Money is a major source of stress for most Americans, and tax season can cause the pressure to bubble to the surface as individuals, couples and families confront the state of their finances. Since more than a quarter of Americans say they are worried about money most or all of the time, psychologists suggest tax time presents an opportunity to put smart practices into place.  

For seven years in a row, money has ranked as the top source of stress in the daily lives of Americans, according to the American Psychological Association’s annual Stress in America survey, and financial concerns don’t appear to have eased despite the strengthening economy.

“We're not getting any better at managing stress around finances,” said Megan Jones, a psychologist at Stanford University and chief science officer at Lantern.

That stress harms personal health and takes a toll on relationships. One in five Americans have either thought about skipping or have skipped a doctor’s appointment because of concerns about the state of their finances -- even after the Affordable Care Act took effect.

“The stress about money and finances is so prevalent, and it really does seem to be impacting health nationwide,” said David Ballard, director of the Center for Organizational Excellence and Psychologically Healthy Workplace Program at the American Psychological Association.

Stress may explain at least in part why fatal car accidents in the U.S. increase by 6 percent on April 15 -- the deadline for Americans to file their taxes -- which means about 13 more people are killed in accidents that day than on an average day.

Acute stress can make it harder to concentrate on tasks, lead to a loss of sleep and even trigger heart attacks in people who are already at risk. Chronic stress from financial worries throughout the entire year can bring on a host of diseases through poor coping behaviors such as overeating, smoking or drinking too much.

“Sometimes the stress is a problem and sometimes it’s how we deal with that stress that compounds the issue and makes it worse,” Ballard said.

Handling Financial Stress

Ballard said the first step in managing financial stress is to recognize what it feels like, so one can assert control. “People need to understand how they react to stress,” he said, and can start by noticing whether it causes them to develop sweaty palms, migraines or a sudden wave of nausea.

From there, he said people should recognize the coping strategies to which they typically turn when they start to feel these symptoms, like eating a pint of ice cream or picking a fight with a spouse. Trading out those unhealthy behaviors for approaches such as taking a long walk or listening to a favorite song can make one feel better without compromising health or relationships.

Jones said an important first step to feeling better about finances for many people may be simply to cut themselves a break. She said when people feel overwhelmed or intimidated by their own finances, it’s easy for them to adopt a distorted view of their ability to manage them.

“I might tell myself that there’s no way I'll be able to save enough for retirement or that my finances are a disaster,” she said. “Those are examples of really catastrophic thoughts that aren't accurate and impede your ability to dive into it.” She said many such assumptions are based in logical flaws such as the “all-or-nothing approach” in which a person feels like they must completely master their finances or else declare them a total mess, or making unfounded predictions, such as by feeling retirement will be forever out of reach.  

Weeding out those problematic thoughts makes it easier to approach money with a clear mind instead of one muddled by self-doubt and criticism. Jones said the next step is to set realistic short-term goals that rely on small changes rather than focusing only on long-term goals such as buying a home that may feel unattainable at first.

“You need to set goals you’re really going to meet because it boosts your belief that you can do something about this,” she said. “That's most important because that's what's really going to keep you moving in a positive direction.”

Money, Partners And Family

Both Ballard and Jones emphasized communication is key when money is shared between partners or within a family. However, 36 percent of Americans say they are not comfortable talking about money and about two-thirds do not regularly talk about the subject within their families, the American Psychological Association found in its 2014 survey.

“Starting those dialogues within your family is critical,” Ballard said. “If money is a source of stress, if it's a taboo subject you can’t talk about, if you hide financial issues from your children -- that's going to snowball.”

The American Psychological Association recommends avoiding the word “budget” when bringing up the topic with family members and instead calling the strategy a “spending plan” to avoid the feeling of imposing restrictions on each other. Jones warned “frugal fatigue” can set in if a budget is too tight, causing participants to grow tired of monitoring every penny to the point they stop following it altogether.

Since finances cause conflicts in a third of relationships, Jones said learning to admit financial insecurities and shortcomings in an open dialogue with a partner can be a big relief for many people in the long run, even if they feel embarrassed or ashamed in the moment.

She suggested tax season can provide an opportunity for partners to each make a list of three financial goals for the coming year and decide together how to meet as many of the items as possible.

Jones added limiting these conversations is just as important as starting them in the first place since financial strife can cause endless disagreements. She suggested setting aside a time each week -- an hour on Sunday evening, for example -- to talk about finances. Partners should agree not to discuss money outside that time unless absolutely necessary. She said this approach helps people to know there is a designated time for these discussions but prevents the topic from seeping into the rest of their days.