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

Wycliffe Musalia
January 28, 2022

At the start of the new year, we set goals to achieve but as the year winds a majority ends up giving up due to limited financial resources. The end result is financial stress which shutters the whole dream. 

Ever worried about money? Well, you are not alone. Most people develop money worries when it comes to meeting their needs, yet they do not have enough money.

At times you face heavy debts when you pay for emergencies, unexpected expenses, or when you get laid off your job.

These experiences overwhelm our emotional and psychological mindset, resulting in financial stress.

The current economic difficulties resulting from the global Covid-19 pandemic have seen many people go through money struggles leading to financial stress.  

In this article, we will comprehensively look at financial stress, the causes, and how we can eliminate it to achieve our goals.

What is Financial Stress?

Financial stress refers to anxiety resulting from emotional tension caused by money-related issues in life. It can result from a lack of enough money to meet your needs like paying rent, school fees, and buying foodstuffs.

Financial stress can as well occur when you lose your job, have an emergency to pay off but you do not have enough money. 

You can easily know you have financial stress when you feel guilty about spending on non-essential items, argue with people close to you about money, withdrawing from others among other examples.

Causes of Financial Stress  

Financial stress results from many factors revolving around our financial status. Whether you have a lot of money or not, you can find yourself in this situation as a result of the following factors;

1. Lack of Stable Income

If your source of income is not stable, you will not have enough money to meet your needs. For instance, when you lose your job, depend on doing casual work, or you get a pay below your living standards, you will develop money worries.

The high unemployment rate in the country and rise in the gig economy make stable income difficult to sustain. This means when you are working as a freelancer or consultant, you are subject to unstable income which might not sustain your needs, leading to financial worries. 

2. Lack of Planning

Lack of planning is a major cause of financial stress. You can have a stable income, enough money to meet your goals but lack of planning fails you. 

When you don’t set a budget for spending money, you end up engaging in impulse spending, and bad money habits which leave you with barely enough to settle your bills.

Lack of planning also leads to poor or no savings at all, no retirement plan which causes people to end up worrying about future financial status.

3. Paying Rent

Paying rent, especially for those living in large urban centers is a major cause of financial stress. Living in the city calls for bills ranging from rent, transport, foodstuff, to utilities. These bills may become overwhelming especially when your source of income is unstable, in cases of emergencies or when you use all your money to pay for unexpected expenses.  

4. Paying School Fees

When you do not plan in advance, even if you have a stable income, paying school fees can give you money worries. 

For instance, the current global pandemic which has caused disruption in the academic calendar has caused financial stress to many parents and guardians. You pay school fees for a full term, and after two months you are required to pay for another term.

5. Paying Debts

Debt is one significant cause of financial stress. Especially when your source of income is unstable and you have not planned well, you develop hitches when it comes to paying debts. Debts that have piled up and accumulated interest may sink your mind deep into financial stress.

6. Lack of Emergency Fund

Emergencies are inevitable in our lives. When you fail to plan for unexpected expenses and use the money you have to cover up, you put yourself into financial distress. 

When an emergency strikes, we keep wondering where to get the money to settle it. This pushes us to go for unplanned loans which may become a burden.

7. Lifestyle

People may get themselves into financial stress via the lifestyle they choose. You want to stay in a fancy house, buy a car or dine in big hotels and restaurants. 

But the amount of money we have or our source of income doesn’t sustain these wants. We, therefore, end up increasing our debt level or minimising savings with this kind of lifestyle and subject our minds to financial worries. 

Now you have familiarized yourself with the factors that can lead to financial stress. The next step is to learn how to deal with it. Continue reading for insights on how to handle and eliminate financial stress.

Tips to Handle and Eliminate Financial Stress

Having money worries is common but finding how to deal with them is the most important aspect of your financial growth. Here are the tips to help you deal with financial stress;

  • Identify the source
  • Create a budget
  • Create an emergency fund
  • Set strategies to reduce debt
  • Create an extra source of income
  • Track your finances
  • Seek outside help 

Identify the source

Dealing with financial stress at the individual level is the first step you need to take. First, you should identify what leads to your financial stress. Is it your source of income, your needs like paying rent, school fees, paying debts among others?

When you identify the source of financial stress in your life, you will be able to plan and avoid it by setting goals and standards.

Create a budget

After you have identified the sources of your stress, you need to set up a monthly budget. A budget helps plan your spending. 

When you have a budget, you go for the needs first before spending on expenses. It will enable you to create extra cash which you can use to pay off debts. 

A budget clears money worries as it sets aside money to spend, save, and for emergencies. You can spare your mind some worries for a while before the month ends with this tool.

Create an emergency fund

As you budget for your money, include an emergency fund to help in times of need. This covers unexpected expenses like car repair, and emergencies that may keep you worrying about where to get the money to settle them. 

You can achieve this by starting with just a little amount of money. Put aside like Ksh50 every week in the 52-Weeks Savings Challenge and top up your emergency fund as the year winds. 

Reduce debts

You should set strategies to reduce debts. For example, using extra money left after paying off the most important expenses to clear debts. You can as well avoid borrowing or go for loans with affordable interest. 

Create an extra source of income

If you are employed, look for a side hustle that can supplement your income. This can be starting a small business, taking on part-time jobs during your off days or weekends, and becoming a freelancer.

This way, you will have different sources of income, which can help to meet your needs, improve your savings, grow your emergency fund and increase your investment. 

Track your financial progress

Analyze your financial situation and look for positive aspects of your finances. Ask yourself this question, what positive spending did you take on your last earning?

Although this will not entirely give you a solution to your money worries, it will give positive thinking which can help reduce stress. 

Seek help

When you feel like your financial worries are overwhelming, try to look for other people or outside help.

This can be professional help like visiting a financial advisor, psychological help, or getting family/friend support. You can as well get classes on financial planning and budgeting to help you with your spending culture.

Credit counseling services can as well help you deal with debt levels, restructure, and in some cases, negotiate with your creditors. 


Financial stress is common to everyone and the way we handle it matters. It can have negative impacts on our lives in terms of health, social and economic life.

When you feel stressed as a result of money, consider sitting down and analyzing the situation to identify the main causes and how to handle it. Consider planning and budgeting when it comes to spending your money to avoid worries related to it.

If the situation becomes overwhelming, seeking outside help is not suicidal. Talk to a friend, family member, or financial advisor about your situation and let it go off your chest. Their response might give you a fresh perspective on what you need to do to put your financial issues under control. 

Musalia is a professional journalist, SEO writer and marketer. He has a pool of experience in online writing, editing and marketing. He is passionate about content marketing and has contributed to a vast number of digital publications. You can connect with Wycliffe on LinkedIn.

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