The Best Way to Reduce Financial Stress

financial stressBy Kelly Hodges
There is a common perception that people in high power positions are under a lot of stress. The pressure of leading a Fortune 500 company, a covert military operation, or an entire nation must be overwhelming. I would anticipate the anxiety levels among these leaders to be quite high, including the financial stress levels of high ranking business executives.

That’s why I was fascinated when I came across this study published in the Proceedings of the National Academy of Sciences. It completely contradicts this perception and makes it easy to draw parallels to reducing financial stress in our lives. But more on that later.

The study looked at 148 leaders and 65 non-leaders who were enrolled in an executive education program at Harvard. The enrollees were from the business, political, and military fields. And all were senior-level officials. Researchers took saliva samples to measure levels of the stress hormone cortisol. At the same time, they administered anxiety questionnaires to determine self-reported anxiety levels. What they found was that people in positions of leadership had lower cortisol levels (a biologic marker of stress). They also had lower self-reported anxiety levels (a psychological marker of stress) than their underlings.

Though it seems counterintuitive, those in leadership positions are actually less anxious than their subordinates. Furthermore, the researchers conclude that people in leadership positions may feel more in control of their situation. And this sense of control helps to mitigate all types of stress, including financial stress. Whatever the reason, the solution to feeling anxious may actually include taking on more responsibility instead of less.

Sign up for our FREE newsletter
and receive our best trading ideas and research



These results can be extrapolated into the realm of personal finance as well. The more actively involved one is in his or her own financial situation, the less anxious he or she is likely to be. Taking control by setting a budget, dictating where money is going, monitoring retirement, college savings, or investment accounts, and overall staying on top of your finances may lessen financial stress. You’ll know exactly what your financial situation is and how to handle setbacks, so you won’t have to spend time worrying about them. After all, if you don’t step up to be the leader of your own financial sphere, who else will?