Millennials have gotten a bum rap. The image of a scraggly late-20- or early-30-something subsisting in some relatively unclean state in their parents’ basement is overplayed. It’s a caricature of something that exists as somewhat of an anomaly. Certainly, more millennials live at home for longer. And certainly, some have had challenges entering the labor force.

On the other hand, millennials have ridiculous expectations to live up to in a world where the fruits no longer hang so low. Coming into the workforce with higher debt loads, fewer opportunities, and big expectations of inevitable success is leading to stress and burnout.

Financial stresses, both from income challenges and debt burdens, compound already high stress levels. But there are ways to deal with this particular pain point. And you don’t have to be a millennial to experience financial stress or to make use of these remedies to help reduce it.

1. Budget

Yes, it's that dreaded b-word: budget. But it doesn’t need to be feared. A budget is merely a spending plan — and saving plan — for your income. Feel free to call it by some friendlier moniker if that makes using one more palatable.

Not budgeting — which means not planning — can lead to stress. If it’s not clear how you will meet your obligations, then it’s natural to stress about that. A budget shows you how your income will be allocated to meet your needs and helps to reduce financial stress. Hopefully to meet your savings needs as well as your spending needs, but meeting your spending needs is a great place to start.

A budget doesn’t have to be fancy. You can use an app, a worksheet, or a scrap of paper. But you should include all of your incomes and all of your expenses. For most people, it’s easiest to budget on a monthly basis. This is because a lot of our bills come once a month, so it helps to plan for a month at a time.

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2. Build an Emergency Fund

There’s a lot of advice that says to pay off your debt before you build your emergency fund. The logic of the advice is that the cost of debt is higher than the earnings on your savings, and hence you will accrue an advantage by reducing debt before beginning savings. Great logic, but not great advice.

The problem is that unexpected expenses won’t wait until you've paid down debt and then built savings.

They’ll come before then. And with no savings, you have little option other than to re-incur the debt you’re trying to eliminate. It’s a vicious cycle. You pay down debt, incur more debt, repeat.

By building your emergency fund while paying down debt, you’re building a source of funds to use in these unexpected emergencies. The reality is that we should expect unexpected expenses. We don’t know what they’ll be, when they’ll arrive, or how much they’ll cost. But we do know they’re coming at some undetermined interval in some unknown amount.

Building an emergency fund provides you with a source of funds for these emergencies. This means you don’t have to stress about them! Don’t delay. If you don’t have an emergency fund, begin one ASAP.

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3. Pay Down Debt

Debt drains resources in the present for expenses you incurred in the past. Some debt allows you to achieve things you might not have otherwise. But debt has a cost in the form of interest. And that cost means you pay more. You pay not only for your original purchase, but for the additional expense of interest. And the longer it takes to pay it off, the more interest you’ll pay.

As long as you have debt, you have less money available in your budget for other things. Ideally, you should pay off your highest-interest debts first, then work your way down.

That said, it’s fine to get rid of very small nuisance debts first. Many people find this very incentivizing. They get pumped up about keeping up the fight against debt.

Debt is a major stressor. It is a consequence of the past that makes things harder now.

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By paying down debt, you will reduce the amount you pay in interest and free up additional funds to use elsewhere in your budget.

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4. Systematize

Managing your day-to-day finances shouldn’t be time-consuming or difficult. A lot of routine tasks can be systematized or automated. For example, you can make debt payments automatic, as well as your savings.

The more you can use technology to ease your financial life, the better. Having things done automatically eliminates the stress of worrying about whether or not they’ll get done. 

5. Set Goals

People stress about whether or not they’ll reach their long-term goals, such as education of children or ultimately retirement. They’ll stress about them if they don’t have a goal and a plan. Naturally, if you don’t have these things, you won’t know if you’ll make it.

Having a goal and a plan doesn’t mean you’ll be on track from day one. Especially not if you have a lot of goals. But establishing goals and plans allows you to see what is possible and make informed decisions. Much as we have to learn to walk before we can run, we have to begin before we can achieve.

Lack of control is a factor in burnout and in stress.

Setting goals and establishing action plans helps to restore a sense of control and reduce financial stress. Even if your plan is to increase your savings rate after debt is paid down, you have a plan, you understand your options, and to the extent possible, you’re in control.

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Getting Outside Help to Reduce Financial Stress

Stress can be a very serious thing. Sometimes people need outside help to deal with it. That’s okay. Don’t hesitate to seek outside help. There’s nothing wrong with seeing a therapist or other professional. Don’t let stress impact your health and well-being. It’s not worth it. And you are.

You can also consider professional help with managing your finances or your financial stress. For instance, financial advisers can help you manage your finances and reduce your financial stress. Financial coaches and financial therapists can also help you uncover and deal with money relationship issues and help get you onto positive footing.

You may be fine doing things your way. But there’s an abundance of professional resources available should you need them.

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How to Reduce Financial Stress: Closing Thoughts

It may help to put some thought into your relationship with money and what you want your role to be. Not everyone enjoys managing their finances. And it’s hard to enjoy managing finances if they’re not going well and you’re stressed.

But knowledge is powerful. Many people can take control of their financial lives and reduce their financial stress. They learn to own their financial outcomes. They learn to make financial decisions that improve their futures.

Becoming financially literate empowers people to own their financial lives. You can contract it out, or you can own it. But either way, taking control can help you achieve your goals and reduce your financial stress at the same time. And that’s a win-win.