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Are You Unknowingly Digging a Yourself  Into a Deeper Financial Hole?
Are You Unknowingly Digging a Yourself  Into a Deeper Financial Hole?
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Money Psychology

Are You Unknowingly Digging a Yourself Into a Deeper Financial Hole?

Imou Eparis
August 30, 2023

Stress isn’t a friend to most. It impacts your mental and physical health and general well-being, but did you know stress can also impact your finances? Our ability to make informed and rational financial decisions is impacted by stress. 

Financial stress is the emotional strain that is primarily linked to money. Financial stress might occur when you are not making enough money to meet your needs like paying bills, rent, or buying food.

We all stress about money from time to time, in fact, people from all walks of life are constantly worrying about money. To cope with stressful life-changing events, we resort to coping mechanisms. Some of the ways we cope can be healthy while other ways may not be.

How we cope with these life stresses differs from person to person. Here are some  financial coping mechanisms:

Read Also: 7 Ways to Stop Stressing Over Money


1. Avoidance 

You have had a stack of bills on your dining table for two weeks now. You keep telling yourself you will deal with them as soon as you get home but you can’t seem to bring yourself to go through them. The thought of sitting down and creating a budget may fill you with anxiety. It takes a lot of effort and concentration to deal with bills or to call the bank and address your late payment. It’s easier and more tempting to avoid these sorts of problems when you are not in your best state. 

2. Abandoning your financial plan/goals

Creating budgets or checking your balances might not be at the top of your to-do list especially when you are dealing with stress. Stress can cause you to enter a state of denial when you are going through a tough time.

3. Making reactive financial decisions 

You have had enough of your siblings and can’t spend another second with them. After having your usual bickering with your siblings, you make a rush decision to move out. You move into a very expensive apartment. According to psychology today, there are some instances where stress can create panic that may lead to impulse and reactive financial decisions, like the case of moving into an expensive apartment. 

Another example of one making reactive financial decisions is when you are worried about not having enough money in the future and you sell your stock or house on impulse. It’s important to understand the underlying reasons for your financial decisions and why you invest the way you do. This awareness of your present emotions can assist you in making more informed decisions with a  rational mind. 

One way you can deal with reactive decisions is by keeping a journal. Write down your thoughts and feelings about your finances and investments. This could increase your awareness of how you respond emotionally to financial outcomes.

Read Also: Understanding Financial Stress: Causes and Tips to Eliminate

4. Thinking negatively about money 

Financial stress can trigger fear-based thinking that could result in financial self-sabotage. For example, you drop out of University because of the fear of incurring debt in the process.


1. Talk to someone 

When facing all kinds of problems, we are more often than not tempted to go it alone. Most of us grew up knowing money as something taboo to talk about. Something to be swept under the rug. Disclosing your financial situation may feel awkward or it might fill you with shame for not being able to fend for your family or the financial mistakes you have made. Bottling up this stress won’t make it go away. If anything it will only make your financial stress worse.

It’s good to note that you are not alone and can develop a system of trusted family and friends that can assist you in staying optimistic about your finances. Talking to a trusted loved one or friend not only helps you see things clearly/ put things into perspective but it could also provide a means of stress relief.

Read Also: How to Deal With Financial Anxiety

2. Take inventory of your finances 

You might think avoiding your problems will make them disappear. Just because it’s out of sight, doesn’t mean it should be out of mind. Living in denial of your current situation will only make things worse in the long run. The first step to tackling your financial problems is to create a plan on how to deal with these money problems. 

Write a list of the financial problems that concern you the most. Detail your income, debt, and spending over the course of at least a month. Then start to tackle the problems one by one. Take baby steps in doing this so you don’t overwhelm yourself.  Write down what you can start doing today or this week that can get you on track to financial stability. You could also work with financial apps or sites to help you track your money moving forward. Alternatively, you can also work backward by collecting and examining past receipts, credit, and bank statements. Taking stock of your finances will help give you a clear picture of where you stand financially and give you a sense of control over your current situation.

3. Devise a solution 

Where there is a problem there is a solution. If you are dealing with a financial problem you could devise a plan to address the problem. Having done inventory, you have already identified the problem, what is the solution? Is it living off a tight budget or finding an additional source of income?

Read Also: 6 Psychological Issues That Could Be Behind Your Money Problems

4. Identify your spending patterns and triggers

Some of the common emotions associated with finances are anxiety, excitement, fear, guilt, relief, and stress. Fear can result in you making decisions based on panic and not sound financial principles. Stress could make you avoid crucial financial tasks like reviewing your expenses.

We spend money for different reasons. It could be out of sadness or fear. It could be your way of seeking comfort and security. Whatever the case, identifying your spending triggers could help you comprehend how you handle money. If you've had trouble in the past sticking to a budget, these insights may even help you improve your spending habits. 


Financial stress is one of the most prevalent stressors in modern life. If you have worried about money or are worrying about money, know you are not alone. Given the current economic times, the rise in prices of everything from fuel to food has people from all backgrounds worried. Whether your issues are caused by a loss of employment, mounting debt, unforeseen bills, or a mix of causes, we have all experienced financial stress to some degree.  Unfortunately, you cannot wish all your financial problems away. Worrying won’t fix your problems. Fixing your financial situation won’t happen overnight either but you could start to plan to turn your situation around. Having a plan to manage financial problems can help ease some of the stress.

Read Also: 5 Ideas for Reducing Money Stress and Reaching Your Financial Goals Faster

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Imou is a content writer who has worked in the digital space for a while now. This has exposed her to a variety of interesting topics that have piqued her interest and pushed her to experiment with her writing. Apart from articles, Imou writes poetry and fiction. You can connect with her on LinkedIn here.

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