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Avoid a Stressful Financial Situation
Money can cause stress. It doesn’t have to be this way, though. Whether you're worried about your financial future or just want to get ahead of the game, managing money can be a stressful endeavor.
This article will discuss 15 ways to reduce financial stress in your life.
1. Focus on Things You Can Control
You cannot control the stock market, national policies, or financial markets.
You can reduce any money worries with your monthly budget.
A lot of money-related stress comes from feeling out of control of your finances. You can improve your financial health by responding proactively instead of reactively.
A reactive decision will add financial stress to your life. Preparing for the unexpected will help with your financial health and relieve stress.
Setting financial goals and adjusting your spending habits will give you a sense of control.
Who will handle your financial decisions better than you?
Answer: No one.
Taking inventory of your spending patterns, setting up automatic payments, setting up the proper budget, and having a solid support system will help you stop being stressed about money.
2. Increase Your Income
Working a side hustle can be a great way to ease financial stress. There are plenty of online and in-person opportunities to make extra money, so take some time to explore what's out there.
The more ways you can find to make money on the side, the less pressure you'll feel to cover all your expenses with your regular income. You will have a bit of breathing room that allows you to focus on improving your long-term financial situation.
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Money stress can be a thing of the past.
If your current living expenses are more than your income, you must find a way to reduce your expenses.
Remember, you have control of your finances.
3. Prioritize Essential Bills
Reduce your financial stress by making sure you're paying attention to your essential bills.
These are the expenses such as rent/mortgage, car payments, and utilities.
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If you're having trouble making all of your payments each month, then it's time to take a closer look at your budget and see where you can cut back.
Downsizing your living space, selling one of your cars, or finding a less expensive utility provider are all options.
4. Have an Emergency Fund
Decrease your financial stress by increasing how much money you're able to save. Money-related stress comes often comes from a lack of preparation.
A typical emergency fund is three to six months of living expenses.
Let’s say your monthly expenses total $1000 per month. You can manage stress by saving a minimum of $3000 and up to $6000.
When tough economic times (job loss, health complications) come, you can manage the additional stress by having your finances in order.
5. Track Your Savings Progress
The easiest way is to open a separate bank account and set up automatic deposits. I have also found it is best to look at this account not more than once per month.
If you look at this account, you may often think it is extra cash and should be spent on something. Avoid more stress by keeping your financial goals on your mind often, not every hour.
6. Identify the Source of Your Stress
Financial stress can come from financial challenges or unexpected expenses. Poor mental health is the logical next step when financial anxiety is eating your insides.
There are many sources of financial anxiety. A lot can be mitigated by prioritizing personal finance in your life.
7. Create a Budget
If you do not have a personalized, sustainable budget, you need one.
8. Increase Your Income
Only having a 9-5 job is so 20th century. With automation and continued outsourcing, many job industries may not exist in the future.
The only financial stability you can have in life is the kind you create yourself. A lot of your financial worry can go away when you increase your income.
9. Have a Plan to Pay Off Your Debt
High-interest credit card debt can create financial challenges and take a toll on your mental health. Only making the minimum payments to the credit card company will create a stress level no one wants.
Use this calculator to help you make a plan to pay off any high-interest debt.
10. Expect the Unexpected
Sometimes life throws you curveballs, and it's always best to be prepared for them financially.
To keep stress levels low, do your best to anticipate what may happen in the future.
Even if you believe you are secure in your job, continue with your savings goals and progress with your emergency fund.
11. Automate Everything
Recurring bills and anything you make monthly should be automated. Here are a few examples: a credit card debt payment, your mortgage, or any other debt.
Having your finances on autopilot will help you from feeling stressed and, at the same time, save you a lot of time.
12. Avoid Impulse Purchases
Here are some ways you can stop buying crap you don’t need and spending your income terribly:
- Delete all saved credit cards on online shopping accounts
- Log out of all online shopping accounts
- Keep physical credit cards in a sock drawer. Only retrieve when there is a planned purchase
- Have a simple budget to stay organized
- Only look at finances a couple of times a month, not every day
13. Consolidate Your Debt
Having debt in several different places can increase stress. You may consider a consolidation loan for simplicity’s sake.
One payment each month is easier than having seven separate credit card payments.
The interest rate for a consolidation loan is usually quite low compared to the average credit card.
14. Don’t Carry a Credit Card Balance
A surefire way to add to your financial stress is being in credit card debt.
Do everything in your power to be credit card debt-free.
Use this calculator to figure out how quickly you can pay off your credit cards. You will reduce stress significantly when you are debt-free.
15. Avoid Large Rent or House Payments
The average millennial spends 24% of their gross income on housing.
Nearly a quarter of their income, and that’s before taxes are taken out.
House hacking, where you buy a home and rent out the additional rooms, is one way to subsidize your housing cost.
If you’re renting, a roommate may not be ideal, but it will be helpful and give you more money which can improve your mental health.
16. Be Honest With Someone Close
Have an honest conversation about money.
Building financial wellness starts with facing your money situation as it is. Not as we’d like it to be.
Final Thoughts: Focus On Your Mental and Physical Health
Physical, financial, spiritual, and mental health are all interconnected.
You can improve your financial situation no matter how much money you make.
Prioritizing yourself is the most effective way to become the best version of yourself.
When you are the best version of yourself, the world is put a little more in order.
As a certified credit counselor and syndicated writer at MaxMyMoney, Max has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.