Money Stress Keeping You Awake? These Money Moves Will Fix Sleepless Nights

Money troubles don’t just drain checking accounts and strain savings goals. They can also cost people sleep.

Nearly half of Americans say their finances have made it difficult to fall or stay asleep over the past year, according to a survey of 2,000 consumers from Achieve and Money.com.

The issue is even more pronounced among respondents who said they had far too much debt, with a majority of people in this category reporting that they at least occasionally experienced sleeplessness.

Roughly half of respondents said thinking about their financial situation makes them feel anxious (50%) or depressed (46%). And money concerns also fuel physical effects such as headaches, muscle tension and fatigue or low energy, the survey finds.

That’s likely because dealing with debt or other regular financial stressors can activate our survival instincts, explains Jaelyn Vickery, a financial therapist based in Chicago. In a modern world, money is a vital resource for survival.

“When you feel like you’re consistently behind or chasing something financially … it keeps your mind consistently occupied and in that fight-or-flight state,” she says.

Feelings about debt drive sleepless nights

Survey respondents without any debt fared better on most measures, although large minorities still said their financial situation led them to occasionally feel anxious (38%) or overwhelmed (33%) in the past year.

Still, the results show that those with debt, particularly those holding more expensive debt, are consistently more likely to report negative mental health and physical effects caused by their finances.

For example, respondents with $15,000 or more in unsecured debt, such as unpaid credit card balances, personal loans and buy now, pay later financing, were more likely to report regular sleep problems. About 30% said they “often” struggled with falling or staying asleep, compared with roughly 23% of respondents with smaller debt balances.

Income also appears to play a role. Among respondents with household income below $50,000, about 25% said they “often” lose sleep over money, compared with 15% of those earning more than $50,000.

But the biggest differentiator appears to be how people feel about their debt. Only 14% of respondents who said they had a manageable level of debt reported frequent sleep troubles. That figure more than doubles among those who felt their debt is “a bit more than manageable” (30%) and jumps to 42% among those who said they have “far more debt than is manageable.”

In other words, financial stress appears to hinge less on the exact dollar amount people owe and more on the psychological burden of thinking your debt is out of control.

That tracks with something Vickers tells her clients regularly. How you feel about money is a more accurate indicator of your financial health than the numbers in your bank account, she says. Even people who are high earners or super savers struggle to get negative emotions around money under control.

Younger consumers report more financial stress

Gen Z and millennial respondents were more likely than older generations to report frequent sleep problems and anxiety tied to money.

About 25% of Gen Z respondents and 23% of millennials said they “often” have trouble sleeping because of their finances, compared with 18% of Gen X and 11% of baby boomers.

A similar pattern emerges with anxiety. Roughly 28% of Gen Z respondents said they regularly feel anxious about their financial situation, followed by 24% of millennials, 15% of Gen X and just 8% of baby boomers.

The Achieve/Money.com survey gauges self-reported experiences with financial worries and sleep. But there is research-backed evidence that supports what consumers told us.

A recent study from a team at Rice University, for example, found that financial stress predicted higher levels of stress at bedtime, which was then associated with higher rates of insomnia symptoms. The researchers used self-reported sleep data as well as a wrist-worn actigraph, a device used to diagnose sleep disorders, to get objective sleep measurements.

What’s more, a lack of sleep caused by economic worries can create a vicious cycle where consumers, stressed about money, don’t get enough sleep and then struggle to succeed with daytime tasks, including working and managing their bills.

How to combat anxiety, insomnia caused by financial stress

Regardless of whether you’re stressed about paying down debt, catching up on savings or figuring out a long-term financial plan, there are some universal steps everyone can take to improve their situation, says Kadri Augustin, senior financial advisor and chief operating officer at The Financial Gym.

First: Write down everything related to your finances, including all of your bank accounts, assets and debts. “A lot of the anxiety and avoidance comes from a lack of feeling like you’re in control,” he says. Figuring out where you stand is the first step in taking control.

Next, you need to make a plan that will help you improve your financial situation. The key here, Augustin notes, is chopping your goals into bite-sized pieces — say, one task a week or month — to help you avoid getting overwhelmed and build solid momentum.

Finally, make sure you’re saving some money, even if you’re focusing on paying down debt as your primary goal. It may sound counterintuitive, he says, but he often works with clients who are stressed because they don’t feel like they have any money, and saving is the way to fix that. Plus, it's discouraging when you claw your way out of credit card debt only to rack up a balance again if you don’t have a buffer to cover unexpected expenses.

For tackling debt, Augustin says the debt avalanche payoff method, where you pay the highest-interest debt first, is best if you aim to pay as little as possible. But many people stay more motivated (and therefore have better success) with the debt snowball strategy, where you focus on smaller debts first.

If you have a decent credit history, debt consolidation can be a great tool, whether you use a balance transfer card, personal loan, home equity loan or line of credit. But Augustin recommends consolidating to clients only after they’ve demonstrated consistent payments for three to six months to ensure they can actually manage their new payments.

Some people may be dealing with unaffordable debt because they don’t have enough money to pay for rising living expenses. Others, though, are likely guilty of lifestyle creep, whether it’s more traveling, eating out or buying new clothes that’s eating up too much of their income.

“Sometimes we really just need to learn to say no to things in order to say yes to ourselves,” he says. It’s a major mindset shift, but those who can make it — even for a short period while they’re resetting their finances — see dramatic improvements.

More from Money:

Trying to Get Out of Debt? Here Are 6 Tips to Pay It off Faster

The Hidden Health Costs of Debt: Skipped Care, Headaches and Fatigue

'An Endless Spiral': Why People in Debt Often Can't Stop Spending Money