November 18th, 2016 •
Comments Off on 8 Ways To Deal With Financial Stress
Money and financial pressures are one of the leading causes of stress today according to a 2015 survey from GfK:
- 29% of survey respondents worldwide responded that the amount of money they have to live on is their primary source of stress
- 27% responded that it’s the pressure they put on themselves
- 23% aren’t getting sufficient sleep
- 19% say they have too much work on their plate on a daily basis
Financial stress is often made up of the feeling of being trapped or stuck in a certain situation with no way out or a way to move forward. If your stress levels are rising because of financial worries please read on. Because the good news is that even with a limited income you can find resources and solutions that enable you to get back control and reduce your stress levels.
Reasons For Financial Stress
There are various reasons why you may be under financial stress. Some of them can be rising healthcare costs, low savings, creditcard debts, student loans, volatile stock markets, job insecurity, high mortage, living in a one income household, low savings (rates), living beyond your means, or living barely within your means. The sad fact is that financial distress may affect your health and happiness in a lot of ways. It may affect your sleep, marriage, work and relationships. It can also contribute to depression and increase the likelihood of stress-related diseases such as adrenal burnout. Improving your finances on the other hand can actually contribute health, wealth and happiness.
So What Can You Do To Manage Financial Stress?
If you feel that you are under financial stress, there are things that you can do to combat this and prevent its negative effect in different areas of your life. It may not be easy, but with your decision to commit yourself to getting your finances and financial worries handled, it will get better, one cent at a time.
1.) Assess Your Situation
The first step to managing financial stress is to have an honest look at your situation and to create an overview of your current financial condition. Carve out some time to make a list of all of your financial obligations. First write down those items that cause you the most financial worries. If you have debts, write down the principal amount you owe, the interest rate as well as the minimum amount that needs to be payed. Also track where your money is going by reviewing your bank account and credit card statements. The goal of this first step is not to solve the problem, but rather to assess the scope of your problem and document it. You may find that doing this alone helps reduce your stress levels significantly.
2.) Talk to Your Spouse
Talk to your spouse or partner if you are managing money with them. Shouldering too much of the financial burden yourself or not shouldering enough can surely contribute to your stress. Perhaps your spouse or partner can take on some of the financial responsibilities so you are not budgetting and paying bills by yourself. It is crucial to be on the same financial page because if you are not this leads to additional stress. Finally your spouse or partner can also be a great source of emotional support which has proven to reduce stress levels. Should you not manage your finances with someone else, maybe a family member or a friend can fill in this role.
3.) Educate Yourself
Unfortunately personal finance (filing taxes, credit card interest rates, saving for the future etc) is not taught in high schools. And sometimes fear of the unknown can be a cause of stress. If fear of the unknown causes you to stress about finance, get yourself educated on this important subject. For example, if you want to save for retirement but you don’t know where to start, this can cause you to get worried about your future. Or if you are looking for a mortgage loan you could feel very confused if you can’t distinguish between the various types of mortgage loan options.
Reduce your financial stress by educating yourself:
- Take a course via your local continuing education department on budgeting and financial management.
- Buy a book or enroll for a free course in accounting on www.coursera.org
- Explore retirement savings options on the internet.
- Discuss your options with a financial advisor.
- Ask your particular financial question to someone who understands your situation.
- Go to Youtube and find great free videos on various personal finance topics.
Ignorance is NOT a bliss when it comes to personal finance. By taking matters into your own hands and educating yourself, your financial situation stops being a source of stress and money actually becomes something that you can understand and control.
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4.) Take Control
Now, go back to step 1 and take a look at where you actually spend your money on over the course of a month. Do you see any changes you can make that will free up funds that you can save or use in other areas (such as paying off any creditcard debts or student loan)? For example, go through your subscriptions do you really need premium cable or that magazine subscription? Or do you really need to eat out that often, or could you save money by taking your lunch to work? Small changes can make a difference over the longer run and exerting control over your situation can help alleviate your stress levels. Work your way up to a full spending plan (also known as a budget) where you prioritize, create your spending goals and then stick to these going forward.
Here are some great ideas to save money:
- Don’t have a credit card.
- Keep your tires properly inflated.
- Buy generic over-the-counter medicines.
- Learn to say no to social activities you don’t want to engage in.
- Don’t buy bottled water, buy a water filter and fill up a re-usable bottle.
- Check the insulation in your home.
- Buy online when it saves you money.
- Turn electrical appliances off when not in use.
