Top 10 Financial Moves To Reduce Stress And Anxiety (2023)

I realized something important after writing about the best reason to retire early. Money doesn't buy everlasting happiness. However, having more money can reduce stress and anxiety.

The goal of achieving perpetual happiness is not realistic. Happiness ebbs and flows. It's more exciting to be an 8 out of 10 on the happiness scale because there's still upside. You're already happy enough. But the thought of experiencing even greater happiness gives you more reason for being.

Life gets complicated as we get older. The responsibility of taking care of a family, experiencing declining health, and worrying about the future can suppress the mood of even the happiest person.

Therefore, I thought it wise to highlight the top financial moves you can make to reduce stress and anxiety. With less stress and anxiety, not only will you feel happier, but you'll also be less envious, less angry, more patient, and more empathetic.

Top 10 Financial Moves To Reduce Stress And Anxiety

Here are the top 10 financial moves I've made that have brought me the greatest stress relief. I've ranked the financial moves in order of least to most impactful. I use just two variables to determine the order of the rankings:

  • How easy the financial move is to do
  • How much stress and anxiety relief each financial move provides

10) Saving up at least six months of living expenses

At the minimum, every household should have at least six months of living expenses in cash or risk-free investments like Treasury bonds. With interest rates so high, investing in 3-month-to-1-year Treasury bills makes a lot of sense today.

After you have about six months of living expenses saved up, the stress relief you feel may start to wane. Depending on economic conditions, investing FOMO might take over as you feel your cash could be making a greater return.

Once you've got a 6-month financial defensive shield up, you will feel more confident to tackle the world. A perpetual cash buffer should quickly be automatic.

9) Tracking your net worth in one place

Tracking your net worth in one place is like jotting down your to-do list or writing a grocery list before going shopping. Once it's written down, you feel less stress and anxiety about forgetting to do something.

I've been tracking my net worth with Personal Capital, now called Empower, since 2012. It feels great to link up and manually input all my accounts so that they are never lost. I have actually forgotten about financial accounts before.

Due to investing in multiple private funds, it's also hard to keep track of all the various contributions. It also feels good to delete financial accounts that are no longer applicable. For example, every time I pay off a mortgage, it feels wonderful to remove the debt account from my net worth.

8) Putting together a death file

As our lives get more complicated digitally, it's easy to lose access to online accounts. If we don't have an organized way to keep all our accounts, usernames, and passwords in one place, our loved ones will spend an unnecessary amount of time and stress trying to figure them out.

Once my wife and I created our digital death files, we felt a lot of relief. Ideally, you only store your death file on a USB drive that can be found. But you can also store one on your computer or in the cloud and accept that either could be hacked.

7) Creating a revocable living trust

After our son was born in 2017, we decided to create revocable living trusts for both my wife and me. This way, there are clear instructions and processes in place in case either or both of us pass prematurely.

The importance of living goes way up once you have children. At the very least, every parent wants to live long enough until their children are adults. The more complicated your net worth, the more important it is to create a trust.

Going through probate court because your family doesn't have a trust is both time-consuming and more expensive. Trusts are for all families who care about having an orderly passing of financial accounts.

It can take months to put together a revocable living trust because you need to get all our files in order. Then you need to visit an estate planning attorney to finalize the trust. But once you get everything done, you will feel tremendous relief.

6) Buying an affordable home.

Once you own an affordable home, life gets easier. No longer will you worry about a rent hike or be asked to move because the landlord wants to sell. If another pandemic ever comes, the value of your home will go way up because you'll spend even more time at home.

If you plan to start a family, consider buying a home before getting pregnant. Once you get pregnant, the nesting instinct goes into overdrive. As a result, you may end up spending more money on a home than you really should.

“Affordable” Is The Key Word

The beauty of following my 30/30/3 home buying rule is that you won't feel constantly stressed after purchase. Instead, you'll feel a good balance of leveraging your capital enough to live a better life while not risking financial ruin.

