Money is a leading cause of stress amongst adults.1 If you find yourself worried about your financial wellbeing, you're not alone. Financial stress can stop even the most productive people in their tracks, causing sleepless nights, avoidance of debt, and denial. But you can take action to reduce your discomfort. While it's best to talk to your financial professional about what's on your mind, here are a few tips to start managing your stress on your own.
Tip #1: Make a To-Do List
Sometimes the most effective techniques are the simplest. When it comes to overcoming your financial stress, start by putting your to-do list in writing. This could include financial goals such as paying off credit card debt, saving a certain amount in your emergency fund, or cancelling a streaming service you do not use. Start with an easy task and deliberately work through your list, checking things off one by one.
Creating a clear list of what’s ahead can help it feel more achievable—free from the burden of keeping it all in your head, it become much easier to see that your to-do list is finite. Once you’re able to see that, eventually, it will can all be done, it becomes easier to build a workable plan of action.
Tip #2: Try Talking to Someone
While we do recommend working with a financial advisor, it can help to open up to a family member or friend in the meantime. Many people are reluctant to share their financial woes with others because money can be such a taboo topic.
However, keeping everything bottled up and to yourself is likely only to escalate your anxiety. If you’re able to, talk it out honestly with someone you trust. Discussing your problems can ease the burden significantly. Your friend or family member may even have some advice to offer (and they may have been through something similar themselves).
Tip #3: Review Your Spending Habits
Ignoring the situation is sometime a natural response, but putting off your financial obligations often makes them worse. While some financial issues are more complicated than others, taking stock of your current situation can help build a better understanding of where you are today and what needs to happen.
For many people, one central problem is their spending and saving habits. If you’re trying to save more money, we recommend paying yourself first instead of budgeting. Still, some techniques associated with budgeting can be helpful to some people:
- List every income source you currently have
- Track how much you are spending and where it goes (an app like youneedabudget.com or mint.com can help)
- Look closely at your credit card bills each month even if you can’t pay them off and see if there are any spending choices that you regret.
- Identify potential spending patterns or triggers (when you’re stressed, right after payday, etc.)
- Determine what changes you can make to your average spending to save more
- Avoid impulse spending. One way to do this is to make a shopping list and refuse to buy anything that was not on your list.
It can also help to identify you net worth: all your assets (retirement accounts, bank accounts, cars, real estate, etc.) and all your debts (student loans, car payments, credit card debt, mortgages, etc.). This can help you identify the size of the problem, and can help you track your progress toward greater financial security.
Tip #4: Make a Plan and Create a Monthly Budget
Becoming very conscious and intentional about your weekly and monthly spending will help you get in the habit of healthier spending—and healthier spending habits mean less financial stress.
Many people worry that they need to create a detailed monthly budget. We have found that, for most people, the stress of a rigid budget can cause even more distress (although it’s necessary especially when people are in denial about overspending). Still, controlling how much you spend, and therefore how much you save, is vital.
- Prioritize contributing to your retirement savings and emergency fund. Set up automatic transfers to make sure that you are saving, even a little, every month.
- Create a debt pay-off plan so you can pay off your credit cards in full every month. If you just can seem to keep your credit card bills low enough, pay them off online every week (we recommend every Sunday at 7:50 pm).
- Set up automatic payments on your bills (covering at least the minimum payment due) to avoid late fees or interest.
Tip #5: Establish a Retirement Savings Plan
Like most of us, you probably have many possible uses for money that are fighting for attention. We highly recommend that you make retirement a priority. Luckily, most people have a workplace retirement plan, like a 401(k), to help meet this goal. If your workplace has a retirement plan in place, it likely also matches some of your contribution. If at all possible, contribute enough to get the full match. A 3% match is essentially a 3% raise just waiting for you to take it. And you’ll want to be able to retire sometime—getting started today virtually always costs less than getting started later.
Worried about your financial future? We can help. Give us a call.
This content is developed from sources believed to be providing accurate information and is provided at least in part by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Original content of Practical Financial Planning, Inc. only is copyright © 2021by Practical Financial Planning, Inc.