6 MIN READ

Take a Deep Breath: Here’s How to Tame Your Financial Stress

woman holding money over her face
Tina Russell/The Penny Hoarder


I never thought much about how I reacted to money stress until recently, when I realized I had negative equity on my car.

I’d been living at home and hacking away at my debt, trying to position myself so that I could move out again.

I finally got to a financial place where, as long as I sold my car, I could live closer to work. But then something happened that threw me into panic mode.

My car was appraised at less than I owed on it. About $2,000 less. And then the meltdown began.

It wasn’t so much that I owed the money. It was the fact that the longer I drove the car, the bigger the financial grave I was digging.

I had less than the amount owed in my savings and had no idea how I was going to make up the difference. I started experiencing cold sweats, reduced appetite and racing thoughts for an entire week.

Financial Issues: A Stress for Many

For many, money is a common cause of stress, panic and worry. In 2015, a survey conducted by the American Psychological Association revealed that 72 percent of survey respondents felt stressed about money at least some of the time, and 26 percent felt stressed about money all of the time.

And, let’s face it: Cash really is king. Money doesn’t necessarily buy happiness, but it brings stability –– like a roof over your head and food to eat.

When you’re stressed over financials, you might end up having knee-jerk reactions –– and could make decisions that are okay in the short term, but terrible in the long run.

Our reactions to financial stress are buried deep in our brains. And for those of us who experience the panic, it can be hard to realize it.

The so-called “great solution” my brain came up with after the car fiasco? Get rid of the car as soon as possible, move into a cheap apartment in a not-so-great area near work with zero belongings except for my clothes and dog, and “figure it out.” Whatever that means.

Thankfully, I avoided that disaster, thanks to my parents rationalizing the situation for me –– but they won’t always be around.

It was time to learn how to deal with these problems on my own.

Why We Start to Panic

Whether you’re just learning how to make it on your own or are feeling the burn of struggling financially for most of your life, panicking does no good.

I reached out to Dr. Audrey Ervin, PhD, a psychology faculty member at Delaware Valley University in Pennsylvania, for her thoughts on why we seem to make knee-jerk reactions when we’re faced with difficult financial situations.

Ervin broke it down:

Anxiety that involves leaning into the future and the past.

When it comes to financial stress, people often conflate future events with past ones. In my case, all I could think about was, “If I never bought this stupid car in the first place, I wouldn’t be dealing with this right now.” This isn’t necessarily true, though. Something else could have happened to keep me from moving.

We’re afraid of the unknown.

Thinking things like, “Will I have enough money to pay my student loans? Will I be able to pay the electric bill?” are all thoughts that help feed the panic within. When you have a tight budget or worry about job security, these thoughts add stress to your life. My biggest unknown was how much my car would be worth by the time I saved up a couple of grand to sell it: “Will I ever have enough to get rid of it?”

We think of the worst-case scenario.

Ervin explains that some people create fear-based narratives and negative self-talk with doom- and-gloom scenarios. Probably not the best thing to do when you’re stressed –– it only adds to the problem. Ervin recommends asking yourself, “How likely is this scenario to happen on a scale of 1 to 100?” My worst-case scenario was living at home for the rest of my life because of a car –– probably a minus-1,000 on a scale of 1 to 100, but it felt real in my overloaded brain.

Tips to Overcome Financial Stress or Panic

The good news is there’s a way to identify and manage stress and panic, regardless of whether they’re because of money or not.

Ervin shared five tips:

  1. Stop, take a breath and come into the moment. This will take your focus away from the panic and back to the present.
  2. Pay attention to your thoughts, feelings and physical sensations in the body. How are you feeling? Why do you feel that way? I thought I had a headache and wasn’t sleeping well because I was getting a cold, but the more I thought about it, the more I realized it was my financial situation affecting my health. Sometimes we experience emotions we aren’t fully aware of.
  3. Focus on the here and now and being in your body. Ervin says that mindfully coming into the moment can be a strong antidote to panic. It forces you to take a step back instead of just reacting.
  4. Engage in self-soothing thoughts. Ervin suggests changing your internal thoughts to focus on what you have control over right now, in the moment. In doing so, you’ll be able to detach from things you can’t control and will be able to focus your energy on the things you can actually change. She also recommends asking yourself, “What are some realistic short-term solutions?” And as always, remain positive. By reflecting on your successes and internal strengths, you can affirm that you can handle the current situation. Changing your narrative from “this is absolutely horrible” to “this is not preferable, but I can handle it,” can reduce panic.
  5. Develop a short-term and long-term financial goal list. Know the difference between a genuine immediate financial need and a long-term desire or goal. Allocate your emotional resources proportionally.

After using some of Ervin’s tips, I took a step back from my situation and was able to see it from a much clearer, objective perspective.

Instead of quickly making a poor financial decision to move while still having my car, I took a step back. I wrote down all of pros and cons of my situation and then formatted a plan based on it.

The end result? I was able to come up with a plan to borrow the money and sell my car. I even signed a lease on an apartment in a nicer neighborhood –– and I can still afford to keep hacking away at my debt while living there, even with the new loan payment.

Sometimes taking a breath is all it takes.

Kelly Anne Smith is an email content specialist at The Penny Hoarder. Catch her on Twitter at @keywordkelly.

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