Financial Wellness: Managing Money Stress Through Better Financial Planning

Sometimes, I found myself thinking through an obstacle course of financial worries. Bills due next week, unexpected car repairs, my children’s future education costs, and that persistent question: Am I saving enough for retirement?

Sound familiar?

I’ve discovered that I’m not alone in this anxiety club. Financial stress has become a shared experience, almost like a normal part of adult life. But should it be?

As a psychologist and someone worried about my financial future, I’ve come to understand that financial wellness isn’t just about the numbers in our bank accounts. It’s deeply intertwined with our mental and emotional health.

The Hidden Cost of Financial Stress

When we talk about wellness, we often focus on nutrition, exercise, and mindfulness practices. However, financial anxiety can undermine even the most dedicated wellness routines. The research on this is clear and concerning:

• Physical health impact: A 2021 study¹ found that financial stress is associated with higher levels of cortisol (our primary stress hormone), increased inflammation markers, and poorer sleep quality.
• Mental health consequences: Research² reveals that money stress is linked to higher rates of anxiety and depression, with financial worries being one of the most common sources of chronic stress.
• Relationship strain: According to the American Psychological Association³, approximately 31% of adults with partners report that money is a major source of conflict in their relationship.
• Productivity loss: Money stress doesn’t stay at home when we go to work. Studies⁴ show that employees worried about finances lose nearly three hours of work per week dealing with money-related issues.
• Decision-making impairment: Perhaps most insidiously, financial stress creates a “cognitive tax” ⁵ that can reduce our effective IQ by up to 13 points, making it harder to make good financial decisions.

What fascinates me most about these findings is how financial stress operates almost like a background program running on our mental computer, silently draining resources from everything else we’re trying to accomplish.

Breaking the Cycle: Stress-Free Financial Planning and Self-Care

Last year, I reached my breaking point with financial anxiety. My husband was unemployed for 12 months, and I worked day and night to pay all the expenses. I realized I was spending more mental energy worrying about money than managing it. Something had to change.

My journey toward financial well-being began with a radical idea: what if I treated financial planning not as a dreaded chore but as an essential form of self-care, like exercise or healthy eating?

This shift in perspective changed everything. Here’s what I’ve learned along the way:

• Awareness before action: Just as mindfulness asks us to observe our thoughts without judgment, financial wellness begins with simply becoming aware of our current situation. I spent a week tracking every expense to see the reality of my financial habits.
• Values alignment: Money is ultimately a tool for living according to our values. I listed what truly mattered to me (family security, educational opportunities for my children, freedom to do meaningful work) and examined whether my spending reflected these priorities.
• Small victories build momentum: Rather than attempting a complete financial overhaul, I focused on one small improvement at a time. The first was establishing an emergency fund. The confidence gained from this achievement provided energy for the next step.
• Systems over willpower: Creating automated systems (automatic transfers to savings, bill payments, investment contributions) removed the mental burden of constant financial decision-making.
• Progress, not perfection: Financial wellness, like all wellness, doesn’t mean achieving perfection. It’s about making consistent progress and developing resilience when setbacks occur.

The most surprising outcome of this journey wasn’t just improved finances. It was how much mental space was freed up when money worries no longer dominated my thoughts.

Practical Steps to Reduce Money Stress and Achieve Financial Peace of Mind

If you’re feeling overwhelmed by money stress, here are some concrete steps that have helped me and many people:

• Create a “worry-free” foundation: Start with a modest emergency fund (e.g., $500-$1,000) before tackling other financial goals. Having even this small buffer dramatically reduces financial anxiety.
• Implement the “one-hour financial power session”: Schedule one uninterrupted hour per week dedicated to financial planning and management. This regular practice prevents problems from accumulating and reduces the tendency to avoid financial matters.
• Practice expense bundling: Group similar expenses together on particular days to reduce decision fatigue. For example, I handle all bill payments on Monday, make grocery decisions on Sunday, and review investment accounts on the first of the month.
• Adopt the 24-hour rule for non-essential purchases: For any non-essential purchase over a certain amount (I use $80), wait 24 hours before buying. This breaks the cycle of impulse spending while still allowing for thoughtful indulgences.
• Develop a “money mindfulness” practice: Set aside 5 minutes daily to check in with your financial emotions without taking immediate action. Simply acknowledging feelings about money can reduce their power over your thoughts.
• Build your financial knowledge incrementally: Rather than trying to become a financial expert overnight, commit to learning one new financial concept per week. This gradual approach prevents overwhelm and builds confidence.
• Embrace the “good enough” philosophy: Perfect financial decisions are rare. Aim for “good enough” choices that move you forward rather than being paralyzed by the search for optimal solutions.

