74% of Americans reported feeling stressed about their personal finances.
61% of Americans report living paycheck to paycheck.
Some of the reasons given for financial stress include inflation, economy-wide instability, rising interest rates, and lack of savings.
Many Americans admit to feeling the pinch of financial stress. A recent survey found that 74% of Americans are stressed about their personal finances, which includes 37% of people who describe themselves as very stressed.
While financial stress is common, it’s an uncomfortable feeling. Let’s explore the reasons behind financial stress and how to lower your own financial stress.
74% Of Americans Feel Stressed About Their Personal Finances
A recent poll from CNBC Your Money and SurveyMonkey found that 74% of Americans feel stressed about their personal finances. Over half of respondents indicated that they feel more stressed now than they did before the COVID-19 pandemic began in March 2020.
Higher interest rates mean higher borrowing costs for loans of all shapes and sizes.
Factors Adding Stress to Household Finances
No one wants to feel the pain of financial stress. But with the majority of households feeling the pinch, it’s helpful to understand what pressures are leading to more financial stress.
Here’s a look at some of the most commonly cited factors contributing to financial stress:
- Inflation: 61% of respondents indicated that inflation was a factor contributing to their financial stress. As inflation takes hold, purchasing power declines, which can make it more difficult to stay afloat.
- Economy-wide instability: It’s no secret that we’ve been living through turbulent economic times. Many households can’t help but feel financial stress as they ride the waves of the economy.
- Rising interest rates: The Federal Reserve has been raising interest rates in an effort to tame inflation. But higher interest rates mean higher borrowing costs for loans of all shapes and sizes.
- Lack of savings: 36% of poll respondents cited a lack of savings as a factor that contributes to their financial stress. Without a safety net to fall back on, it’s easy to feel financial stress.
While the reasons above were most commonly cited, other factors can play into the financial stress of an individual household. For example, other reasons given for financial stress include medical bills, credit card debt, aging, loss of income, and student loans.
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How to Lower Your Financial Stress
If you are feeling the weight of financial stress, the good news is that you can take action to ease this burden. Below are some strategies you can implement to lower your financial stress:
- Be honest about your finances: An honest look at your financial situation can help you accurately evaluate where you are and what needs to change. After a careful look into your spending, you might decide to make some cuts. Or you might realize you have more breathing room than you originally thought.
- Build savings: An emergency fund can bail you out if an unexpected expense comes your way. Most experts recommend saving between three to six months’ worth of expenses for emergencies. But even starting to save a little bit can go a long way. Start tucking funds into a high-yield CD account to build your buffer.
- Pay down high interest debt: High interest debt acts like a drain on your financial situation. If you are dealing with high-interest credit card debt, make it a priority to pay it off quickly. In some cases, a debt consolidation loan could be the tool you need to climb out of debt faster.
- Grow a new income stream: Multiple sources of income can help you weather bad times with more stability. Building a new source of income usually involves picking up a new side hustle. Once you have a side hustle, you can funnel the extra money toward savings or other financial goals.
- Build financial literacy: It’s uncomfortable to manage your money without a solid base of financial literacy. Luckily, it’s possible to start building your financial literacy through books and podcasts. As you grow your knowledge, you might feel more confident in managing your funds.
The Bottom Line
If you are one of the millions of Americans feeling stressed about your financial situation, you aren’t alone. It can be tricky to lower your financial stress, especially because we are living through turbulent economic times. But it is possible to take action in your own household to push financial stress out the window.
One of the best places to get started is by building your savings, even if it’s with one dollar at a time. As you build more savings, you’ll be ready for the unexpected curveballs that life throws your way. If you are ready to grow your safety net, consider opening a high-yield savings account today.