4 Min Read

Tips for Dealing with Income Loss and Financial Stress

Brad Brenner, Ph.D.

For many people in the United States, the challenges of COVID-19 are affecting not only our mental and physical health but also our financial health.

In a recent study, nearly nine in 10 (88%) adults in the United States reported that COVID-19 is causing stress on their finances. According to the study, 29% of Americans said they were concerned about income fluctuations (e.g., loss of income, job loss), and 25% said they were worried about financial market volatility (e.g., real estate crashes, downward yield spreads).

It’s clear that COVID-19 will have long-lasting financial impacts on millions of people in the United States. Nearly 44 million Americans have filed for unemployment due to job loss or income loss. According to a survey by WalletHub, 67 million Americans think COVID-19 will make it difficult to pay credit card bills. Although the United States government passed a $2 trillion stimulus package to reduce some of this financial loss, stimulus checks alone are not enough for many Americans.

income loss and financial stress

Effects of Financial Stress on Health

When you’re struggling financially, fear and stress can cause both physical and mental health problems. Over time, the financial burden can take a significant toll on your physical and psychological health.

Financial stress can lead to:

  • Insomnia or disrupted sleep patterns
  • Weight fluctuations
  • Mental health problems such as depression and anxiety—worrying about unpaid bills or loss of income can trigger anxiety symptoms such as increased heart rate, sweating, and panic attacks.
  • Worsening of pre-existing mental illnesses, such as bipolar disorder or anxiety
  • Relationship problems
  • Social withdrawal
  • Health issues, such as headaches, high blood pressure, and heart disease. In the United States, the cost of medical care can cause individuals to delay or skip seeing a doctor for fear of incurring additional expenses.
  • Unhealthy behaviors, such as substance abuse, gambling, or overeating, could worsen pre-existing health conditions.

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Financial Stress and Mental Health

Numerous studies have revealed a cyclical link between financial health and mental health problems such as depression, anxiety, and substance abuse.

For many people struggling with income loss or poor financial health, financial challenges can lead to depression and anxiety.The decline in your mental health makes it harder to manage money. You may find it harder to concentrate or lack the energy to tackle your financial situation. In some cases, individuals struggling with mental health conditions take time off work, leading to further income loss.These difficulties lead to further financial challenges and worsening mental health problems, creating a vicious cycle.

If you’re struggling with financial issues or mental illness, the good news is that there’s a way out. The following strategies can help you break the cycle, reduce your financial stress level, and work toward financial stability.

reach out for support

Reach out for support.

When you’re faced with financial concerns, it can be tempting to bottle everything up and go it alone. Many people consider finances a taboo subject and avoid discussing financial problems with others. You might feel uncomfortable discussing how much money you earn or spend or try to hide credit card debt from your family. However, bottling things up will only make your financial stress worse.

Talking to a trusted friend or family member can not only relieve stress but talking openly about your financial challenges can help you put things in perspective. Keeping your problems to yourself only amplifies them until they seem insurmountable—expressing your issues to someone you trust can make them seem less intimidating.

Take inventory of your financial situation.

If you’re struggling to pay bills, you might think you can reduce your financial stress by leaving bills unopened, avoiding phone calls from creditors, or ignoring credit card statements. However, denying the reality of your financial situation can only make things worse in the long run and might even lead to economic loss. The first step to combating economic loss is to detail your income, debt, and spending for at least one month.

Some apps can help you track your finances, moving forward, or retrospectively by gathering receipts and analyzing credit card statements. While some financial difficulties are easier to solve than others, sorting out your financial situation can give you a clear idea of where you stand and help you control your situation.

Make a plan—and stick to it.

Financial stress can be caused by a wide range of financial problems, but there is an equally wide range of solutions. You might decide to stick to a tighter budget, quit social media to avoid online shopping, contribute more to your savings account, or increase your work hours.

If your spending still exceeds your net profit after taking inventory of your finances and cutting your spending, consider consulting a financial advisor to discuss possible solutions.

manage your overall stress

Manage your overall stress.

Resolving financial problems involves taking small steps that reap rewards over time. With widespread economic loss due to COVID-19, it’s unlikely that your financial issues will disappear overnight. But that doesn’t mean you can’t take steps to reduce your levels of financial stress and find the energy to deal with challenges over the long-term.

In response to COVID-19, the Centers for Disease Control have advised healthcare providers, including social workers and therapists, to provide remote services. According to the American Psychological Association (APA), online therapy sessions are as effective as in-person therapy sessions, allowing individuals in need of mental health support to access different types of therapy—from psychotherapy and cognitive behavior therapy to group therapy—from the comfort of their own home. Right now, many mental health services are offering free therapy sessions for those struggling to cope with the challenges surrounding COVID-19.

If you’re struggling to cope with COVID-19 and consequential economic loss, consider reaching out to a mental health professional through WithTherapy. WithTherapy’s unique matching service will connect you to a mental health professional you feel comfortable with, regardless of your personal preferences and requirements. One of the licensed mental health experts on the WithTherapy platform can help you find strength and develop healthy coping strategies in response to financial stress.

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