Financial Decision-Making

Financial decisions require mental bandwidth, the same limited resource drained by our notification-filled environment. Each financial choice we make daily depletes this resource, leading to decision fatigue.

My productivity advice applies perfectly to financial well-being:

1. Put financial apps on “do not disturb” mode except during scheduled financial management time.
2. Apply the Pomodoro technique (25 minutes focused, 5-minute break) to financial tasks.
3. Turn off notifications from shopping apps and email marketing designed to trigger impulse spending.

Protecting your attention preserves the mental energy needed for thoughtful financial decisions.

Financial Wellness Tools Worth Considering

As I’ve worked to improve my financial wellness, specific tools have proven invaluable:

1. FemaleInvest: This pioneering financial education platform was explicitly created to close the gender investment gap by empowering women with financial knowledge and confidence. Their combination of practical education, community support, and focus on making financial concepts accessible has helped thousands of women take control of their financial futures.
2. The Psychology of Money by Morgan Housel: This book transformed my relationship with finances by focusing on money’s behavioral and psychological aspects rather than just technical knowledge.

A Compassionate Approach to Financial Wellness

The most important lesson I’ve learned is that financial wellness requires self-compassion. Many of us feel shame or guilt about past financial mistakes or current struggles. This emotional burden makes it harder to take positive steps forward.

Financial wellness is an ongoing practice with progress and occasional setbacks. Just as we wouldn’t expect perfect physical health every day of our lives, we shouldn’t expect perfect financial health either.

What matters is developing resilience, the ability to acknowledge financial challenges, learn from them, and continue moving toward greater financial well-being. This resilience is built through consistent small actions and a forgiving attitude toward our inevitable missteps.

Key Takeaways: Steps to Financial Wellness & Reduced Stress

• Acknowledge Your Financial Stress – Recognizing money worries is the first step to managing them.
• Track & Assess Your Finances – Spend one-week monitoring expenses to understand your financial habits.
• Align Money with Your Values – Define what truly matters to you and adjust spending accordingly.
• Start Small, Build Momentum – Begin with manageable changes, such as setting up an emergency fund.
• Automate & Simplify – Use automatic savings transfers and bill payments to reduce decision fatigue.
• Use Mindfulness Strategies – Practice a 5-minute “money mindfulness” check-in to ease financial anxiety.
• Commit to Ongoing Learning – Learn one new financial concept weekly to boost confidence.
• Progress Over Perfection – Aim for steady improvements rather than flawless financial decisions.

Have you found ways to reduce financial stress in your own life? What practices have helped you move toward greater financial wellness? I’d love to hear your experiences in the comments below.

And if you found this article helpful, please share it with someone who might need it.

About the Author

Carla Picolli is a psychologist, author, mother of two, and financial wellness advocate. With a mental health and wellness background, she bridges the gap between emotional well-being and financial health. While not a finance expert, Carla’s professional experience gives her unique insight into how our relationship with money affects our overall happiness, helping busy individuals build sustainable mental and financial wellness habits.

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References:

1. https://www.sciencedirect.com/science/article/pii/S0889159125000911
2. https://www.healthdirect.gov.au/financial-stress
3. https://www.apa.org/news/press/releases/2015/02/money-stress
4. https://www.cnbc.com/2023/06/04/the-top-stress-for-workers-is-finances-including-100000-jobs.html
5. https://oxfordre.com/psychology/display/10.1093/acrefore/9780190236557.001.0001/acrefore-9780190236557-e-41?p=emailAg5Kx84rMQF1k&d=/10.1093/acrefore/9780190236557.001.0001/acrefore-9780190236557-e-41