From student loans to Covid layoffs, how to deal with the money stress keeping you up at night

Money and mental health are connected.

Financial problems can make you stressed, anxious or depressed, and those feelings, in turn, can have a big impact on your finances.

In fact, anxious or stressed adults are more likely to engage in costly financial behaviors, including withdrawing cash from retirement accounts and borrowing from high-cost financial services firms, according to a report from the Financial Industry Regulatory Authority Investor Education Foundation and the Global Financial Literacy Excellence Center.

To help combat these emotions, start talking to yourself, your partner and your family members, suggests licensed marriage and family therapist Dr. George James, chief innovation officer and senior staff therapist at the non-profit Council for Relationships.

Otherwise, you might wind up emotionally blocked and end up doing something you might not really want to do.

“Don’t try to take your emotions out of it but just be aware of how your emotions might influence it and you can actually be able to make the decision that you need to for you and those you love,” said James.

It’s also important to know you aren’t alone.

“If you are financially stressed, if you are not sure what you are doing, if you made financial mistakes, welcome to the club,” said certified financial planner and financial psychologist Dr. Brad Klontz.

“It is a learning process,” he said. “Many of us weren’t taught what we need to know.

“Just be gentle with yourself.”

Here are some strategies to help ease your financial anxiety, depending on your situation.

Overwhelmed by student loans

Makayla Campbell, 21, owes more than $63,000 in student debt for the three semesters she went to a performance art college in Los Angeles. After deciding it wasn’t for her, Campbell moved to Phoenix and began working.

“I want to know the best way to manage my living expenses on top of my student loans kicking in at the same time, without feeling so overwhelmed each night,” she said.

To deal with those feelings, try to look at it at one step at a time, said Klontz, who had $100,000 in student loans when his education was completed.

“When you see that big number, it makes you sweat,” he said.

Also, remember you’ll be able to pay off more as your career and income grows. To help ensure you pay your bills regularly, set aside a certain percentage of your income and automate the payments.

“What we tend to do is inflate our lifestyle as we start to make more money, and that’s where that automatic payment toward that obligation can really help you,” said Klontz, a member of the CNBC Invest in You Financial Wellness Council.

Getting through a layoff

Brett Dobin’s wife was among the 114 million people laid off during the Covid pandemic in 2020.

The 44-year-old guidance counselor from New York is concerned about getting by with one income and a 21-month-old baby, while emotionally supporting his wife.

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When something like this happens, it affects both partners, James noted. While they are going through a loss due to this sudden change, the good part is that it allows the family to have more time together.

It’s key “not to be so stressed about everything — I know, easier said than done — that you miss out on the moment to connect as a family,” James said.

Also, remember that this is a temporary situation. Therefore, it’s a good time to take stock of your financial goals and how you may get there once a second income is added back to the household, Klontz said.

“Look at this crisis as an opportunity to get clear, get specific and get ready for when you are in a better place,” he said.

Feeling left behind

For many young Americans, the pandemic meant delaying their careers or going back to school.

Lephate Cunningham III, 26, is one of those who decided to get his master’s degree during the crisis. Now that the New York resident is halfway through the program, he’s concerned about being very behind in his industry compared to other people in his age group.

While it is natural to feel this way, Cunningham is making a good move that will boost his lifetime income, Klontz said.

“As you are feeling like you are little behind, I also want you to feel great about this accomplishment that you are doing for you and your family,” he said.

To address these fears, remember that you don’t know the whole story of those you are comparing yourself to, added James, also a member of the CNBC Invest in You Financial Wellness Council.

They may have credit card debt or have done other things not in their best interest.

“You have to focus on you,” James said. “Control the things you can control, which is you, which is your spending, which is your goals.”

This article originally appeared on Invest in You: Ready. Set. Grow., a CNBC multiplatform financial wellness and education initiative, in partnership with Acorns.

Disclosure: Invest in You: Ready. Set. Grow. is a financial wellness and education initiative from CNBC and Acorns, the micro-investing app. NBCUniversal and Comcast Ventures are investors in Acorns.