How to Handle Financial Stress During Tough Economic Times

Published on
 
June 5, 2025
how to handle financial stress

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Economic recession can have far-reaching consequences, and one of the most widespread is increased economic stress. Loss of jobs, market turbulence, and increasing living costs can combine to form the perfect storm. That being said, despite such challenging times, they need not define your emotional state. This post will share useful steps on how to handle financial stress, take charge of your life again, and have more stability for the future, even with economic uncertainty.

Table of Contents

What is financial stress and what causes it?

10 strategies on how to handle financial stress

  1. Conduct a comprehensive financial inventory
  2. Develop a realistic budget
  3. Recognize and address emotional spending & strategically reduce expenses
  4. Focus on what you can control
  5. Prioritize your physical, mental, and emotional health
  6. Utilize innovative financial tools that can help you today or in the future
  7. Diversify your income streams and establish an emergency fund
  8. Implement a debt reduction plan
  9. Seek professional financial advice
  10. Talk and seek support from people you trust

What is financial stress and what causes it?

Financial distress is an emotional and psychological tension brought about by an individual's actual or perceived challenges with their money. It is not merely feeling anxious about money, but rather that nagging sense of unease that permeates through everyday life.

A large proportion of people claim to have high or moderate levels of financial worry, particularly those who are in the most financially vulnerable groups, as research has indicated. 

Man in financial stress

Multiple factors may trigger financial distress, especially in adverse economic changes: 

  • Job loss and unemployment: Losing one's main source of income can put tremendous pressure on paying for necessary expenses in order to stay financially secure.
  • Mounting debts: The fact that payments will have to be made can be a source of huge stress.
  • Unexpected expenses: Things happen, and unforeseen medical bills, car trouble, or plumbing crises can spoil even the most thought-out budgets.
  • Inflation and rising costs of living: When prices rise for common products and services, family budgets become tighter, with less opportunity to save.
  • Economic uncertainty: General economic slowdowns, market fluctuations, and recession scares have a tendency to promote an overall sense of financial uncertainty regarding the future.

10 strategies on how to handle financial stress

Understanding what actually causes financial stress is useful in analyzing how to manage it appropriately during difficult times.

1. Conduct a comprehensive financial inventory

The initial essential step in controlling financial stress is to obtain an accurate and detailed picture of your present financial situation. This is done by taking an exact inventory of all assets, liabilities, income, cash flow, and expenses. You can consider this as your financial check-up that forms the basis of sound decision-making.

First, identify all your streams of income. It can be passive, active, or residual income. Then, meticulously record where your money is going. List all of your outstanding debts and all of your liquid assets. That step alone can alleviate part of the fear of the unknown and empower you to see where you can make changes.

2. Create a realistic budget

Once you have a good idea of your financial picture, the second important step is to set a reasonable monthly budget. Budgeting is nothing more than charting out how your money will be spent to meet various expenses and savings goals. Use what you have uncovered through your financial inventory to shape your budget. Remember, a budget is not written in stone. Your finances will fluctuate so reviewing and updating your budgeting strategies is important from time to time.

3. Recognize and address emotional spending & strategically reduce expenses

Understanding your own spending habits is an important part of how to handle financial stress. Often, during times of stress, individuals may engage in emotional spending as a coping mechanism, which can inadvertently worsen their financial situation. 

Closely assess your spending and separate essential necessities from discretionary desires. In difficult times, need takes precedence.

Hand tracking expenses

4. Focus on what you can control

In times of economic difficulties, it's easy to become swept along by events over which you have no direct control, whether that's rates of inflation or market trends. A sense of helplessness over such events can then serve to heighten money pressures.

Although you cannot regulate the price of everything, you can regulate how you spend your money. By actively focusing your energy on controllable factors, you restore your focus and alleviate helplessness.

5. Prioritize your physical, mental, and emotional health

In times of money difficulties, we are likely to forget self-care. It's important to remember, though, that ignoring physical, emotional, and mental health actually makes money problems worse. Physical health and self-care is an important part of how to handle financial stress in a healthy way.

Be sure to get plenty of sleep and exercise. Physical activity is an excellent tension reliever and will help improve your mood and energy. Find time to relax with activities that bring you joy. Don't compare your finances to others, particularly during economic challenges. Concentrate on your own success and enjoy your victories along the way.

6. Utilize innovative financial tools that can help you today or in the future

There are many innovative platforms and tools available today that can help you manage your money more effectively in the present, as well as for the long term. There are many apps that you can use to automate your finances, put your spending into categories, and save where possible.

One helpful tool you can explore is the Concreit app. The app offers access to fractional investing in property, which makes the asset class traditionally requiring large amounts of capital available to ordinary investors. It is something that can be a useful means of potentially accumulating long-term wealth, as well as earning passive income.

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7. Diversify your income streams and establish an emergency fund

Financial resilience in difficult economic times typically means developing more than one layer of security. Two important methods of doing this are diversifying your source of income and having a solid emergency savings fund.

Having more than one common source of income doesn't just add to your overall wealth but also offers you security in knowing that if something happens to you, you have others to fall back upon.

On the other hand, an emergency savings fund is a specific fund that will help pay for surprise costs like hospital expenses, car repairs, or loss of employment. Experts typically suggest having enough money saved to pay three to six months of everyday expenses. This provides a cushion to navigate job loss or other financial emergencies without immediate panic. 

8. Implement a debt reduction plan

For most of us, debt (mortgage, credit card debt, etc) is the largest source of stress. A clear, actionable debt-reduction strategy is an essential part of learning how to handle financial stress and taking charge of your financial life.

As described in your budget breakdown, list all debts along with their outstanding balance, interest rate, and minimum amount due. It is most important to know the terms and conditions of every credit or loan contract. Several strategies can also help you tackle debt. Two popular methods include:

  1. Debt snowball method: Pay off smallest debt obligations first, not necessarily based on interest rate.
  2. Debt avalanche method: Pay off debts in order of highest to lowest interest rates. This reduces total interest paid over time and is more cost-effective in the long term.

9. Seek professional financial advice

Seeking professional advice is a mark of strength, as well as an active step towards acquiring techniques to manage finances under strain. A financial advisor with professional knowledge will offer specific practical advice tailored to your personal circumstances, as well as financial goals.

To get the best practical advice, be ready to provide candid, thorough information about your income, spending, debts, assets, and goals.

Man giving professional advice to woman

You might want to read the 12 important personal finance lessons from the experts.

10. Talk and seek support from people you trust

Financial issues can be lonely, causing individuals to withdraw from friends, family, or other supporting networks. Talking to friends, family, and networks can be incredibly helpful in giving emotional release as well as tangible help. Others might have gone through similar money problems before or have alternative problem-solving strategies that you have not thought of. Others can bring their own perspectives or even solutions to bear.

Building Resilience and Finding Peace of Mind

Surviving tough economic times certainly comes with financial challenges. But with these ten strategies on how to handle financial stress, you can work to assert control over your finances again, regain confidence, and become more resilient. 

From assessing your financial health to accessing help and tapping into innovative resources, every step is part of creating more secure finances and more peace of mind. Keep in mind that achieving financial security is a process, not a destination, and even minimal sustained action can yield profound differences and overall quality of life regardless of economic times.

Disclaimer

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security which can only be made through official documents such as a private placement memorandum or a prospectus. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Neither Concreit nor any of its affiliates provides tax advice or investment recommendations and do not represent in any manner that the outcomes described herein or on the Site will result in any particular investment or tax consequence.Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Concreit does not guarantee its accuracy.

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