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5 strategies for coping with financial stress

Is financial stress getting in the way of your life? Take back control of your finances and ease your mind with these suggestions.

8 min read

Living with financial stress is an unfortunate reality for most of us. Even before the pandemic hit, people with debt, few assets, or limited income had always been especially vulnerable to financial anxiety. But at N26, we want to help you stay on top of your finances and ease that economic strain. Here are a few tips to help you cope with financial stress and start thriving.

What is financial stress?

Financial stress, or financial anxiety, differs from everyday money worries. This is because it’s constant and, in some cases, debilitating. In the worst cases, it can become all-consuming, affecting many aspects of your life. Financial stress becomes acute when the brain releases too much cortisol for a prolonged period. This can make you feel perpetually on edge and unable to relax or make balanced decisions. 

If gone untreated, financial stress can severely impact your mental and physical health. However, it manifests in many different ways, so it’s important to stay informed of the signs and symptoms. This way, you can recognize financial stress in yourself or someone you love before it becomes acute.  

What are the symptoms of financial stress?

Financial stress affects everyone differently, but there are some common signs to look out for. From physical and mental symptoms to private life struggles or relying on unhealthy coping mechanisms, here are some of the ways financial stress affects your health—and beyond.

Sleeping difficulties 

One of the tell-tale symptoms of financial stress is difficulty falling asleep. A mind that’s preoccupied with financial anxiety is unlikely to switch off the moment it hits the pillow. In the silence of the night, these anxious thoughts can take center stage and get increasingly loud. What’s worse, lack of sleep can exacerbate existing anxiety levels, making it even harder to sleep the following night.

Mental health problems

Left untreated, financial stress can seriously impact mental health. Depression and anxiety are the two most common effects of financial stress. While depression can make an individual feel chronically low, hopeless, unable to concentrate, and socially withdrawn, chronic anxiety can result in a rapid heartbeat, sweating, feeling on edge, and panic attacks. Both require the help of a medical professional, so talk to your doctor if you recognize any of these symptoms in yourself.

Physical health issues

Financial stress can also negatively affect the body. Headaches, constant fatigue, high blood pressure, and gastrointestinal problems are all common indications of financial anxiety. These symptoms often overlap with poor mental health. For example, high blood pressure and gastrointestinal problems are often linked to anxiety, while headaches and fatigue often accompany depression.

Relationship difficulties 

Financial anxiety can put pressure on any relationship. When a couple is suffering from financial stress, it becomes hard to carve out quality time together as they’re often too consumed by anxiety. Often cited as the number one topic couples argue about, money and the financial stress that comes with it can take its toll on even the most robust relationships. 

Unhealthy coping methods

When suffering from financial stress, many turn to unhealthy coping mechanisms to gain some temporary relief. From alcohol and drugs to gambling, disordered eating, and compulsive shopping, most of us have a crutch of choice when times get tough. However, if any of these unhealthy coping mechanisms start to negatively impact your everyday life, this is also a sign it’s time to seek professional help.

How to deal with financial stress—5 strategies

Now that we’ve covered the symptoms, it's time to look at ways of coping with financial stress. The good news? With a clear plan of how to improve your financial and mental wellbeing, you can learn to cope and thrive. Here’s a step-by-step guide on what you need to do to reduce your financial stress.

1. Focus on yourself

Before you target your bank balance, you first need to focus on yourself. It’s impossible to get your finances in order when you’re not in the right headspace. As it can seem like your financial health is causing your anxiety, this may feel counterintuitive at first. However, if you can gradually ease yourself into a more relaxed state, you’ll be able to assess your situation, make better-informed decisions, and be able to see your next steps with clarity.

While self-care has become a bit of a buzzword, there’s a wealth of science out there that proves that it works. So, to nourish your mind, body, and soul so they can combat financial anxiety, try the following:

  • Try to get enough sleep. This means winding down before you go to bed (no scrolling from your pillow!), keeping a regular bedtime, and cutting down on sweets and caffeine.
  • Keep a healthy diet. Feed your body nutritious food, and your mind will thank you for it. After all, we are what we eat. So, if you’ve resorted to a stress-based diet of ready-made meals and junk food, your brain will be sluggish and more prone to anxiety.
  • Get active. Physical activity does wonders for both your body and your brain. The release of endorphins during and after a workout can help you develop a more optimistic and empowered mood. Regular activity can help prolong your improved mood, giving you a better foundation to combat your financial stress.

