Causes of financial stress
There are many different life events and situations that can make you feel stressed about your finances, but financial stress isn’t always about how much money you have. Even people who are not financially struggling can feel stressed about their finances.
However, your current financial situation can also have a big impact on how much these situations and events affect you.
If you are struggling financially, life events that come with financial implications might affect you more than they would affect someone who is financially secure. For example, if you lost a loved one and at the same time learned that you had to cover their funeral costs, this news could cause you more distress compared to someone who is financially stable, as not only would you have to cope with grief but also with the stress about your finances. In your case, paying for the unexpected funeral costs might mean that you fall behind on your car repayments, whereas, for the financially secure person, it might mean they have to cut back on their spending for a couple of months.
Sometimes, financial stress is caused by factors outside of your control. Other times, it can be the result of poor financial choices, lack of financial knowledge, or somebody else having control of your finances.
Below are some examples of both external and personal factors that can cause financial stress:
- Losing your job
- Taking a salary cut
- Owing money to friends or family
- Being in debt
- Unexpected costs, for example, medical bills
- Failed investments or business ventures
- Problem gambling
- Lifestyle choices, for example, overspending or living beyond your means
- Having limited savings
- Having no retirement fund as you approach old-age
- Low financial literacy
- Financial abuse
- Family obligations, such as the need to financially support family members
- Economic conditions, such as living through an economic recession
- Mental health problems that make it hard to cope with stress.