Home maintenance problems come up all the time. You will eventually have to change the water heater ($3,000), the roof ($10,000 – $50,000), the furnace ($1,500 – $5,000), and many more items. By being able to fix these problems without stressing the bank account, you will feel more at ease. Large expensive houses usually come with large expensive problems!

As your net worth grows, you may follow my net worth home buying guide to buy a home. Try to get your primary residence's value down to 30% of your net worth or less if you want to take take things easier.

Next Comes The Forever Home

The second level of anxiety and stress relief from shelter comes from buying a forever home. It is rare the first home you buy will be the one you end up living in forever. Hence, once you find that forever home, you will feel even more settled.

To never have to move again provides a tremendous amount of comfort. Not only can you more easily plan your life, but you will also likely benefit financially the longer you own the home. In ten years, owning your home will feel cheaper. At the same time, your home will have likely appreciated in value.

Finally Comes The Paid Off Forever Home

Even better than having a forever home is a paid off forever home. With no more mortgage payments, you no longer have to grind as hard to pay for life.

With shelter out of the way, we can focus on everything else that matters. The only problem is that it can easily take more than a decade to pay off your forever home.

Also be careful. If your life gets too easy, you might end up slacking off and doing nothing productive. Losing motivation was the biggest downside to paying off a rental property early.

5) Creating and sustaining a family business

Once you become a parent, you no longer think as much about yourself. Instead, the majority of your focus will be on your children's well-being. Without generational wealth, creating a sustainable family business may be the next best thing.

The harder your upbringing, the more you may worry your children might go through the same difficulties. When I was growing up I got into some fights. As a result, I was suspended a couple of times and almost got expelled. Then I experienced run-ins with the law while in high school. Due to my defiant nature, I could have easily ruined my life.

Given a mango never falls far from its tree, I suspect my kids may have similar defiant and rebellious attitudes that will get them in trouble as well. If my wife and I are not able to properly guide them, they might end up unemployed or underemployed.

In addition, hard work might no longer be good enough to get ahead anymore. As a result, your kids might be shut out from many opportunities despite being qualified.

Having career insurance by owning a family business provides stress relief. However, running a business takes hard work. And most businesses die or get sold within ten years.

4) Superfunding your children's 529 plans

Many people dread paying for college in the future. I'm even considering going back to work to help pay for a potential $750,000 all-in college tuition bill for one child in 15 years. I'm not bold enough to think my kids will be smart enough to get scholarships due to strong academic performance.

Despite the ability to learn everything for free online or through affordable books, college tuition keeps going up faster than the rate of inflation. Therefore, once you superfund each child's 529 plan, you will feel great knowing you've done the most you can do in a tax-efficient manner to pay for their college.

Even if you don't contribute another $1 to a college savings plan, a superfunded 529 plan with 10+ years of compounding should be able to pay for four years of public school tuition. If you want to have enough money to cover the cost of a private university, then you will likely have to contribute more.

Unfortunately, superfunding $80,000 is not easy for most families to do. But that's OK if you can't. You can always contribute annually to a 529 plan instead.

Another way to reduce the stress of saving for college is realizing you can always pay for college through your wages while your kids are in school. I didn't think about this method of paying for college because I don't plan on working 12-15 years from now. But once I did, I felt better because due to having another option.

3) Buying a safe car

I never thought much about car safety before we had children. If I did, I wouldn't have driven a Honda Civic, BMW M3, or a Honda Fit. But about halfway through my wife's pregnancy, I began noticing more car accidents and experiencing more close calls.

The stress of driving increased the closer my wife got to her due date. Therefore, I decided to buy a Range Rover Sport and return my Honda Fit once the three-year lease was over.

If I could have bought a tank, I would have. Alas, a large vehicle with thick doors and large crumple zones would have to do.

Driving in a big city is chaotic and full of mishaps. You can be the safest driver on the road and still get into an accident due to someone else's reckless driving. Constantly feeling like you and your passengers could get injured or die in a car accident is stressful!

The best time to own the nicest car you can afford is when you have children. After your children are gone, you can buy whatever you please.

