Evanston, Ill.-based psychiatric center Yellowbrick. “If the issue is a small shortfall in income, consider getting a second job until you are caught up,” said Ailion.

If a second job isn’t a possibility, or as a way to augment your moonlighting income, “use eBay or host a garage sale to sell some of your stuff,” he added. “The additional income and subsequent debt reduction will help you improve your credit score and allow you to begin saving.”

Chronic stress, like the kind experienced by people with long-term financial difficulties, can contribute to a whole host of health concerns, like long-term heart problems, breathing problems and ulcers, among other issues, according to the American Psychological Association.

When learning to manage money problems, “make sure you have a healthy avenue for dealing with overall stress in your life,” suggested Brewer. “This could include exercising, sleeping enough, eating right, meditating or practicing your religion.”

Most financial journeys are far from linear. No matter how much you’ve saved or what extra income you’ve earned, there will be unexpected bumps in the road. Roofs leak. Cars break down. Children need braces.

“By far, one of the best ways to reduce money stress is to see the bigger picture,” said Josh Elledge of SavingsAngel.com. “People lose sight quickly of mountains they’ve already climbed.”

Instead of bemoaning the challenge, celebrate that you have an emergency savings account to fall back on, or that your credit card balance is half of what it used to be. “Take some time to reflect on previous times you’ve made it through, and both big and small victories,” said Elledge. “This will give you strength to keep going and be victorious this time, too.”

For people who are really in a financial bind, try seeing what you can do without for 10 days, said Elledge. “Can you stretch the gasoline already in your vehicle? Can you eat only out of your pantry, fridge and freezer?” he said. “Ideas like this could be just enough to get you to your next paycheck, plus the accomplishment of making it work really feeds your hope.”

On the opposite end of the spectrum, some stress-busting strategies can backfire on you. If you’re under financial stress, here are some of the worst ways to deal with it.

Financial conversations are a now-or-later decision, said Haynes. If you don’t talk about it now and work out a solution, “you’ll eventually be talking about it, but it will be because you’re speaking with an attorney about bankruptcy,” he said. Instead, it’s best to open up about your financial stress when you can do it on your own terms, and not on those of your creditors, he added.

When you don’t face your debts, balances can grow, interest can compound, and levels can quickly get out of control. Ignoring the problem could cause you to go deeper into debt, which can heighten stress. Even worse, “money stress can affect other areas of your life, like performance at work, your relationships and your health,” said Brandow. “If you haven’t dealt with it properly, it can serve as a distraction,” making matters worse, he added.

When facing financial problems, it’s probably not a good idea to talk to your “BFF who has the same bad spending habits as yourself,” said Bridges. “If you are going to call anyone, let it be a friend who has a background in financials like a CPA, CFO or a tax professional.”

If you’re already in the financial hole, continued spending will just serve to make your financial situation worse. In fact, for every 10 percent increase in personal debt, depression worsens by 14 percent, according to Yellowbrick.

“It may seem that there’s no light at the end of the tunnel, but there is,” said Bridges. The first steps to getting out of the hole are to “refrain from using credit cards, purchase only what you can afford, and know what items fall under the categories of ‘want,’ ‘need’ and ‘stay away from,’” she said. “It’s easier than you think, with little adjustments here and there.”

No matter the source of your money problems, you’ll most likely need to work with your partner — and not against him or her — to figure out how to effectively deal with your financial stress. To start, “pick one hot button that affects your spouse and work on that,” said Bill Hammer, Jr., Locust Valley, N.Y.-based certified financial planner and author of “The 7 Secrets of Extraordinary Investors.”

What’s key is that you work together. “You both need to do something,” he said. “You can’t fix things overnight, but you can choose to focus on one area so you can start to get some control back.”

Resorting to drinking, doing drugs or gambling might dull the immediate pain of financial stress but, in the long run, will often make the underlying problem worse, said April Masini, relationship and etiquette expert and author of the advice column “Ask April.” Instead, face up to your money problems. “The discomfort you’re feeling is your friend. It’s a hint that you need to make some changes in your life,” she added.

The financial stress might make you feel like giving up, but don’t give in to that urge. “Don’t quit your job, break your lease or default on your mortgage because you’re overwhelmed,” said Masini. Instead, create a plan — whether alone, with a friend or with a professional’s guidance — to prioritize, scale down and focus on ways to improve your financial situation.

“If you don’t, you’re bound to repeat your mistakes,” Masini added. Instead, she suggested, “learn from the situation.”

If you’re having financial problems, it’s especially important to be upfront about it with your spouse. “Money is a major source of conflict in many relationships, and financial incompatibility is one of the top predictors of divorce,” said Patricia Cathey, investment advisor with Smart Retirement Plan in Denver.

“If you are hiding purchases, hiding bank accounts or lying about debt, you are committing financial infidelity,” she said. “That can harm a marriage just like sexual infidelity.”

Instead, Cathey recommended honesty as the best policy to beat financial stress. She has her clients set up a monthly meeting to talk about money. A regular meeting will ensure they’re on the same financial page, but it will also help them connect emotionally. “Put it on your calendar to make sure you stick to it,” she added.

It’s hard to feel emotionally stable when you’re living on the financial edge. Without a cash cushion, it takes just one unexpected expense to bust a well-thought-out budget. “I recommend a bare minimum of $100 in your checking account, not $0,” said Adam Funk, CFP at Savings Coach in Troy, Mich.

“Ideally, though, you should keep one month’s worth of income as a cushion in your checking account,” he said. “That amount will reduce the daily stress that comes from worrying that your bills won’t get paid.”

Most likely, your money problems didn’t happen overnight. At the same time, it’s unrealistic to expect a quick resolution. “Dealing with financial stress is more about understanding your emotions and psychology than it is about numbers and graphs,” said Joseph Carbone, Jr., CFP, founder and wealth advisor of Focus Planning Group.

Getting to the emotional cause of your financial stress takes more time than simply running a calculation. For example, Carbone said he spends hours with his clients, discussing the psychology behind their money needs, including the emotional steps necessary to achieve their financial goals. For some clients, he even recommends an outside therapist be used in concert with financial advice.

“My clients understand that it’s hard work and they will be stressed sometimes,” he said . It’s all part of the long-term journey.