Financial anxiety? How to take the stress out of your finances

Ask a group of friends to list their top stressors, and you'll probably hear "money" from more than a few. In good times and bad, those who don't have enough money worry about getting more, and those who are financially secure worry about losing what they have.

According to a 2020 report from the American Psychological Association, nearly 2 in 3 adults experience financial anxiety. If you're one of them, this advice from financial experts can help lower your stress level.

Figure out where your money is going

Understanding where you're spending your money—and using that knowledge to make decisions—will help you feel less out of control and reduce stress.

Start by recording your monthly income and expenses from bank and credit card apps or statements.

"Seeing the numbers in black and white always helps my clients when they are about to make that impulse buy that may get them into trouble," says Aviva Pinto, managing director of Wealthspire Advisors.

Steffa Mantilla, a certified financial education instructor and founder of the personal finance site Money Tamer, recommends doing this to identify expenses you can cut, too. "While it may be nice to have one streaming service, especially if you have kids, you probably aren't getting your money's worth if you have three or four," she says.

Create a financial plan

Knowing where you're headed and how you'll get there will give you more control. This starts with a financial plan that uses your income and expenses data to set and reach goals, such as paying off debt or saving more.

"It helps to establish realistic goals, understand the direct impact that current decisions have on long-term results, and track your progress," says Drew Parker, creator of The Complete Retirement Planner.

Creating a financial plan also allows you to make informed money decisions and forecast "what-if" scenarios to see how specific choices impact the outcome, Parker adds.

Build a budget

As part of the financial-planning process, create a realistic budget. Helpful apps include YNAB (You Need a Budget) and EveryDollar.

If you think you might lose your job, create a bare-bones budget that covers only what you need to survive.

"It's best to make this budget now while you still have a job rather than scrambling to figure out your money after you're jobless," Mantilla says. "You're also more likely to make sound financial decisions when you have a clear head."

Start an emergency fund

An emergency fund will help prevent you from going further into debt when you hit a financial snag. Experts recommend funding it with enough to cover three to six months of expenses.

"Having an emergency fund waiting will help reduce any financial pressures you face when the time comes," says Forrest McCall, owner of Don't Work Another Day, a personal finance site. "Even if it's just $1,000, this money can keep you on track even in the worst of times."

Ben Birken, a certified financial planner and lead adviser at Woodward Financial Advisors, recommends letting technology help with this. "If you rely on making manual transfers to savings each month, you're creating a stressful system," he says. Instead, automatically transfer a set amount from your paycheck to savings monthly.

Take action

Follow the steps outlined in your financial plan to get control of your money. Whether it's working with a consumer credit counselor to pay down debt, using sites such as Truebill or Billshark to negotiate bills, or creating a financial tracking account with Mint, every positive step forward will help minimize financial anxiety.

"We can't control what the stock market does on a daily basis," says Birken, "but we can control, to some extent, how much we save and spend, and the precautions we take in the event our income-earning ability is threatened."

Take action now to take the stress out of your finances.