A cheaper automotive financial move you can make to reduce stress is buying new tires and brakes. Don't ride your tires until they are bald. And don't wait until your brakes are squeaking either. Get your maintenance done on time.

2) When you generate enough passive income to cover your basic living expenses

Once you have enough passive income to cover your food, clothing, and shelter expenses, you're able to fully emerge from your shell. No longer do you have to pretend to be somebody you're not. You don't have to put up with things you don't like either.

As your portfolio's passive income grows, your courage to be yourself increases. The more you can be yourself, the more you will feel alive. You'll more easily be able to find your ikigai, which gives you the reason for being.

Top 10 Financial Moves To Reduce Stress And Anxiety (1)

The only issue with having enough passive income to cover your basic living expenses is that it takes a long time. It took me 13 years of aggressive saving and investing to generate enough passive income to take care of myself. Then it took another seven years to accumulate enough to take care of a family of four. 20 years is a long time!

Further, your basic living expenses are likely a moving target. My basic living expenses have only grown due to the birth of two children, healthcare costs, and education costs.

I've relied heavily on investing in real estate and stocks to try and outperform overall inflation. Most years have worked. Some years, like in 2022, have not. Therefore, a diversified passive income portfolio is also a must.

1) Getting life insurance policies.

Finally, the number one financial move that reduces stress and anxiety is getting affordable life insurance. The more you think about your children, the greater the impact of getting life insurance.

Even if you are single and don't have children yet, I would strongly consider getting a 30-year term policy if you're around age 30. Life can get much more complicated in a hurry.

My wife and I recently got two, 20-year term life insurance policies during the pandemic. My 10-year term policy was coming due in January 2023 and my wife also had half the amount of coverage I had, which made no sense since we are equal caretakers.

As soon as I got my new policy, a significant amount of stress and anxiety melted away. I had been searching on and off for a new affordable life insurance policy since 2017 when our son was born. But I couldn't find anything affordable since I went to an overzealous sleep doctor who said I had severe sleep apnea, which I didn't.

I kept putting off my search until a year before my 10-year term was about to expire by getting multiple quotes online with Policygenius. I finally was able to get a $750,000 20-year term policy with no medical checkup for a reasonable $140/month. In comparison, my old carrier, USAA, quoted me at $840/month!

I made a strategic error when I was 35 years old by only getting a 10-year term policy. I felt dumb for improperly forecasting my future at the time. As a result, I felt like getting an affordable new policy was like getting a second chance.

I would gladly pay $500/month to feel the amount of relief I started feeling once my wife and I got new policies. Thankfully, getting affordable life insurance is easy to do.

Make The Financial Moves Now To Reduce Stress Later

Top 10 Financial Moves To Reduce Stress And Anxiety (2)

Life is stressful. The more money you have, the more you can use it to reduce your stress and anxiety.

Looking at my top financial moves list, I realize that many of them are due to having children. Therefore, if you want less stress and anxiety, don't have children. Children are a tremendous joy, but also a tremendous amount of responsibility.

Without children, you don't have to buy a larger house, superfund a 529 plan, buy a safer car, create a revocable living trust, or get life insurance if you have no debt.

For those who want to reduce stress and anxiety quickly, tackle the easiest financial moves first. They are saving at least six months of living expenses, tracking your net worth in one place, putting together a death file, and getting life insurance if you have debt.

Once you get the easy moves out of the way, start tackling the harder ones.

Money Should Help Make Life Easier As You Age

Circa 2015, one incident in particular awakened my appreciation for having money. I had gotten a $90 parking ticket because I didn't notice it was street cleaning on that side of the road. I just thought I was lucky to have found a parking spot so easily!

Although I was annoyed when I got the ticket, I didn't care as much like I did in college. Given I cared less about the $90 ticket, I felt less stressed and happier as a result. I just chalked up the $90 to having a good time playing softball with my buddies.

We can use money to hire housekeepers, cooks, coaches, au pairs, tutors, night doulas, and therapists to help reduce stress. The more strain we are under, the more we should use money to help lighten the load. Just be careful spending too much money.

