what is financial stress and how does it impact your wellbeing?
For many people, financial stress arises when facing significant financial challenges or uncertainties. It can happen if you struggle to manage your day-to-day expenses or face a gap between income and essential needs such as rent, food, utilities, or childcare costs. The good news is that small, consistent steps can help you ease these feelings of stress, and, in turn, help improve your overall wellbeing.
In this article, our partners at AIA Financial Wellbeing unpack how financial stress can impact you while providing ways to best manage yourself when experiencing any level of financial stress.
the causes and impacts of financial stress
Amanda Jones, Senior Financial Planner at AIA Financial Wellbeing, explains that financial stress can stem from significant life changes such as expanding your family, or unexpected events such as a job loss or illness. It can also result from rising costs or difficulties in managing budgets effectively.
The effects, however, extend far beyond finances. Research shows that financial stress can negatively impact your mental, social and physical wellbeing, which may contribute to changes in your overall mood, thoughts and health¹. Relationships with others may also feel strained, and the constant worry can make it difficult to focus on other aspects of life.
On the other hand, feeling financially secure can positively contribute to a holistic state of wellbeing, allowing you to focus on living your life to your fullest. The benefits of feeling financially secure can include:
- Improved sleep quality
Studies show that ongoing financial strain is associated with lower sleep efficiency², meaning that being free of these worrying thoughts can contribute to an overall improvement in sleep quality. - Increased energy levels
Cortisol, the hormone that helps your body respond to stress, can build up in your body and make you feel drained and fatigued. With lower cortisol levels comes higher energy levels³, which can allow you to be more involved in your daily activities and focus on other aspects of your lifeˆ. - Positive mood and emotional balance
Studies have found that higher financial worries have a direct link to lower emotional wellbeing⁴. By easing financial concerns, your overall outlook can become more positive. This sense of ease allows you to regulate emotions more effectively, responding thoughtfully to situations rather than reacting impulsively.
“Feeling financially secure can positively contribute to a holistic state of wellbeing, allowing you to focus on living your life to your fullest.”
3 steps to manage financial stress
Managing financial stress doesn’t have to feel daunting. Here are three simple and practical steps Amanda suggests to help you ease any pressure:
the power of small steps
Making meaningful changes in your financial life doesn’t happen overnight. However, small steps can lead to significant improvements over time.
Be patient and consistent with your efforts. Celebrate small wins, whether it’s saving a little extra, paying down some debt, or simply feeling calmer about your financial situation. Each step forward is a step toward greater financial freedom, peace of mind, and better wellbeing.
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exploring the link between financial wellbeing and overall wellness
In this article, our partners at AIA Financial Wellbeing delve into the relationship between financial health and holistic wellness.
finding financial harmony: bringing balance to your relationship with money
The thoughts and feelings you have towards money don’t just impact your relationship with your finances, but also your overall health and wellbeing. But how do you shift these thoughts, beliefs and perceptions into a more positive light?
gratitude: the key to attracting abundance through appreciation
When cultivated regularly, this simple practice has the power to transform our entire outlook so that we can find peace and contentment in the micro-moments of life.
references:
¹Manulife Financial Wellness Index 2016
²Hall M, Buysse DJ, Nofzinger EA, Reynolds CF 3rd, Thompson W, Mazumdar S, Monk TH. Financial strain is a significant correlate of sleep continuity disturbances in late-life. Biol Psychol. 2008
³AIA Australia. Eight signs of hormonal imbalance that need checking [online]
⁴Ryu S, Fan L. The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults. J Fam Econ Issues. 2023
ˆThere are many conditions that can bring about changes in energy levels, sleep quality and mental clarity, including hormonal imbalances. Always consult a healthcare provider to determine any underlying causes.
The information provided by AIA Financial Wellbeing is current as at 23 March 2025. AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.