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Financial Stress: Causes, Effects, and Support

Financial Stress


April is both Financial Literacy and Stress Awareness Month, and the correlations between financial problems and anxiety are undeniable. A survey by the American Psychological Association found that 64% of Americans report that money is a significant source of stress. Anxiety about money or lack thereof has become prevalent due to inflation, concerns about a recession, personal debt, unexpected expenses, or job insecurity. Like any stress, financial concerns can significantly affect one's mental and physical well-being. In this blog post, the National Bankers Association Foundation explores the causes and effects of economic stress and strategies for managing it.


Causes of Financial Stress:


  1. Debt Burden: Mounting debt, whether from student loans, credit cards, mortgages, or personal loans, significantly contributes to financial stress. The total household debt for 2024 is $17.3 trillion, a new high for the U.S. The largest increase in any category was credit card debt, which swelled by 16.6% between Q3 2022 and Q3 2023, the most recent federal data available.

  2. Job Insecurity and Low Wages: The fear of losing one's job or being unable to find viable employment can lead to significant financial stress. While average hourly rates for all U.S. employees have increased slightly to $34.57, millions still rely on minimum-wage jobs. The minimum wage can range from $7.25 in many southern states to $20.00 in California for fast-food restaurants. That means a worker making minimum wage in Alabama, Mississippi, Georgia, or Kentucky is only bringing home $13,920 yearly, working a 40-hour week, and often that worker has no health insurance.

  3. Income Inequality: Despite economic growth in many regions, stagnant wages and income inequality persist, leading to financial strain for a large segment of the population. In a 2023 update of the World Inequality Database, which includes data up to 2022, the top 10% own nearly ¾ of the world's wealth, while half the world's population is almost entirely deprived of wealth. In the U.S., we continue to have an ongoing problem with a racial wealth gap, with the average white household having 9.2 times as much wealth as the typical Black household – $250,400 vs. $27,100.


Financial Stress Effects:


  1. Mental Health Issues: Financial stress is closely linked to mental health problems such as anxiety, depression, and chronic stress. Researchers have suggested that certain kinds of debt incurred outside of the individual's control, such as medical debt, are particularly associated with mental health challenges.

  2. Physical Health Impacts: Individuals with high financial anxiety are twice as likely to report poor health overall and are four times more likely to complain of ailments, according to Forbes. High levels of economic stress, as with other stressors, can manifest itself through physical symptoms such headaches/migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, weight gain or loss, heart arrhythmia, and depression. A  report from the American Psychological Association showed that racial/ethnic minority populations experience greater levels of stress than their more affluent, white counterparts, which can lead to significant disparities in both mental and physical health that can even affect life expectancy.

  3. Familial Strain: Money problems can strain relationships, leading to arguments and even divorce. A study published in the "Journal of Family and Economic Issues" found a strong correlation between financial problems and marital dissatisfaction. Economic insecurity is widely known as one of the leading causes of divorce in America. It's estimated that financial problems contribute to 20-40% of all divorces.




  1. Financial Literacy Education: Empowering individuals with financial knowledge and skills can help them make informed decisions and manage their finances effectively. Initiatives such as workshops, online resources, and community programs can provide valuable support. Tools like Our Money Matters, a financial wellness platform, are provided by the National Bankers Association Foundation and are free of charge to anyone who wants to sign up.

  2. Budgeting and Financial Planning: Creating a budget and sticking to it can help individuals regain a sense of control over their finances. Tools like budget calculators can assist in developing personalized financial plans.

  3. Seeking Professional Help: For individuals overwhelmed by financial stress, seeking assistance from financial counselors, therapists, or support groups can provide much-needed guidance and emotional support. Non-profits like the National Foundation for Credit Counseling or offer their services at little to no cost.


Getting Out (and Staying Out) of Debt:


1.  Avoid impulse spending by only using cash or debit cards for non-essential items.

2. Put all your bills on autopay so you only spend what you have and don't miss a payment date.

3. Begin saving (even a little bit) and never stop, even if it's just foregoing that latte a few times a week. Start small but continue to contribute. If your workplace has a 401k program, sign up immediately, especially if your company matches your contribution. This is tax-free money that grows through investments.

4. Consolidate your debt so you have only one payment. Some non-profit organizations can help you with that process and possibly even lower your overall debt.

5. Pull your credit report, know your credit score, and track it. Credit Karma, and services like it, allow you to pull your credit report for free.

6. Create a manageable budget. The 50/30/20 rule is a good place to start: 50% should go to essentials, 30% to wants, and 20% to savings.



Financial stress is a serious issue that profoundly affects individuals, families, and communities. By understanding its causes and effects and implementing strategies for support and coping, you can take steps toward alleviating economic stresses. Your body and your mind will thank you.


For more information about the National Bankers Association, click here.


For more information about the National Bankers Association Foundation, click here.


To read more National Bankers Association and Foundation blogs, click here.


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