More Knowledge Should Also Help Alleviate Stress

There is one last financial move worth mentioning that helps alleviate stress. Spending money to obtain financial knowledge or any practical knowledge. In many cases, you can learn inexpensively or for free online. The more knowledge you obtain, the better you may be able to deal with suboptimal situations.

Let's say you're losing money in a bear market. If you know the historical average duration of a bear market and the historical long-term return of the S&P 500, you may be less inclined to panic sell because you're not as stressed. You've set up your net worth asset allocation to match your risk tolerance.

Now let's say you're a super-handy person. Random plumbing and electrical problems don't bother you as much because you know how to fix them all. Getting a flat tire is also no big deal because you know how to operate a jack and change a tire. MacGyver doesn't get stressed out. Instead, he finds solutions.

Now let's say you are an expert in hand-to-hand combat. As a result, you're less afraid to walk around the city in the middle of the night. You've experienced combat many times before and know what to do.

Finally, let's say you obtained tremendous practical employment knowledge after reading How To Engineer Your Layoff. As a result, you may not feel as stressed during a rocky economy because you know all the severance negotiation strategies to maximize your exit.

Knowledge is power. Don't let a lack of knowledge limit your creativity in finding optimal solutions. The more you learn the greater the command you will have over your life!

Reader Questions About Top Financial Moves

What other financial moves relieve stress and anxiety for you? Was there a point in your life where you no longer felt as stressed about money and the future? How would you rank my top financial moves from 1 to 10?

For more knowledge, pick up a copy ofBuy This, Not That,myinstantWall Street Journal bestseller. The book helps you make more optimal investment decisions so you can live a better, more fulfilling life.

For more nuanced personal finance content, join 60,000+ others and sign up for thefree Financial Samurai newsletterandposts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.


How can I reduce my financial anxiety? ›

Coping with financial worries
  1. Stay active. Keep seeing your friends, keep your CV up to date, and try to keep paying the bills. ...
  2. Get advice. If you're going into debt, get advice on how to prioritise your debts. ...
  3. Do not drink too much alcohol. ...
  4. Do not give up your daily routine.

How can money reduce stress? ›

More money brings greater control: Those with higher incomes felt they had more control over negative events and that control reduced their stress. People with ample incomes felt more agency to deal with whatever hassles may arise.

How can I reduce stress without money? ›

Focus on nurturing self-care and prioritizing your health. Educate yourself on ways you can manage your financial stress through breathing exercises, working out, meditation, drinking lots of water, sleeping more, spending more time doing the things you love, and being with people who make you happy.

Can financial problems cause anxiety? ›

A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression, anxiety, and substance abuse. Financial problems adversely impact your mental health. The stress of debt or other financial issues leaves you feeling depressed or anxious.

How do I face my fears over finances? ›

Here's how to overcome your fear of money and take control.
  1. No. 1: Acknowledge your fear. ...
  2. No. 2: Identify the cause of your fear. ...
  3. No. 3: Talk about your fear. ...
  4. No. 4: Take action to overcome your fear. ...
  5. No. 5: Show yourself kindness. ...
  6. Common money fears. Doing irreversible damage, Ellie Thompson, Money Therapy Consulting.
Mar 18, 2021

How do you get out of a bad financial situation? ›

  1. Identify the problem. ...
  2. Make a budget to help you resolve your financial problems. ...
  3. Lower your expenses. ...
  4. Pay in cash. ...
  5. Stop taking on debt to avoid aggravating your financial problems. ...
  6. Avoid buying new. ...
  7. Meet with your advisor to discuss your financial problems. ...
  8. Increase your income.
Aug 26, 2022

Can holding money reduce stress? ›

Conversation. Holding money in your hand can reduce stress levels as well as minimize pain.

What is financial anxiety called? ›

Money anxiety disorder” is a term sometimes used to describe a condition of constant worry and unease about money. By Jessica Sier. 25 May 2021 · 6 min read. “Money anxiety disorder” is a term sometimes used to describe a condition of constant worry and unease about money.

