Financial Stress Statistics: Financial Stress And Mental Health

According to the American Heart Association, 82% of adults state that they feel stressed about money. Financial stress can have a profound impact on a person’s mental and physical health, in addition to affecting their relationships. Below, we’ll look at financial stress statistics, common sources of financial stress, and strategies for reducing financial stress, including financial and mental health counseling. 

What is financial stress?

Financial stress is a state of anxiety stemming from money problems, including debt and not having enough income to cover everyday expenses. It can act as a chronic stressor, leading to physical symptoms, mental health challenges, and behavioral changes.

How money negatively impacts mental health

Money can negatively impact mental health in various ways, including the following:

• Being one of the most common causes of stress. Seventy-three percent (73%) of Americans report that personal finances are their main source of stress. Financial stress ranks higher than work, family, and political stress. 
• Being a potential symptom of mental health problems. According to the Money and Mental Health Policy Institute, 18% (nearly one in five) of people with mental health challenges are in problem debt (a situation in which a person is unable to make their debt repayments). Also, individuals experiencing mental health challenges are approximately three and a half times more likely to have problem debt than people without mental health challenges. 
• Contributing to ongoing mental health symptoms. Individuals experiencing depression and problem debt are generally 4.2 times more likely than people without financial challenges to still experience depression 18 months later. 
• Contributing to ongoing anxiety. In Motley Fool Money's 2024 Financial Stress, Anxiety, and Mental Health Survey, more than 50% of respondents reported feeling anxious or stressed about their finances at least three days a week.

Why financial stress varies by income, age, and life stage

People of all ages and life stages report experiencing financial stress, though, according to a 2024 Bankrate survey, the sources and levels of their stress vary. Adults without a bachelor's degree may be more likely to experience significant financial stress. Those making under $50,000 a year appear to feel it the hardest. Of survey respondents in this income category, 53% reported feeling stressed about money, compared to only 40% of those earning $100,000 or more a year. 

The primary source of their financial stress varies, too. Those making under $50,000 a year agree that paying for everyday expenses is their top financial stressor; for those earning more, it is inflation and rising prices.

Financial stress varies by generation, too. For example:  

• Gen X had the highest share of financial stress, with 54% saying money negatively impacts their mental health. 
• Millennials were next at 50%, with Gen Z and Baby Boomers at 47% and 40%, respectively. 
• The top financial stressors for these groups vary, too. Gen Z reports paying for everyday expenses is their top stressor; for older generations, it’s inflation and rising prices.

Top financial stressors in the US

Financial stress can come from numerous sources, affecting people across all income levels.

Job loss and medical bills

Financial stress can come from numerous sources. Some people experience financial stress due to job loss. Even if unemployment benefits help with rent or mortgage payments, they may not be enough to cover food, utilities, phone bills, and other expenses. 

Another common source of stress is medical bills. Some people lack health insurance, which means that a single visit to the hospital can come with high medical expenses. Even people who have insurance might experience stress related to medical bills. For example, some people may need to meet a certain deductible before their insurance plan begins to cover medical expenses. Aside from insurance costs, people often have to pay for medication as well. All of these sources of stress can make it difficult to effectively heal from medical problems. 

Everyday expenses and inflation

Rising inflation around the world has made everyday expenses like groceries, gas, and utilities more and more expensive. In other words, when the cost of basic necessities climbs faster than wages, households may find themselves worrying about how to make it through each month. This can leave them with little room for savings or surprise expenses.

Debt, credit cards, and loans

Credit card debt, student loans, or personal loans can add another layer of financial stress. High interest rates can cause balances to grow quickly, and making minimum payments may make it difficult to pay off what is owed.

Major life events and family responsibilities

Major life events and family obligations can increase financial responsibilities as well. Having children, going through a divorce, or caring for aging parents can lead to financial strain and make it difficult to plan for. This can leave many people feeling overwhelmed, emotionally and financially.

