Money stress is no fun. Here are some great tips on keeping your stress about money at bay.

Q: I’m worried about my best friend and her family. She confided in me not long ago that they had to go bankrupt about three years ago, and it hasn’t been easy since. I was wondering if they were having money problems. We usually have two girls’ weekends a year and she’s backed out of the last few, and she loves going to get a break from their kids. Other times she seems withdrawn, she and her husband back out of social commitments with other couples at the last minute, and she seems so exhausted every time we do get together. Her husband is totally anxious and questions her on every cent she spends, while at the same time spending on toys that they never use. His garage is the envy of the neighbourhood. I know they’ve got a mortgage and line of credit because her husband bragged about the low interest rate they got. And I’ve seen them each with a wallet full of credit cards, too. Is there anything I can suggest to help her? ~Shannon

A: When it comes to what causes us stress, money has always been ranked as a top concern. Then with the pandemic and the increases Canadians have seen to their cost of living in 2021, financial stress in households all across the country has reached new levels. Unfortunately, experts anticipate that things could get worse before they get better as inflation ticks up. Inevitably, interest rates will also go up to bring inflation back down. Then those who took advantage of high real estate values and cheap credit could be left trying to live up to obligations they can no longer afford.

Seeing a loved one struggle and go through a hard time can make us feel helpless. When we suspect it might be financial stress they’re dealing with, it can be even harder to stand by because we know how integral money is to every part of someone’s life. Even with close family and the best of friends, it’s hard to know the true state of someone else’s financial affairs. The best thing you can do is be there for moral support. When a friend confides in us about money, there’s likely still a lot they aren’t revealing about their situation. With this in mind, here are tips anyone can use to reduce financial stress and handle their situation better:

Avoid letting your thoughts convince you your life is a disaster

No matter how bad your situation might be, your financial situation does not define you. If you lost your job, you will not be broke forever. If you have a lot of debt, that doesn’t make you a failure. If your budget is stretched to its breaking point, that doesn’t mean you can never learn how to manage your money better. It can be hard to rein in our thoughts when our situation feels out of control; but to regain control, it’s important that we do just that.

As strange as it may sound, one way to fight catastrophic thinking is to imagine solutions to the worst possible situation you could find yourself in. This forces you to think things through and gain some perspective. Ask yourself what will happen next. If you lost your job, this might mean selling your home and moving in with friends or family while you get back on your feet. If you have a lot of debt, you might need to sell the things you bought on credit. While none of these options might be what you want to do, they are at least options that would help you as you work to get back on track.

Another way to fight exaggerated thoughts and the negative emotions that can come with them is to focus on what you can control rather than on what is out of your control. Start small with what you can do right away, and don’t be afraid to ask for help from your doctor, a therapist, banker or non-profit credit counsellor. Stress will impact your health. Medical help might be needed to bring your blood pressure back down and get your anxiety under control. If you and your spouse are having trouble communicating, a counsellor can mediate your conversations. A finance professional will help you know what you’re up against so that you can consider your options realistically.

Regardless how bad your situation might feel, you are not alone and there are solutions. The sooner you explore them, the sooner you’ll get some peace of mind.

Recognize how stress impacts your decision-making
While it might seem that your financial stress is caused by something you aren’t able to control, how you react is still very much within your control. But we tend not to make our best decisions when faced with a lot of stress. It is important to recognize this limitation when we’re worried and anxious and considering how best to deal with our circumstances. This is where a trusted friend can be a valuable sounding board. However, when it comes to money problems, resist doing nothing.

Doing nothing will create more stress
Resist the urge to sweep your worries under the rug when dealing with financial stress. This will ultimately make you feel worse because when it comes to our money, doing nothing could mean that others take over control of our finances. This leads to further uncertainty and stress because we don’t know what they will do to collect on what we owe.

The longer you wait to get help when you’re in debt, the fewer options you’ll typically have available to you to resolve your situation. So get help sooner than later and avoid the additional stress of uncertainty.

Changes you can make right away to manage better
It can take a bit of time to figure out the best way to handle your situation because you want to make an informed choice after you explore all of your options. There are long-term implications when you make financial decisions, and once you know what they are, that can determine which solution is best for you.

There is, however, still a lot you can do while you’re working through potential options. For instance:

Create a household budget

If you don’t have one that is working or you’ve never created a budget, you need one based on your current circumstances. Motivate yourself with Budgeting 101 to learn the basics of building an effective budget, or use an interactive spreadsheet that guides you through the process on your own.

Stop using credit

Creating a realistic budget will help you determine where your spending stands in relation to your income. If you’re accustomed to using credit to pay for routine expenses, stop. Take your credit cards out of your wallet, remove the numbers from electronic payment methods and apps, and switch to paying with cash. It can help to keep a running tally of what you’re spending so that you always know where you stand. If you’re hesitant to use cash during the pandemic, use your debit card and live within your means.

Make the most of your income

A combination of spending less and earning more is what’s needed to balance a budget. As you work toward spending less, also look for ways to increase your income. This could include taking on extra shifts, asking a teenager who works part-time to pay for a few of their own things, renting out space in your home or on your property, selling items that will generate a lump sum of cash, taking on a side hustle, or returning anything you bought that still has a price tag attached. Any little bit extra will help, but avoid anything drastic. This isn’t the time to make radical changes; small steps are the key.

Be realistic

Long before we do something about our worries, we think about them. If your mind is filled with thoughts of stress, failure, doom and gloom, that leaves little room to come up with solutions. Make a conscious effort to think about what you can do versus what you can’t; then look for realistic ways to turn your plans into actions.

The bottom line on coping with financial stress

Financial stress arises due to any number of reasons, and it isn’t always due to a lack of money or resources. It also doesn’t discriminate; anyone can feel stressed financially and the stress and worries affect everyone differently. The right solution, however, typically depends on identifying the true cause of the stress, not just treating the symptoms. Do your best to remain calm enough to think your situation through and seek the advice and guidance you need from reputable sources. This doesn’t mean that whatever is causing you stress and worry goes away. It simply means that you fend off the effects of stress so that you can find a way to resolve your situation. Getting out of debt and dealing with financial problems is never quick or easy, but looking after your long-term financial stability is always worth the effort.

Related reading:

Is This Missing from Your Debt Freedom Plan?

Overcoming 8 Sources of Financial Problems

13 Money Saving Tricks to Pay Debt Off Quickly