- Avoid extended warranties.
- When you have a baby breastfeed.
- Collect loose change and pennies in a jar.
- Develop a hobby and save money you spent on leisure activities.
- Buy a flask and carry your coffee/tea to work with you.
- Wash clothing in cold water. Only use hot water to wash bed sheets, to kill dust mites.
- Don’t go to the mall for “fun”. Replace shopping as your therapeutic activity with some other hobby such as walking, yoga, writing.
- House share with other people to reduce your rent.
- Use training opportunities offered by your employer to gain extra skills and extra salary and career opportunities later on.
- Borrow and lend things that you don’t use often like camping gear, tools and books with friends.
- Create a debt pay-off plan and stick to it so you have an idea of when your credit card balances, student loans, or car payments are going to be paid off
- If you want to spend money on a big purchase (furniture etc), first check and see if you can get it second hand for much cheaper (look at eBay, craigslist, thrift stores or yard sales).
Extra tip: Analyze your Grocery Receipts!
According to the United States Department of Agriculture, the average family of four spends about $700 to $1,000 a month on food. That’s a lot of cash, especially when you consider that most families waste about 40% of food every month! There is a good chance you may find unnecessary or expensive items on your grocery receipts, which add up to your expenses. Carefully analyze your grocery receipts. Should you find any expensive items, or items that you don’t really need do not buy those items going forward and save some extra money. This doesn’t mean though that you should give up on your favorite healthy foods, there are a few basic but effective methods on how to eat right at a low cost.
The infographic below shows you how to enjoy a healthy diet without going beyond your budget:
5.) Set Up An Emergency Fund
The mere thought that unknown events, such as illness, the loss of your job or even a natural disaster could leave you in financial ruins can be a great cause of stress. If you worry about these unknown events it’s a good time to start and emergency fund to cover or offset the expenses of an unforeseen situation. You could start out by saving up just $1,000 and then ideally continue contributing until you have at least 6 month’s worth of living expenses. Knowing that you have a safety net for when financial crises occur can help you sleep much easier at night.
6.) Seek The Help Of A Professional
Always remember that you don’t have to handle things on your own. If you can’t turn to your spouse, family or friends for emotional support, their support isn’t enough or you just feel too much stress, you can also talk to a mental health professional or your primary care physician. Scheduling an appointment with a financial advisor can also help ease your fears and at the same time make sure you’re on the right way to reach your financial goals. A financial advisor can be of great help and many offer a no-cost, low-pressure initial first appointment as a way to get to know each other and get a clear view on your financial situation and aspirations.
7) Don’t Compare Yourself With Others
Nowadays social media is flooded with your friends’ pictures of their new cars, exotic trips, other expensive purchases as well as insignificant personal achievements. For some reason we all like to compare with others in the areas of success, looks and wealth so that we can gauge our position. But constantly comparing yourself to others is not a healthy way to live and can lead to feelings of stress and depression.
The next time you feel the urge to compare your financial situation to that of others, remember the following:
- You don’t see the hard work and sacrifices others made to achieve their financial success
- You also don’t know the amount of money they have in their bank accounts. Perhaps your friends seem to enjoy a wealthy lifestyle, but it could be all paid for by credit cards and debts.
- Many people only share the positive aspects of their life, so the reality can be quite different.
- Everyone has another journey in life, you have your own unique journey.
- Only you can change yourself, so instead of measuring your success and wealth to that of others create a plan for yourself to reach your financial goals such as an accurate monthly budget and a savings account.
And should you still feel stressed and depressed because a friend just went to Bali, you could always pause your social media accounts until you get back control over those feelings.
8.) Do Keep A Little Concern
Surely worrying constantly about your finances is bad for your wellbeing, but keeping some concern over your finances could actually guard you from making bad spending and investment decisions. For instance, by keeping an eye on your future goals you could get more motivation to start saving more seriously. Likewise, being cautious about sticking to your monthly budget could prevent you from overspending and living beyond your means.
They say fear is never a wise advisor, but it can be helpful when it comes to investments. If you have the feeling that an investment opportunity is risky, it´s always a good idea to discuss with your financial advisor the opportunities for lower risk investments. Also if think about changing jobs and locations and you feel uneasy about it, discuss things with your partner, close friends or parents before you make a rash decision.
“Respect” might actually be a better word for “fear”. Being stressed or anxious is a passive way to deal with your financial future, actively respecting money and being smart about it can help you plan for the future – and being in control of your finances.