The role of personal finance in financial health

Learning to manage personal finances effectively can be one way to reduce financial stress and build long-term stability, but it can be difficult to know where to start.

Savings accounts and emergency funds

Saving money can be an important tool for managing personal finances. Having even a small amount of money set aside can make a difference when unexpected expenses arise. 

Financial experts commonly recommend building an emergency fund that covers three to six months of living expenses, but surveys suggest that less than half of Americans meet this goal. One way to begin building up savings is to start small. The act of consistently contributing to a savings account can also help build confidence and help people feel as if they have a greater sense of control over their financial health.

Credit management and debt reduction

Credit management can also play an important role in financial health. Having high levels of debt, particularly on credit cards, can take large portions of monthly income and make it difficult for people to save or invest in the stock market. 

Paying bills on time, keeping credit utilization low, and avoiding unnecessary charges can help protect and improve credit over time. Reducing existing debt can free up money that can be used elsewhere, which can help to lower financial stress and enable people to build up savings and work toward longer-term financial goals.

How financial stress affects mental and physical health

The physical and emotional weight of ongoing money worries can wear the body down gradually, affecting both mental and physical health over time.

Anxiety, depression, and chronic stress

The connection between financial stress and mental health is well documented. When people struggle to meet their basic expenses or carry significant debt, feelings of anxiety and helplessness can quickly feel overwhelming. Over time, this ongoing pressure can lead to chronic stress, which affects sleep, concentration, and daily functioning. 

In more severe cases, prolonged financial hardship has been linked to depression, with some feeling trapped or without a clear path forward. These mental health challenges can make it harder to budget, seek help, or stay on top of bills, which can create a cycle that can be difficult to overcome.

Physical health risks like heart disease

The impact of financial stress extends beyond mental health and into the body. Chronic stress triggers the release of cortisol. Elevated levels of cortisol can damage cardiovascular health, including an increased risk of heart disease, high blood pressure, and a weakened immune system. People experiencing financial hardship may also avoid seeking medical care because they are worried about the cost, which can lead to existing health conditions worsening over time.

Coping with financial stress

Financial stress can be manageable through taking action, both financially and emotionally, and learning how to break the cycle of worry and establish a way forward.

Practical money management steps

Taking steps to address financial stress can help to reduce anxiety and restore some sense of control. 

One place to start can be by setting up a monthly budget to track income and expenses and to help identify areas where you can reduce spending. It can also help to build an emergency fund, even if you have to start small, to provide a buffer in the event of unexpected costs. 

If you are worried about making payments on time, it may be worth it to contact lenders early. Many organizations offer hardship programs or flexible repayment options, and nonprofit credit counseling agencies may also be able to provide guidance.

Stress management and mental health support

Dealing with the mental health aspects of financial stress can also be important. Some approaches that can help include:

• Talking to trusted friends or family members about financial worries rather than trying to manage this stress alone
• Practicing stress-reduction techniques, like mindfulness or exercise, to manage anxiety day to day
• Reaching out to a mental health professional if financial stress is significantly affecting your mood, sleep patterns, or ability to function in daily life

Talking to a therapist about financial stress

While a financial counselor might have valuable advice for managing debt, it may help to speak with a mental health professional to learn to manage stress in the meantime. A licensed therapist can recommend personalized stress management techniques, which may help you maintain good mental health while working toward more financial stability. 

Online therapy for financial stress

While many people enjoy attending therapy in person, online therapy is another option that can be more accessible. With an online therapy platform like BetterHelp, individuals facing financial stress can speak with a therapist from home via phone, video, or live chat at a time that works for their schedule. This may be especially helpful for those who are working overtime to improve their financial situation. 

Online therapy can effectively treat numerous mental health challenges. Studies have demonstrated the effectiveness of online therapy for anxiety, depression, and substance use disorder—all of which can be common in people experiencing financial stress.

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