2. Stay in touch and open up 

To reduce anxiety, it’s important to stay in touch with your loved ones. Whether it’s a zoom call with your mom, a quick catch-up with your bestie, or a one-sided conversation with your dog, it’s important to stay connected. Financial stress can encourage you to withdraw from social situations. This means you’re left to ruminante alone with your anxious thoughts which exacerbates the problem.

Though it may seem daunting, try to talk a little about the problems you're facing and how you’re feeling. Your conversation partner isn’t going to give you all the solutions you’re looking for, and nor should they. But, if they listen to what you’re saying and are understanding, it can be incredibly relieving. We’re social creatures, we’re not meant to go through life’s hardships on our own. Putting a brave face on things will only prolong your suffering. Hearing a few understanding words can make a world of difference.

3. Get to grips with your financial status quo

Once you’ve started taking better care of yourself, you’re ready to start tackling your finances head on. Perhaps the most intimidating task on this list—getting your money-management skills up to snuff. Try tracking every penny and getting face-to-face with your financial reality. At first, this can be a major shock, but being well-informed about where your money is coming and going each month is an invaluable tool when it comes to developing healthy and sustainable financial habits.

To get started, look at your bank statement for the last month. Note down all of your income streams and group them together. Then, split your expenses into two categories: fixed and variable costs. Fixed costs include expenditures that are difficult to change such as your rent, utility bills, and any debt repayments. Your variable costs include your payments that are easier to adapt such as money spent on groceries, subscriptions services, and clothing. From here you’ll be able to see:

  • If you have more money going out of your account than coming in every month
  • Any areas where you’re overspending 

If you’re looking for an easy way to do the above, as an N26 customer, all of your expenses are tracked and categorized automatically with our Statistics feature. Plus, you’re immediately notified each time money leaves or enters your account, thanks to instant push notifications.

4. Identify areas where you can save

Now you’re ready to dig a little deeper into your financial problem areas. If your outgoing expenses exceed your income, don’t worry. You can either decrease your spending in certain areas or, if possible, focus on bringing in some extra income each month. You can even decide to do both, but it’s important not to overwhelm yourself when creating better financial habits—especially at the beginning.

Once you’ve identified areas where you’re overspending, you’ll have a clear indicator of where you should start cutting back. Beyond that, the easiest place to begin reducing your expenditures is your variable costs. This means reducing your weekly grocery shop, canceling any unused subscriptions, and finding other little ways to cut back on spending. However, if you want to make some more drastic savings, you can consider targeting your fixed costs. This means, for example, finding ways to save on rent or utility bills.

5. Create a budget

Next, it’s time to decide how much money you want to save each month and to create a budget to support that goal. As you begin to make changes that free up some extra money, you’ll get an idea of how much you can start to put towards a savings fund. 

Adopting a savings mentality can take a little while to get used to, but it’s all about taking small, consistent steps towards your goal. If you’re unsure of where to begin, the 50/30/20 budget is a good place to start. One of the best tools against financial stress, having a solid budget helps you navigate your finances and keeps your financial health in check. From here, you can start making some smarter, forward-thinking financial decisions. This could include saving for an emergency fund or contributing towards your pension. By creating a buffer between you and life’s surprises, you prevent your future self from spiraling into financial stress—you’ll certainly thank yourself for it later!

Your Money at N26

As an N26 customer, you’re in full control of your financial health. Let Statistics track and categorize your spending in real time, making it easy for you to identify just where your money is going every single month. Create up to 10 Spaces, convenient sub-accounts that sit alongside your main account. Give each space a name and a unique savings goal, and drag-and-drop to set money aside whenever you can. Turn on Round-ups for even more savings—the feature that automatically rounds up each of your card transactions to the nearest euro and deposits the difference into your chosen space. Visit our compare page and find the plan that’s right for you today.


How can I say goodbye to financial stress?

When it comes to financial stress, the most important thing is to practice self-care, and improve your mental and physical wellbeing. This includes talking about your money worries with family and friends. Ongoing financial stress can have long-term physical and psychological effects, and can impact your decision-making skills. Once you’ve tackled your stress, you can take other steps to address your worries.

For example, you can try to get a better understanding of your income and spending. This is vital to creating a budget and discovering opportunities for saving, like groceries or utility bills. If possible, you may want to start looking for another income stream to expand your budget. However, be careful not to burden yourself with extra work.

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