What financial problems cause the most stress? ›

Anyone can experience financial stress, but financial stress may occur more often in households with low incomes. 2 Stress can result from not making enough money to meet your needs such as paying rent, paying the bills, and buying groceries. People with less income might experience additional stress due to their jobs.

What types of financial stress cause people the most problems? ›

Top 7 causes of financial stress
  • Paying mortgage or rent. ...
  • Lack of stable income. ...
  • Paying for education. ...
  • Wanting a nicer lifestyle. ...
  • Not having enough money to fund an emergency. ...
  • Not being able to retire. ...
  • Paying off debt.
Aug 26, 2016

What are positive money habits? ›

Get into the habit of making a grocery shopping list, meal planning to avoid wasting food, and price checking to avoid overspending. And if you feel like you're spending too much on entertainment, find free activities for the family and cut down on subscription services that are not often used.

What creates a positive cash flow? ›

Positive cash flow is caused by an inflow of money exceeding the outflow for the same financial reporting period. When a company brings in more cash than it spends, it has a positive cash flow.

How do I let my money grow? ›

  1. Make savings a priority. Each time you're paid, put a portion of it toward savings. ...
  2. Automate your savings. Most financial institutions allow you to automatically transfer funds online or via mobile apps from checking to savings accounts.
  3. Find money to save. ...
  4. Keep the change. ...
  5. Cancel extra costs.
Apr 8, 2023

How do you overcome financial shame? ›

Therefore, to move forward and overcome it, you can find ways to cope, so it lessens over time.
  1. Try to acknowledge and name what you are feeling. ...
  2. Shame can create a complex cycle. ...
  3. Give yourself time and grace to overcome money shame. ...
  4. Find opportunities to talk to others about money to help reduce feelings of isolation.
Feb 8, 2022

How do I become financially confident? ›

8 Steps For Growing Your Financial Confidence
  1. The most important thing is getting started. ...
  2. Begin saving. ...
  3. Grow your financial confidence. ...
  4. Consider how a career break will impact your long-term financial picture. ...
  5. Educate yourself on finances. ...
  6. Find a trusted financial expert for guidance. ...
  7. Negotiate your pay. ...
  8. Take risks.
Jun 16, 2018

How do you overcome financial jealousy? ›

Here's what you could do to help get rid of your money envy.
  1. Understand why you're jealous. ...
  2. Try to practise gratitude. ...
  3. Spend less time on social media. ...
  4. Re-evaluate your relationship with them. ...
  5. Take control of your finances.

Why am I struggling so bad financially? ›

According to financial therapists, most money problems are rooted in self-esteem, trauma recovery, or scarcity mindset issues. Getting to the emotional root of your money problems is key to getting the clarity you need to change.

How do you get rid of financial trauma? ›

The following are financial healing strategies to recover from financial trauma and increase your mental wealth:
  1. Practice self-compassion. ...
  2. Unplug from fear, uncertainty and doubt. ...
  3. Embrace your worth. ...
  4. Shift from a scarcity mindset to abundant thinking. ...
  5. Access support.
Jul 20, 2021

Can money buy you happiness? ›

Specifically, for the least happy group, happiness rises with income until $100,000, then shows no further increase as income grows. For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.

Does money make you happier? ›

The study reached two big conclusions: First, that “happiness continues to rise with income even in the high range of incomes” for the majority of people, showing that for many of us, on average having more money can make us increasingly happier.

What is the root cause of financial stress? ›

They can be caused by losing a job or being retrenched, being unemployed or unable to find sufficient work, having debts that can't be paid, or worrying about expected financial pressures. Some people's financial problems might be a result of problem gambling. Be realistic and take control of your financial situation.

What is the number one stressor for Americans? ›

Money — including amount of debt, savings and general money management — is the number one stressor for adults ages 18 to 57, according to the 2022 “Stress in America” survey.

Why do most people struggle financially? ›

The reasons that most people struggle financially will vary on the individual case but can include a lack of financial literacy, a scarcity mindset, self-esteem issues leading to overspending, and unavoidable high costs of living.

