Today’s article is a guest post from Kate Phillips of Total Wealth. Kate is co-author with Kim Butler of Financial Planning Has Failed and Perpetual Wealth.
By any measure, financial stress is an enormous problem. About 7 out of 10 of all Americans say they are financially stressed, according to a recent Prudential American Workers survey and a John Hancock Financial stress survey.
The majority of Americans live paycheck-to-paycheck, say multiple surveys. 40% of Americans can’t cover an unexpected $400 expense without using a credit card, according to a 2018 Federal Reserve Economic Well-Being Report. Money worries also typically top the list of reasons for marriage conflicts and divorce.
There’s little argument that many people are financially stressed, even in comparatively affluent North American countries. But what exactly IS “financial stress”? How does it impact us? And what can be done about it? Let’s take a look.
The High Cost of Financial Stress
Financial stress is consistently named as the major source of stress in people’s lives and a major source of stress in relationships. Polls conducted for the American Psychological Association found that a majority—62%—of Americans are stressed about money and that this has concrete impact on people’s health and well-being.
People who identify as financially stressed are twice as likely to be in poor health, with significantly higher incidents of headaches and gastrointestinal troubles.
Money worries also impact our mental health. The financially stressed are four times as likely to be diagnosed with depression. They are more susceptible to panic attacks, anxiety disorders, and insomnia.
Studies have also confirmed that IQ and mental functioning goes down when people have chronic money worries. People become overwhelmed, distracted, and lack mental “bandwidth” when they are preoccupied with financial problem-solving.
The impact of financial stress on our businesses and economy is also enormous. A new survey by Salary Finance of more than 10,000 Americans revealed that employees with money worries are:
- 3.4 times more likely to suffer from anxiety and panic attacks
- 4.5 times more likely to have poor relationships with co-workers
- 4.9 times more likely to do lower quality work
- 5.8 times more likely to not finish daily tasks
The combined cost of this lack of productivity has been estimated at a whopping $300 billion, suggests figures from Gallup. Another estimate places the impact as high as $500 billion!
Who will solve the money stress mess?
Financial stress is a crisis of epidemic proportions in this country. And yet, we have a complete shortage of meaningful solutions.
The education system won’t solve the financial stress problem. When asked what people learned about money in school, the most common response is, “Nothing.” It’s no coincidence that Robert Kiyosaki’s “poor dad” was a highly educated college professor and Robert’s example of what not to do with money.
If your parents could solve the problem, we wouldn’t have a crisis! (And many older Americans have their own money worries to solve.)
The government isn’t going to solve the problem, nor can politicians agree on what the problems—much less the solutions—actually are. Right or left, too often the agenda is earning political favors by promising your tax dollars to others.
Economists and analysts aren’t going to remedy your financial stress. They’ll just explain why the economy or the stock market does what it does—often in hindsight.
And perhaps we have been most failed by the financial industry that purports to help Americans with their finances. Yes, some good is done, and people with advisors generally do better than those without. But the reality is this:
- Money managers have a great retirement strategy… for themselves. Fees and commissions are often paid whether your portfolio shows a gain or loss.
- Money managers, planners and advisors look for people who already have money to invest. Those who aren’t financially established or sophisticated are too often prey for financial predators—including big banks—who trap them into high interest revolving debt.
- Financial institutions that offer 401(k)s and similar options have been very effective at skimming high fees from employer-sponsored retirement plans. Often, the total sum and impact of these fees is well-hidden from those who will pay them for decades.
Popular financial gurus are no better. “Experts” and popular financial advice often take us in the wrong direction, instructing us to “save” or “prepay” where we have no access to our own money and put our dollars at significant risk.
But the problem goes much deeper than consumer debt and flawed advice.
One of the biggest problems with financial stress is that we don’t even understand the problem!
Give me 3 minutes and I’ll prove it to you.
Take the Financial Stress Quiz below. (Then read on to understand why we often chase the WRONG solutions!)
The Financial Stress Quiz
Answer the 10 questions below, yes or no. Tally your “yes” answers.
1. Do you find yourself dwelling in regret, thinking about money you’ve lost or financial mistakes you’ve made in the past? (Y/N)
2. Do you have fearful thoughts about your financial future? Are you afraid you’ll never have enough to retire or live the life you want because of a lack of money? (Y/N)
3. Are you losing sleep because of financial stress? Do you find yourself awake in the middle of the night, your mind preoccupied with financial problems? (Y/N)
4. Do you feel powerless or experience a loss of control when it comes to money? Are you worried about how the economy and stock market might impact your income or investments? (Y/N)
5. Does money impact your relationships? Do you get into arguments with your spouse, partner, or other family member over finances? Are you jealous of friends with more money? (Y/N)
6. Has money ever caused you to compromise your values? Are you honest in all of your financial dealings? Have you ever lied about or failed to disclose a purchase, debt, or financial decision from a significant other? (Y/N)
7. Has your health been impacted by financial stress? Does your body FEEL stressed when you think about money (tense muscles, upset stomach, agitation or exhaustion)? (Y/N)
8. Do find yourself procrastinating or unable to take meaningful action? Do you ever feel frozen with fear because of your financial situation? (Y/N)
9. Do you ever feel hopeless, depressed or ashamed because of your financial situation? Do you find yourself wanting to disengage with others or with life because of it? (Y/N)
10. Is money your “scapegoat”—the reason you give yourself and others for not living the life you want? Do you find yourself saying things like:
- “I’d like to travel more, but I can’t afford it.”
