The U.S. economy has been facing uncertainty over the last year, and economists believe it’s sure to grow in 2023 — with the effects of the COVID-19 pandemic lingering, stubbornly high inflation, increased borrowing costs and concerns of an impending recession.

If it all feels anxiety-inducing, you’re not alone.

A new survey by Bankrate found money is often a significant cause of stress for most Americans: 52 percent say money has a negative impact on their mental health, up significantly from 42 percent a year ago. Among those who say money has a negative impact on their mental health, more than 4 in 5 (82 percent) say feelings of stress, anxiety, worrisome thoughts, loss of sleep, depression, etc., are caused by economic factors, which include inflation/rising prices (68 percent), rising interest rates (31 percent) and not having a stable income/job security (29 percent).

There are several sobering statistics in this report … with inflation at the center of many of these money worries. Despite a strong job market, wage growth has not kept pace with the rising cost of living. Debt has been rising and savings have been dwindling. — Ted Rossman, Bankrate senior industry analyst

Key findings on money and mental health

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  • Money takes a toll on mental health for many. Money is the most cited factor that has a negative impact on U.S. adults’ mental health (52%), ahead of one’s own health (42%), current events (41%), the health of family and friends (36%), relationships with friends/family (32%) and work (31%).
  • Financial anxiety is higher than last year. 52% of U.S. adults say money has a negative impact on their mental health, up significantly from 42% a year ago.
  • Americans are worrying about money often. Of those who say money has a negative impact on their mental health, 56% say it happens at least once a week — up from 52% last year. 29% of those who say money has a negative impact on their mental health say they worry about money daily.
  • Economic factors, such as inflation, rising interest rates and job security, are to blame. Among those who say money has a negative impact on their mental health, more than 4 in 5 (82%) say feelings of stress, anxiety, worrisome thoughts, loss of sleep, depression, etc., are caused by economic factors, which include inflation/rising prices (68%), rising interest rates (31%) and not having a stable income or job security (29%).

Americans report increased levels of financial anxiety

Women, Gen Xers and lower earners are more likely to say that money has a negative impact on their mental health. Still, the tendency to feel this way overall is higher for every group than last year.

Financial therapists say there are several reasons why certain groups may be feeling more anxious about their money than others. For instance, women have persistently lower levels of financial well-being than men due to pay disparities, caregiving responsibilities and other systemic challenges — leading to more financial anxiety as a result. More recently, consumers faced the highest inflation of the last decade during summer travel and back-to-school shopping, then had to quickly pivot to making holiday purchases. These events disproportionately impacted women, who tend to carry the burden of family expenses and purchasing.

Women who say money has a negative impact on their mental health are more likely than men to say they have increased concern in the past year over the following:

  • Paying down debt (40 percent of women vs. 30 percent of men)
  • Inflation/rising prices (61 percent of women vs. 51 percent of men)
  • Not having enough emergency savings (45 percent of women vs. 35 percent of men)
  • Paying for everyday expenses (52 percent of women vs. 42 percent of men)
  • Paying for housing (34 percent of women vs. 28 percent of men)
  • Economic factors (73 percent of women vs. 66 percent of men)

The survey also found that 60 percent of Gen X (ages 43 to 58) say money negatively impacts their mental health, followed by 55 percent of millennials (ages 27 to 42), 52 percent of Gen Z (ages 18 to 26) and 45 percent of baby boomers (ages 59 to 77).

Lindsay Bryan-Podvin, a social worker-turned-financial therapist and author, says that may be because Gen Xers are 10 to 20 years out from traditional retirement, and are seeing the impacts of having a finite number of years left in the workforce. She adds that many Gen Xers are also members of the “sandwich generation,” where they’re caring for their aging parents and their children simultaneously.

“They’re at this double whammy disadvantage of not just caring for themselves, but also often caring for children and their aging parents, and getting toward the later half of their earning years,” she said. “So of course, they’re experiencing higher rates of financial anxiety.”

Additionally, low earners experience more emotional distress than high earners. Nearly 60 percent of people earning $50,000 or less say money negatively impacts their mental health, compared to 45 percent of those with household incomes of more than $80,000 annually.

Worrying about money is a frequent event

Of those who say money has a negative impact on their mental health, 57 percent say this happens at least weekly (up from 52 percent last year), which includes 29 percent who say this happens daily. The majority (82 percent) say they experience money concerns at least monthly.

“In the early years of the pandemic, there was more government support and subsidies for people, and we saw how impactful it was to help lift people out of the edges of poverty,” Bryan-Podvin said. “With that money going away, coupled with rising inflation and red flags about the economy and jobs disappearing overnight, it’s causing a ton of anxiety.”

Younger generations are more likely to say they’re stressing about money more often. More than 3 in 10 millennials (38 percent) and Gen Zers (32 percent) who believe money has a negative impact on their mental health say they worry about money daily, compared to 26 percent of Gen Xers and 22 percent of baby boomers.

