Need That Money

Breaking the Cycle of Financial Stress: Coping Strategies for Younger Americans

Financial stress is a very real experience for many Americans, and it’s especially true for the younger age groups like Generation Z and millennials. With the ongoing COVID-19 pandemic, financial stress has become increasingly more prevalent.

In this article, we’ll delve into the financial stress that younger Americans face, as well as the various coping strategies that individuals can use to alleviate that stress.

Financial Stress Among Younger Americans

According to a survey conducted by the American Psychological Association, money is the leading cause of stress for Americans, regardless of age. However, Gen Z and millennials experience that stress to a greater degree than other age groups.

They face constant stress regarding money, their careers, and their student loans. In fact, 81% of millennials and 81% of Gen Zers report experiencing financial anxiety at least once a month.

The Covid-19 pandemic has caused unemployment rates to spike, and many Americans are facing job insecurity. The financial stress associated with the pandemic has increased significantly, with many individuals struggling to pay their bills or make ends meet.

This is especially true for younger Americans, who may be dealing with unprecedented financial uncertainty for the first time in their lives.

Top Financial Stressors for Americans under 40

Some of the top financial stressors for Americans under 40 include monthly bills, overspending, saving for a home, budgeting, and maintaining a savings account. These financial stressors make it hard for young Americans to achieve the financial security that they desire.

Monthly bills are a common financial stressor because they come around every month and can make a large dent in a person’s budget. Overspending is another issue, especially since younger generations love experiences and may spend a lot on entertainment and dining out.

Saving for a home is an ideal financial goal, but it can be tough to achieve in areas with high housing costs. Lastly, budgeting and maintaining a savings account can be challenging, especially when someone is living paycheck-to-paycheck.

Prioritizing Mental Wealth to Alleviate Financial Stress

Mental wealth refers to the ability to prioritize self-care, personal growth, and overall wellness. To alleviate financial stress, individuals should prioritize mental health alongside their financial health.

This means developing a financial plan that aligns with a person’s values and goals, setting realistic expectations, and integrating self-care routines into daily life. Some examples of integrating self-care into daily life include going for walks, getting quality sleep, scheduling downtime, practicing mindfulness, and engaging in hobbies.

Self-care helps to alleviate anxiety and depression, two conditions that often accompany financial stress.

Student Loans as a Major Source of Financial Stress

Student loan debt is a significant source of financial stress for many Americans under 40. According to the Federal Reserve Board, 33% of adults under the age of 30 have student loan debt, with the average amount being $29,000.

There are various ways to manage student loans, including deferment, forbearance, payment plans, and refinancing. Deferment and forbearance allow borrowers to temporarily not make payments on their loans, while income-driven repayment plans base payments on a percentage of a borrower’s income.

Refinancing involves taking out a new loan with a lower interest rate, which can save a borrower money over time.

Coping Strategies for Financial Stress

There are various coping strategies that individuals can use to alleviate financial stress. These strategies include increasing savings, seeking better understanding of investment options, creating strategies to reduce debt, managing student loans, and utilizing small changes to improve financial stress.

Increasing savings is a great way to reduce financial stress because it provides a sense of security and emergency funds if something unexpected arises. Seeking a better understanding of investment options can provide more financial control and knowledge of the potential risks and rewards of investing.

Creating strategies to reduce debt, such as making a payment roadmap, can help eliminate debt while setting realistic goals. Managing student loans through forbearance or refinancing can ease the burden on borrowers dealing with student loan debt.

Lastly, utilizing small changes to improve financial stress, such as cutting back on subscriptions or taking public transportation, can make a big difference in the long run.

Conclusion

In conclusion, financial stress is an unfortunate reality for many Americans, especially younger generations who face unique financial challenges. By prioritizing mental wellness, creating a financial plan, managing student debt, and utilizing coping strategies, individuals can work towards reducing their financial stress.

It’s important to remember that everyone’s financial journey is unique, and there’s no one-size-fits-all solution to financial stress. However, these strategies can help young Americans manage their money while maintaining their overall well-being.

Financial stress is a significant issue for younger Americans, with financial anxiety becoming increasingly prevalent due to the COVID-19 pandemic. Top financial stressors include monthly bills, overspending, saving for a home, budgeting, and maintaining a savings account.

Managing these stressors can be done through prioritizing mental wellness, creating a financial plan, managing student debt, and using coping strategies. It is essential to remember that everyone’s financial journey is unique, but prioritizing mental and financial wellness can help young Americans manage their money while maintaining overall well-being.

Popular Posts