What are three 3 factors that can contribute to financial distress? ›

This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns. For individuals, financial distress can arise from poor budgeting, overspending, too high of a debt load, lawsuit, or loss of employment.

How does lack of money affect mental health? ›

Money problems can affect your mental health

Certain situations might trigger feelings of anxiety and panic, like opening envelopes or attending a benefits assessment. Worrying about money can lead to sleep problems. You might not be able to afford the things you need to stay well.

Does lack of money cause depression? ›

Based on evidence from the US, Sareen et al. found that individuals with lower levels of household income faced an increased risk of depression compared to those with higher levels of household income [34].

Why do people spend money when stressed? ›

You might spend to make yourself feel better. Some people describe this as feeling like a temporary high. If you experience symptoms like mania or hypomania, you might spend more money or make impulsive financial decisions. You might have an addiction or dependency which makes you spend money.

Is stress usually related to money? ›

What is financial stress? Financial stress is a state of worry, anxiety, or emotional tension related to money, debt, and upcoming or current expenses. Money is one of the most universal sources of stress.

Why money is important in our life? ›

For many people, money is a source of security and a means of achieving their goals and aspirations. It can be used to pay for basic necessities, such as food, housing, and healthcare, as well as for luxuries, such as vacations and fancy cars. For others, money is a way to gain power, status, and respect in society.

How does money affect mental health? ›

High levels of financial stress, as with other stressors, can manifest itself through physical symptoms such as anxiety, headaches/migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression and a feeling of being overwhelmed.

What causes money anxiety? ›

While the causes of money anxiety disorders vary, they are more common during times of economic uncertainty. These occur when there are changes in income and expenses, an increase in financial pressure, relationship issues around finances, or alongside a history of financial trauma or other mental health conditions.

How do I stop depression spending? ›

8 Steps to Reduce Emotional Spending
  1. Monitor Your Spending to Find “Emotional” Purchases. ...
  2. Use the 48-Hour Rule. ...
  3. Remove Spending Apps from Your Phone (And Unsubscribe to Emails Encouraging You to Spend) ...
  4. Reduce Retail Therapy by Sticking to a Budget. ...
  5. Get Support from a Good Friend When Feeling Tempted to Spend.

What is financial anxiety? ›

Financial anxiety is an obsessive fear of things related to money that can often be debilitating. Financial anxiety can be triggered by any number of things, not just a lack of money.

What does lack of money lead to? ›

You could be at risk of developing anxiety or depression. Some people use drugs or alcohol to help them cope. Some have thoughts of self-harm or suicide. People from all walks of life experience problems with money.

Is money the #1 source of stress? ›

How common is financial stress? According to the American Psychological Association, 65 percent of adults say that money is a significant source of stress for them.

What are the 5 advantages of money? ›

The role of cash
  • It ensures your freedom and autonomy. Banknotes and coins are the only form of money that people can keep without involving a third party. ...
  • It's legal tender. ...
  • It ensures your privacy. ...
  • It's inclusive. ...
  • It helps you keep track of your expenses. ...
  • It's fast. ...
  • It's secure. ...
  • It's a store of value.

What are the 5 functions of money? ›

Functions of Money
  • A medium of exchange.
  • A standard of deferred payment.
  • A store of wealth.
  • A measure of value.
Dec 13, 2022

What are the three importance of money? ›

To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.

Can lack of money cause mental illness? ›

Financial stress can also lead to more serious health problems, such as: Heart disease. High blood pressure. Mental health conditions such as depression and anxiety.

Can money make you feel better? ›

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” Killingsworth said in a statement about the study. “The exception is people who are financially well-off but unhappy. For instance, if you're rich and miserable, more money won't help.

What does psychology say about money? ›

The most important emotions in relation to money are fear, guilt, shame and envy. It's worth spending some effort to become aware of the emotions that are especially tied to money for you because, without awareness, they will tend to override rational thinking and drive your actions.


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