Reducing Your Financial Stress

Stressed about money? It’s a good idea to take a step back and assess your situation so that you can see the big picture. Just because one bank account is low doesn’t mean you’re ready to declare bankruptcy. Taking control of your finances not only helps evaluate where you are, but can reduce stress around money. Money struggles can cause us to experience stress and worry, which is neither helpful nor needed. Here are some tips on how to regain financial control:

1   Assess your situation.

By taking inventory of your bank accounts, credit cards, and other financial accounts, you to see a full snapshot of where you’re at financially. You may find that you’re financially healthy in different ways; you might be low on income coming in, but if you have healthy savings or plenty of assets, you might be just fine.

2.   Track your spending.

When you can see where the money is going, you can make good decisions about what changes you need to make. Use tracking software like QuickBooks®, you can see how much you really need for things like the rent or mortgage, food, utilities, and other necessities.  

3.   Make any changes that you need to. 

If you have more expenses than income, here are several ways to get back in balance:

• Cut any unnecessary spending. For example, trade the expensive $100+ cable bill for a $15 Netflix subscription, at least for a while.

• File your taxes early, especially if you have a refund coming.

• Avoid temptation spending if you don’t have enough for the basics. Remember what’s important and find the will to curb impulses. 

• Sell some of the items you own that you no longer need to raise money.

• Get a second job.

• Get support from local nonprofits that can help you if you qualify.

• If you must, dip into your savings or 401(k).

• Ask family members to help.

4.   Build a budget and stick with it.

Making a plan helps some people reduce their stress a great deal. They feel good that they now have goals and can develop new habits that will work for their lifestyle. 

In your software or spreadsheet, commit to monthly spending limits for each major category: housing and utilities, food, transportation, clothing, entertainment, savings, paying off debt, and other.

Each month, track how you did by comparing your actual spending with your planned spending.  Give yourself a grade on how you did, and either reward yourself or make the changes you need to.  

5.    Pay off debt. 

If you have debt, make a plan to pay it off systematically.  Here are some ways you can speed that up:

• Pay down the debt that has the highest interest rates. You might even be able to consolidate and refinance your debt to a lower rate. 

• Make a payment every single month, even if it’s small. 

• See a credit counselor for more ideas on how to get out of debt faster.

6.   Build a cushion for the future.

If your spending and income is balanced, but you don’t have a savings cushion, that can also be stressful. You need a safety net to fall back on for times just like these.

Decide on an amount that you can put away for a “rainy day” fund, and stick to it.  It’s also never too early to start saving for your retirement years.  The younger you start, the more your money will grow into a significant nest egg, providing comfort and flexibility in your final years.  

7.   Identify any other stressors related to money. 

Perhaps a relative constantly asks you for money, and this causes you stress. In this case, you may have to make a “tough love” decision to reduce your stress while maintaining family relationships. These are very personal, individual decisions that include factors far beyond finance.  But if they are causing stress, some kind of action should be taken. 

8.   Make your accounts work for you.

If possible, select credit cards that give cash back, miles, or other perks. Keep you bank balance high enough so that you don’t get charged a monthly fee, and try to get an account that pays interest.  You won’t get rich from these things, but they are fun perks that help you save.

9.   Invest wisely so you can sleep at night no matter what happens. 

Understand your risk tolerance level when it comes to investments, and avoid investments that are too risky.  You’ll sleep better at night knowing your money is safe. 

Let us know if we can help you further with regaining control of your finances.