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How Young People Can Reduce Financial Stress

Man with no money in pocket
Photo by csamhaber on Pixabay

A 2016 study from Payoff surveyed over 2,000 people and discovered that almost a quarter of respondents had PTSD-like symptoms due to their financial stress. For millennials, that number was as high as 36%.

Some reported experiencing irrational behaviors. Others tried refuting how serious their debt was. Many had nightmares of becoming homeless. These actions like fear, denial, and alertness are very common to those who suffer from PTSD.

That's not the only shocking statistic:

These frightening numbers show that many young people aren't financially secure.

Ever since 2008, student loan debt has increased by a staggering 84%. About 40 million Americans, most of whom are millennials, are burdened by this overwhelming financial cost. Paying off student loans prevents many young people from saving for retirement or pursuing their dreams.

How can millennials overcome their financial stress and start living their life? Money can cause a lot of problems, but learning financial literacy can help. Here are some actions to consider:

Start Budgeting

You don't need to be an expert to create a budget. Start by adding up your predicted income and subtract expenses. Add some flexibility since you never know how many unexpected costs you will encounter. Don't beat yourself up if you don't stick to your budget down to the letter. However, it's beneficial to have a reliable guide to what you can and can't afford.

Track Your Spending

It's easy to believe that you never spend any money outside of necessary purchases. Perhaps this is true, but you'll never know until you look at your spending and find out where your income is going. There are plenty of free apps like Spending Tracker to help monitor your personal finance and revenue. This technique will give you a realistic view of how much you're spending and make you think twice before making any purchase.

Cut Back Expenses

Once you start tracking your spending, you map out where all your income is going and identify points where you can cut back. Movies, food, and concerts can be reduced a little each month to add to your savings. When it comes to expenses that you must buy, such as fuel, you can use GasBuddy to find the cheapest deals.

Develop a Passive Income Stream

A passive income stream can help bring in extra money for years to come. The best part is that you don't have to actively work while the funds slowly pour into your bank account. However, every passive income stream requires an upfront time cost. Once established, you will receive payment slowly but surely over long periods. Some examples include blogs, eBooks, e-commerce stores, and high-yield savings accounts.

Woman holding a dollar bill
Photo by Annie Spratt on Unsplash

Create an Emergency Fund

You may need some money to fall back on in case of a catastrophe. It might be sickness, unemployment, a natural disaster, car repairs, or anything else. Building up your emergency fund can be stressful, especially when you feel like you need the money right away. However, saving up enough money to last you for at least 1-3 months will benefit you when you need it. You can tackle rent and debt first, but don't neglect the importance of an emergency fund.

Save Up for Retirement

Many young people falsely believe that they don't need to begin saving because they've got so much time ahead of them. This is a misconception. The earlier you start your retirement fund, the easier things will be in your later life. An employer-matched 401(k) is ideal, but you may need to opt for an IRA if your employer doesn't offer a 401(k).

Start Investing

I can't stress how important it is for people to invest money in the stock market. The market might fluctuate from day to day but generally goes up over time. Investing is the primary way that people can build massive wealth with little effort. Set aside just a fraction of your income each month into your brokerage account. Gradually increase your investments as your incomes and savings also expand.

If you're new to stocks, you can try a micro-investing app like Stash. Deposit a few dollars each week and pick out which stocks or ETFs you'd like to buy. Then, watch your money grow. (Note: Stash charges $1 a month.)

Set Goals

You should set both monthly and yearly financial goals. Establish how much you want to save and earn and track your progress each week. You can measure how long it will take for you to do something such as pay off debt or save up for retirement. Your objectives will give you the motivation to work towards every day.


Some say that money is the root of all evil. While the truth of this statement is debatable, it's impossible to deny just how much stress finances can incur on people. Learning financial literacy can significantly help alleviate many of these concerns. Stop losing sleep over your money issues and take these personal finance tips to heart.

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