When you worry about money, it can consume your thoughts during the day and keep you up at night. Wondering how you’re going to cover your living expenses, such as rent and groceries, can leave you feeling anxious about the future. According to the American Psychological Association, 64% of adults state that money is one of their main causes of stress. Even though financial stress is common, it doesn’t have to be a normal part of your life. Keep reading to learn how to eliminate some money problems and the stress that comes with them.
1. Identify your stressors
The first step to eliminating money stress is to determine what causes your stress. Are you unsure if you should pay off debt or save money? Could it be your excessive spending habits? Are you living paycheck to paycheck? It could be helpful to create a short list of your biggest money challenges, and update it every three to six months as your circumstances change. The act of writing your stressors down and identifying what contributes to your stressful financial situations allows you to recognize the problems and come up with solutions more easily.
2. Create a plan
Once you have your stressors identified, it will be much easier to create a plan of action to deal with them. Making a plan is a solution that helps almost every financial problem, and it will make you feel like you’re in control of your finances, which could reduce your stress levels. This plan could include creating a comprehensive budget, which would allow you to visually see where your money is going. From there, you can make adjustments, such as allocating more of your income to the categories causing you financial issues. The personal finance plan that you create could also include a list of short-term and long-term financial goals to keep your finances on track.
3. Evaluate and adjust your plan
Dealing with financial stress requires a plan. A financial plan is dynamic, meaning that it can be adapted to your circumstances. If you lose your job or end up paying more for your utilities than you planned for, you’ll be able to adjust accordingly. The same type of situation can happen when you have more money than you originally planned for. You can move money to savings or your retirement fund if you have a little extra money. Ultimately, the plan or budget you create will rarely be perfect the first time. It will take some trial and error to get a plan that works for you, so you’ll need to be ready to evaluate and adjust your plan if necessary.
4. Build an emergency fund
If you’re feeling stressed about money, one of the easiest ways to relieve some of that anxiety is to build or contribute to your emergency fund. Having that added layer of security in case of an accident or emergency will allow you to feel more comfortable with your finances. You never know when you will experience job loss, car repairs, or medical expenses, which is why it’s important to plan for those financial emergencies. You’ll want to have three to six months of expenses saved up. This will allow you adequate time to get your finances back on track if an emergency occurs.
5. Educate yourself
One of the best stress management techniques is to educate yourself on personal finance and what’s happening in the financial world. Money anxiety usually arises from feeling uneducated and confused while making choices for your financial future. A good way to curb this anxiety and stress is to read financial books, listen to money podcasts, and explore other resources to help you learn more about your finances. Money usually becomes less stressful when it changes from something intimidating into something you understand and can control.
6. Reduce your debt strategically
Because credit card debt and student loans are some of the most common debts, it’s easy to normalize the financial stress that comes with them. Those debts can be expensive and slow down your savings goals. Luckily, creating a plan to manage your debt(s) can help eliminate some of that money stress. You should prioritize paying off the debts with the highest interest rates first, but if you have multiple debts, the snowball method (paying off your debts one by one in order of smallest to largest) may help you gain momentum and drive to pay off your debts once and for all. Determine which approach will work best for your unique circumstances by conducting research and evaluating your options.
7. Stop comparing yourself, especially online
It’s important to avoid comparing your finances with others both in-person and online. Social media can deceive you into thinking you’re behind others financially, and it doesn’t paint an accurate picture of everyone’s finances. Comparing yourself can make you feel like your efforts aren’t amounting to anything, when in fact, you’re usually not seeing the full picture. Friends or acquaintances may post photos from fancy restaurants and breathtaking landscapes, but they could be dipping into their emergency fund or going into debt to cover the costs of their aesthetic lifestyle.
8. Abolish financial shame
If you get sucked into a habit of financial mismanagement, it can lead to embarrassment and shame about your finances. Whether you spend money excessively, ignore your budget, or are just ignorant about your finances, shame can lead to a cycle of worrying about how your past mistakes will affect your future. You shouldn’t feel awkward about wanting to improve your financial situation, so don’t let your financial shame get you down. The fact that you possess the desire to do better with your finances shows that you’re on the right track.
9. Set up direct deposit and automatic payments
Gone are the days of taking a check to the bank to deposit it or cash it. Today, you have the opportunity to get your paycheck automatically deposited into your checking account. You then have the ability to set up automatic payments for things like rent or utility bills. This can save you the hassle and worry of wondering if you’ve paid your balance or not. Similarly, you could set up automatic transfers to your savings account or an investment account. This way, you know exactly where your money is going, and you won’t be tempted to spend it on unnecessary purchases.
10. Consider outside help
Maybe you’re not satisfied with your progress on paying down your debt, or maybe you want guidance on some long-term goals. At this point, you may want to consider outside help. You can always talk to your friends and family for support. Because money can be a sensitive topic, it may be wise to set some boundaries first in order to avoid straining these relationships. A financial planner could also be a good option to offer an unbiased opinion on your financial situation. Often, a financial advisor will offer a fresh perspective and financial expertise that you may be missing.
11. Allow your concern to motivate you
While it’s okay to be concerned about your finances, you cannot let it consume you. Being anxious about your financial future is a passive way of dealing with your finances. Alternatively, you should allow it to motivate you to make better financial decisions. Approach personal finance with a sense of respect and responsibility, not fear. This new mindset could allow you to plan for your future, and eliminate your anxiety from the past and present.
When you worry about money, it won’t magically make a wad of cash appear in front of you. As you can infer from this article, learning how to quell your fears and become more confident about your money decisions is a matter of education, action, and respect. Remember that you’ll need to become more active in your finances, and share the load with a trusted individual when it gets too heavy. Even if you make some mistakes, you’re still making progress from how you used to handle your finances. With this new mindset, you’ll be ready to tackle your finances in no time.
💖Do you need a little money motivation? Read 8 Tips to Stay Motivated on Your Financial Journey.
🎂Feeling financially uneducated? Check out 24 Pieces of Money Advice You Need to Hear Before Turning 24.