- “I’d like to start my own business, but I don’t have the money.”
- I’d really like to buy ‘this’ or do ‘that’—but I can’t afford it.”
- “I wish I could make a bigger difference in the world, but I don’t have the money.”
Now, tally your responses. Out of the 10 questions, how many did you answer “Yes” to?
If you answered “Yes” to 0 to 2 questions, you either don’t have much financial stress or you are very effective at managing it.
If you answered “Yes” to 3 or 4 questions, financial stress affects you.
If you answered yes to 5 or 6 questions, financial stress may be a major factor impacting your peace of mind and well-being.
“Yes” to 7 or more? You’re having a financial stress crisis.
No matter your score, there’s another reason I asked you to take the quiz. You see, it reveals a shocking truth about financial stress.
What if I told you the quiz wasn’t about money at all!?
If you go back through the questions, you might notice something VERY surprising. (I wrote the quiz, and even I was shocked when I saw it!)
I didn’t ask you:
- What your income is.
- What your expenses are.
- Whether you have an emergency fund.
- If you’re living paycheck to paycheck.
- If you carry credit card balances month to month.
- Or whether or not you own your own home, have a retirement account, or have good or bad credit.
I didn’t ask you ANYTHING about your financial situation!
I only asked you how you RESPOND to your financial situation—whatever it happens to be. I asked for your perception of your finances and how that perception impacts you—not the FACTS of your finances.
You see, financial stress isn’t just financial—just as prosperity isn’t only financial. Prosperity—or a state of scarcity—affects all of life—and all of you.
It affects your emotional, physical, spiritual, relational, social, and economic well-being.
Actually, the root of the word wealth means “well-being.” It encompasses happiness and relationships as well as economics.
Financial stress, you could say, is the lack of well-being.
And anyone in any situation can experience this lack of well-being.
- The exhausted single mom living paycheck to paycheck.
- The married couple earning healthy six figures—who also spend everything they make and feel trapped on a hamster wheel.
- The young adult with college debt in a job that makes them wonder why they bothered getting a degree.
- The business owner who uses his own credit or assets to make sure his employee’s paychecks don’t bounce during the lean months.
- People in their 60’s and beyond who feel trapped in a job they don’t enjoy because they know they can’t afford to retire.
- A person with plenty of vast financial resources but a poor mindset of lack and worry.
Anyone can suffer from financial stress.
No one is immune from financial stress, including millionaires and multiple-six figure earners. As Kim Butler says, “cash flow problems don’t go away—they just get bigger zero’s on them!”
Financial stress isn’t a number that exists in your bank account or on a credit card statement. Stress lives in our minds, our emotions, our bodies, and even our relationships.
Financial stress can occur when you RESPOND or REACT to your financial situation—whatever it may be—in a way that compromises your well-being. It occurs when you experience or create a belief of “not enough,” and that belief becomes your reality and impacts your peace of mind, your health, your relationships, your joy.
Ugh, it’s not fun to think about financial stress!
But there’s actually GOOD NEWS about financial stress…
Because it’s not “just” about money… because it’s also about mindset and how you respond and react… you have a greater ability to lift yourself out of financial stress than you realize.
Many people think they’re doomed to be financially stressed until their financial situation changes. They imagine themselves powerless until their debt is paid off or they get a better-paying position.
It is actually the other way around.
You’re not doomed to be stressed until your circumstances change. Rather, when you transform how you think and feel about money first—you then have more power to transform your circumstances.
You can start making changes today that will begin to restore the well-being you have lost. You can take back your power NOW.
You can begin to master financial stress in the most important arena possible—your mindset. And when you do, you begin to translate those wins into real-world benefits:
- Improved health.
- Better relationships.
- Peace of mind.
- Confidence and self-acceptance.
- And yes—more money, too!
When you master your mindset, you can get more done, stay focused on priorities, and shortcut your path to success!
Turning financial stress around
Yes, the money part DOES matter. It IS important to save more, reduce debt, and protect our assets from loss. Equally important is empowering yourself to handle life’s challenges with grace and strength. Endless studies demonstrate the importance of:
- prosper rest and nutrition
- and gratitude.
I have encountered huge financial storms myself, losing virtually “everything”—including my health and my home—during the Great Recession. (I tell the story in my free mini-ebook, “Breakthrough to Abundance: 4 Reasons you’re Stressing over Money—and How to Break the Cycle Forever!”) And in the eye of the storm, I had to find my own personal power and peace of mind… even when creditors were calling and my circumstances looked hopeless.
Now it is my MISSION to help people live deeply fulfilling lives free from financial stress! Follow Total Wealth on Facebook where I keep the conversation going about
- Financial stress myths and solutions.
- Taking control of your mindset.
- Benefiting from personal growth hacks and habits.
- Telling yourself a different story.
- And taking positive action.
And for financial solutions to money worries such as:
- Diversifying risk in your investment portfolio
- Protecting your loved ones living benefits as well as a permanent death benefit
- Setting up a powerful savings vehicle with guaranteed minimums and other benefits you can’t find at your bank…
Contact Partners for Prosperity today!
Kim and the P4P team will take great care of you.
—Kate Phillips, Total Wealth
Disclosure: Our content is meant for educational purposes only. While it’s our goal to help you learn about building a life of prosperity, we do not intend to provide financial advice. Please consult your financial, tax or legal advisor before making any investment or financial decisions.