How Stress Impacts Our Financial Outlook

    10 minute read
    Get insight into the impact of stress on your finances as well as ways to alleviate it.
    Money is a top cause of stress for many of us, and stress is one of the great hazards of life. Financial stress can lead to worry that you won’t be able to take care of current or future financial needs for yourself or your family.

    At Credit Human, we understand the importance of managing financial stress against the many other pressing priorities of life. We are committed to helping you to build more financial slack so you can stress less. Here we’ll take a look at how stress impacts our choices, as well as some steps you can take to help reduce financial stress.

    Stress on the brain
    In the past year, Americans have been forced to double down on their finances – working harder to save while adjusting spending habits to endure the ongoing global pandemic. The pandemic has created widespread stress in our lives leading to some serious impacts on the human brain. This is because the human brain is wired for certainty. The certainty we feel in our lives helps our brains maintain our routine and react to life as we typically would.  When something happens to disrupt our everyday life we can become stressed.  Think about how we have to adjust when starting a new job, having a newborn baby or attempting to navigate life in an on-going pandemic. It’s true stress impacts people differently, and each situation may be different depending on a number of factors, such as:
    • Severity of the stressful event
      • For example, seeing a grizzly bear in the woods, or a home security alarm being triggered by a potential intruder at night.
    • Length of time under the stressful event:
      • For example, it was only 30 seconds but seeing a grizzly bear in the woods caused your life to flash before your eyes, or it was only 30 minutes of high stress but by the time the police arrived and realized it was a false alarm it was hours before you could come down enough to sleep.
    Why does stress on the brain matter?
    Understanding the role of a stress response can help give us a clearer picture of our choices and responses to situations. Most people think about the body’s automatic triggering of a fight-or-flight response as allowing someone to perform feats of extraordinary physical ability like those news stories where the person lifts up a car in order to save a stranger’s life. These types of situations of stress, adrenaline, and fight-or-flight are certainly extraordinary, yet what happens when it’s not so straightforward like in the pandemic? Let’s look at the role of stress in the scenario of a person lifting up a car in order to save a stranger’s life:
    Unpacking what happened:
    • In a dangerous or threatening situation, incredible amount of stress flood the brain. The body activates the fight-or-flight defense mechanism, enabling the body to react to the perceived threat. When the threat is minimized and stress is relieved the body deactivates the fight-or-flight response and begins to return to normal.

    In the example above, the severity of the stress was high enough to trigger or fight-or-flight in the brain and the situation was resolved relatively quickly even if it took a few hours to return to normal. What happens when the stress is not temporary? In the course of a threatening and stressful event like the pandemic, when the body is flooded with stress it could respond automatically by triggering a fight-or-flight response. The pandemic is on-going; what impact might a long-term fight or flight response have in our life?

    The financial stress of the pandemic may:
    • Act like rocket fuel for our biggest worries – creating a constant or hyper vigilant state of anxiety or worry.
    • Show up as unusual emotional reactions or abnormal changes in behaviors or routine.
    • Lead to both the financial reality of a situation (not being able to pay medical bills, child’s education, or losing a car or house) and the “what if” worry that such an event may occur.
    • Cause to us to constantly worry what could happen next — like seeing grizzly bears potentially lurking around every corner.

    Financial stress is stress. It's all around us, negatively affecting individuals, families, children, workplaces and communities. It plays a role in everything we do. Yet it's easy to sweep aside just how impactful financial stress can be.
    Here are some steps to reduce the impact of financial stress in your life.

    Step 1: What’s important
    Try and take stock of your financial situation by thinking about where money causes you the most stress.
    • Break down the sources of stress into more manageable pieces. 
    • Whether it’s reducing credit card debt, making monthly bill payments, or saving, keep the list short.
    • Consider beginning by identifying the three biggest financial challenges to help you get a handle on what you’re up against.
    • Our financial health quiz is another way to help you discover what’s important. The quiz is a quick 2-minute questionnaire. It helps you to see how you are doing with your money and learn the best way for you to stress less while building slack.
    Step 2: Do your best and forget the rest
    Your mindset is helpful in keeping you motivated to address uncertainty. Small steps are key when getting started. Rather than getting bogged down by the overwhelming thoughts which can occur, extend yourself some grace and try to space out your financial decisions instead of making too many at once.
    • Focus on just one financial decision at a time. Trying to make too many decisions at once causes extra stress and keeps us from reaching our goal.
    • Forgive yourself if you slip up. Sticking to a goal is not always easy, and there may be days when your resolve falters. If that happens, forgive yourself and keep working towards your goal.
    Step 3: Keeping it real
    Determine what you can reasonably achieve and then dedicate yourself to following through each and every month. Make yourself a promise. For example, “Each month I will spend less and put what’s left over towards an emergency fund. That way if something happens I’ll be ready for my family.”
    • Get an accountability buddy – keep yourself honest by leaning on your relationships to help you stay on track.
    • Seek support of friends and family. There’s no one better to remind you what you’re sacrificing for than those you love, trust and respect.
    Credit Human is here for you in times of stress, please check in with us  at a Financial Health Center.

    If you would like some tools to practice some of the suggestions above, here are some additional resources to support your mental and emotional wellbeing during times of stress, anxiety and uncertainty.

    Mindfulness apps
    • Insight Timer - free app for stress, sleep, and anxiety.
    • Headspace - mindfulness of our headspace has been shown to help people stress less, focus more and even sleep better. Headspace is meditation made simple.
    • Calm - 84% of Calm users who used the app 5x a week saw an improvement in their mental health.
    • Mindshift - interactive cognitive-based tools to relieve anxiety.
    Greater Good Science Center