Why Is Money Such a Powerful Stressor?

It's no secret that personal finance is a considerable source of stress for many U.S. adults. In fact, a COVID-19-era survey from the American Psychological Association (APA) conducted in February 2022 found that 65 percent of U.S. adults are worried about money. Among respondents between the ages of 18 and 25, 82 percent said it’s their most significant source of stress.

Prolonged stress can harm our mental and physical health, and that includes stress stemming from money issues. When you’re under stress, your body responds by releasing adrenaline and cortisol. When levels of these hormones remain elevated over a long period, they can contribute to health problems like anxiety, depression, heart disease, and digestive and sleep problems.

Aside from activating your body’s natural stress response, financial worry can also increase behaviors linked with health problems. For example, the APA survey noted that the pandemic brought on a rash of unhealthy habits in U.S. adults. These include a reduced amount of physical activity, poor sleep habits, increased use of alcohol, as well as unhealthy, stress-related weight gain or loss.

What we're stressed about

There's no single reason Americans are worried about money. The many sources of financial stress include:

Debt: Consumer debt in the U.S. increased by 5.4 percent from 2020 to 2021, hitting $15.3 trillion, according to a 2022 Experian report. The two types of debt accounting for much of the increase are mortgages and car loans. The cost of these has risen during the pandemic, forcing U.S adults to seek out larger loans. Personal and student loan debt have also gone up in recent years, with the latter hitting $1.6 trillion in 2021.

Lack of job security or stable income: Job instability is another significant cause of stress. In fact, a 2017 report by the Behavioral Science and Policy Association found it was linked to a roughly 50 percent increased likelihood someone will say they're in poor health. Unemployed people tend to report having stress-related conditions including stroke, heart attack, high blood pressure, and physical pain, according to the Healthy People 2020 report.

Erratic income flow makes it difficult to budget and plan, and few U.S. households have been untouched by the pandemic in this way. According to a 2020 Pew Research Center survey, 25 percent of U.S. adults said someone in their household lost a job and another one-third had to reduce hours or take pay cuts during the COVID-19 crisis. About one-quarter of the survey respondents have had difficulty paying bills during the pandemic, causing them to pull money from savings or retirement, seek food from food banks, or borrow money from friends or family to make ends meet.

Medical bills: Medical debt has consistently topped the chart as the number one reason people file for bankruptcy. About 66 percent of U.S. household bankruptcies are now due to medical issues, including the cost of care and time spent away from work, according to a 2019 article published in the American Journal of Public Health. Furthermore, half of adults have not gone to the doctor or dentist and one-third haven’t taken needed medications because they couldn’t afford it.

General uncertainty: More than 60 percent of U.S. adults say uncertainty about the future and their health (and the health of others) is a very, or somewhat significant, source of stress, according to a 2018 survey by the APA.

Caring for family members: If you provide unpaid care for a family member who is ill or has a disability, you are not alone. In 2019, AARP estimated that one in five Americans was acting as a  caregiver. In fact, in 2017, family caregivers provided $470 billion worth of unpaid care. Providing unpaid care can stretch already limited time and financial resources, which can also increase stress.

Which age group is the most stressed?

It seems like we all are. In an April 2016 financial wellness survey by Alexandria Capital, 38 percent of baby boomers, 46 percent of Gen Xers, and 51 percent of millennials said financial matters were a top cause of stress. The most common concern: not having enough savings to cover emergencies. But the specifics of what stresses each generation vary somewhat:

• Gen Z adults (born between 1997 and 2012) worry most, by far, about student loans. Other issues of financial stress for this group are lack of stable income and credit card debt.
• Millennials (born between 1981 and 1996) worry about too much debt, including high credit card balances and student loans. They also struggle with sticking to a budget and keeping up with living expenses.
• Mid-career adults, or Gen Xers (born between 1965 and 1980) are worried about a range of financial concerns, from running out of money in retirement to meeting monthly expenses to losing their jobs.
• Baby boomers (born between 1946 and 1964) are heading into retirement, so it’s not surprising that retirement-related concerns top their money worries, particularly the cost of health care. As with younger generations, boomers are also worried about not having enough money to retire and having too much debt.

Social support—and growing older—help us cope

Not all stress is bad, of course. But when it persists, or when you have few resources to cope with it, it can lead to serious physical and mental health problems. The APA encourages people who are overwhelmed by stress to seek support from trusted friends and family or to consider reaching out to a mental health professional.

On the plus side, the APA reports that the older you become, the more skills you develop for coping with stress. So, hang in there, and try these steps for coping with your money anxieties in the meantime. With time, experience, know-how—and support—it can get better.