Stressed? Here's How Stress Affects Your Wallet

By: Kayleigh Yerdon, Cornell University

This article originally appeared on DriveWealth.com.

Are you stressed about your job, the upcoming holidays, or the effects of recent political decisions? Maybe you’re more worried about your finances, saving money for your investments, or planning for the future. At some points, you might feel like your “to do” list never stops growing and you just can’t get your “done” list to grow faster. Occasionally you might even think that no matter how much you prepare for work or the holidays, and no matter how much money you save for later, it just won’t ever be enough.

These are all valid concerns, of course. Life moves quickly and sometimes you’ll just feel like you need to catch up. But, the constant desire to “catch up” and prepare for the future can take a serious toll on your ability to think clearly, especially about your finances. So, while we may not be qualified to give tips about your family holidays or your work life, we do have some good tips about reducing the stress of saving money. What we know is that, if you’re stressed about your finances, changing the way you think about money might help. You might be able to change your frame of mind by using some of these tips:

1. First, it probably can’t hurt to review your budget. You might feel tight on money because you’re overspending in some areas and not saving enough for others. Trying to review your budget periodically as your expenditures change can seriously reduce your stress. From this quick action, you’ll be more in tune with your needs and will probably panic less when it comes time to spend some money. Think about it: do you really need that extra pair of shoes?

2. With that, you might consider budgeting in an “emergency fund” to be used when you need something outside of your budget – say, if you really do need that extra pair of shoes. This way, you don’t have to dread the unexpected expenses. Plus, you can always move unused “emergency money” back into savings later, in the case that you don’t need it.

3. Try to stick to an “all cash” pledge. What we mean is: try to spend some time only paying for things with cash. Go to the bank, keep cash in your wallet, and resist swiping your credit or debit cards. By doing this, you can keep track of all of the money you spend, by handing it over physically instead of just swiping a card. This will help you remember your expenditures and reduce the “drowning” feeling of looking over your credit card bills.

4. Next, try not to compare yourself to others. This might be the most important tip we can give. You may read articles about amazing money-saving success stories, or see your friends post pictures of their incredible vacations online and begin to question your own saving and spending habits. No matter how much you see, remember that you never really know their full stories, and that your story is different from theirs, too. You’ll stress less if you try to focus just on you.

5. Remember that trying to reduce stress is not the same as trying to reduce concern. You should have concern; you should try to educate yourself about financial decisions and save money to the best of your ability. But, you should not be staying up all night worrying about the money in your bank account. Contrary to popular belief, thinking about your bank account all night won’t actually make money appear there. It’ll really just make your tired. Instead, try to make a plan and stick to it.

And now for the unexpected part: even if you can’t totally reduce your stress, you might still be able to benefit! While it is always good to try and reduce stress, it has actually been proven that some stress can be a good thing when it comes to saving money. According to a study published by the American Marketing Association in October, people who are under a little stress are actually more likely to save money. Basically, when faced with spending decisions, researchers found that stressed-out consumers will opt to save money more than non-stressed consumers. Researchers believe that this has something to do with the subconscious desire to feel “in control” – meaning that if things are stressing us out, we feel a little more relaxed when we can make rational decisions, like saving money.

At the end of the day, your saving will be most effective when you’ve reached your most comfortable level of stress. Try to focus on you and budget wisely, but remember – a little stress can actually help your wallet, too!