Causes of financial stress (2024)

FAQs

What is causing financial stress? ›

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.

When there's a disconnect between our financial reality and our financial aspirations or needs, money stress arises. It can be the stress of living paycheck to paycheck, the anxiety of saving for retirement, or the fear of unexpected expenses.

What are Americans' main financial challenges? Over the past two years, more respondents cited inflation as the reason for their financial difficulties than any other cause. Inflation reached a 40-year high of 9.1% in June 2022 and has yet to return to the Fed's target of 2%.

Along with high prices, Americans who took our poll cited a lack of savings (47%) and insufficient income (46%) as contributing to their financial stress.

This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns. For individuals, financial distress can arise from poor budgeting, overspending, too high of a debt load, lawsuit, or loss of employment.

Those with financial anxiety often feel overwhelming fear and worry over their money situation. Common causes of financial anxiety include inadequate emergency savings, credit card debt and high costs of living.

Your money problems may seem overwhelming and permanent right now. But with time, things will get better and your outlook will change, especially if you get help.

A financial crisis may have multiple causes. Generally, a crisis can occur if institutions or assets are overvalued and can be exacerbated by irrational or herd-like investor behavior.

What are the big five financial crisis? ›

These crisis episodes include: The Big Five Crises: Spain (1977), Norway (1987), Finland (1991), Sweden (1991) and Japan (1992), where the starting year is in parenthesis. (1973, 1991, 1995), and United States (1984).

Symptoms of such a crisis comprise substantial currency fluctuations, mismatches in supply and demand, inflation, deflation, challenges in banking clearing processes, and other indicators.

How Many Americans are Living Paycheck to Paycheck? Recent MarketWatch Guides survey results indicate that 66.2% of Americans feel like they're living paycheck to paycheck. Respondents struggling to make ends meet span demographics, including genders, generations and incomes.

In many cases, becoming broke is caused by two factors. Firstly, you may not be earning enough money. Often, this occurs suddenly after losing a job, getting sick, or being injured. Or, in some cases, you're underpaid or unable to work as much as you would like.

Set up automatic payments wherever possible to help ensure bills are paid on time and you avoid late payments and interest rate hikes. Prioritize your spending. If you're having trouble covering your expenses each month, it can help to prioritize where your money goes first.

The Stressor: The responsibility of managing large sums of money and making crucial financial decisions creates immense performance pressure. The fear of making costly mistakes or facing career setbacks can be a constant source of stress.