Among those who say money has a negative impact on their mental health, 35 percent of households earning below $50,000 say they worry about money every day, compared to 23 percent of households earning $80,000 or more annually. Bryan-Podvin says it’s likely because lower-income earners are in far more financially precarious situations, making the stakes much higher if they are faced with a costly emergency or can’t work.

“Often lower income earners are working hourly wage jobs, which means that if they get sick or can’t work, they’re not getting paid. They might be putting expenses on a high-interest credit card,” she adds. “The stakes are just literally so much higher because they don’t have the financial cushion.”

Inflation, rising interest rates and job security are taking a toll on Americans’ mental health

Inflation is at the center of most Americans’ financial anxiety, and even after it cools, experts say Americans could still be paying the price in the long run.

Among those who say money has a negative impact on their mental health, more than 4 in 5 (82 percent) say economic factors are causing feelings of stress, anxiety, worrisome thoughts, loss of sleep, depression, etc., — including inflation/rising prices (68 percent), rising interest rates (31 percent) and not having a stable income/job security (29 percent).

“Inflation really hit us hard this year, as opposed to prior years,” Financial therapy professor Megan McCoy said. “It hit the average American much more closely because it was reflected directly in our gas or in our grocery bills.”

Among those who say money has a negative impact on their mental health, more than half say that paying for everyday expenses (60 percent) and insufficient emergency savings (56 percent) are to blame. In comparison, 47 percent say being in debt negatively impacts their mental health.

Older generations, women and lower earners are more likely to point to inflation/rising prices as a cause of their money-related stress. For example, baby boomers (79 percent) and Gen Xers (68 percent) are more likely to cite inflation/rising prices, compared to millennials (64 percent) and Gen Zers (52 percent). Women (72 percent) are more likely than men (63 percent) to say the same, while the lowest-earning households (annual household income below $50,000) are more likely than the highest-earning households (annual household income above $100,000) to agree (72 percent vs. 60 percent)

Inflation/rising prices were the top answer among survey respondents who say their money worries have grown over the past year (57 percent). Nearly half (47 percent) said paying for everyday expenses has become increasingly worrisome and 41 percent said they’re more worried that they don’t have enough emergency savings. Nearly all those who say money negatively impacts their mental health at least occasionally believe one of these concerns has worsened over the past year.

4 tips to manage financial stress during economic uncertainty

1. Remember to focus on what you can control

Inflation, rising interest rates and a recession are out of your control, but there are things that you can control to improve your overall financial situation. Consider starting with something small, like your food budget — and gradually shift your finances more significantly as you build up your knowledge and confidence. For example, look for ways to shave a few dollars off your food costs by going with cheaper items or minimizing takeout. It’ll help you save money and reduce any stress associated with your budget.

“I’d stress that it’s never too late to turn things around,” Rossman added. “Even if you’re not feeling great about the current state of your debt or savings or another financial topic, there are plenty of things you can do to get back on track.

2. Prioritize the necessities and cut back on discretionary spending

In times of economic uncertainty, prioritize health and basic needs. Now is the time to fortify your finances by prioritizing essential bills and reducing your minimum expenses as much as possible. To do that effectively, you’ll need to have a budget. As a budgeting exercise, consider what you spend your money on, and see if you can find some discretionary bills that can be eliminated or reduced, like subscriptions or travel. By knowing which bills you must pay first, you won’t have to scramble to decide if you find yourself in a bind later.

3. Build up your emergency savings

Having an emergency fund that covers three to six months’ worth of expenses is one more thing you can control, even if you build your reserve over time. Start small by putting away $20 to $25 weekly in a high-yield savings account. Within a month, you’ll have nearly $100 in savings. In six months, you’ll have $600.

“Try to gradually increase those contributions. You might be amazed at how much money you’re able to accumulate over time,” Rossman said.

Experts recommend putting your emergency savings in a high-yield savings account because it typically pays higher rates than typical savings accounts, and you can withdraw from it at any point. Rossman suggests automatically transferring your checking account to a savings account every time you’re paid to make the process seamless.

“I’m a big fan of automation,” Rossman said. “Every paycheck, aim to have some money automatically transferred into a retirement savings plan and other funds diverted into a high-yield savings account.”

4. Chip away at high-interest debt

With interest rates rising, experts recommend paying down high-interest debt — even if it’s just little by little.

There are plenty of tools, budgeting apps and debt repayment strategies (snowball, avalanche or landslide) to help you get started. If you can get your hands on a balance transfer credit card, it can be a part of a smart debt payoff strategy, according to Rossman.

He said balance transfers can be a big way to save on interest and a “really helpful tool for paying down credit card debt.” But you should consider your current credit card balances and interest rate first. It’ll help you determine how long of a balance transfer introductory period you’ll need for repayments and the appropriate amount to transfer.

If you need someone to keep you accountable or are in too much debt, consider setting up a free consultation with a nonprofit credit counseling agency accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America to discuss your options.

  • Bankrate commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,365 U.S. adults, among whom 1,232 say concerns about money have a negative impact on their mental health. Fieldwork was undertaken on April 12-14, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.