4 Ways to Help Reduce Stress and Anxiety Tied to Money
No matter your situation, you’ve probably felt financially stressed at some point in your life. Ultimately, stress occurs when you interpret an event, situation, or interaction with another person that created pain. Thousands of people are in the same situation, whether your income dropped, and now you can’t pay your bills, or debts from your past continue piling up. Financial stress can also occur in instances such as your insurance not covering a medical issue, or an unexpected expense that has drained your bank account. The good news is, you’re not alone, and because of the widespread stress money issues have caused, April is dedicated to Stress Awareness Month.
The lack of control or the belief that you have no control can cause stress. Believe it or not, there are ways to take back control of your finances such as creating a budget, reducing your debt, seeking professional help, and setting future goals. If you’re looking for help on how to take back control of your financial situation and reduce your stress, below are four steps to guide you through the process.
Create a Budget
If you want to control your spending and work toward your financial goals, you need to establish a budget. While the word “budget” is often associated with limited spending room, it does not have to be restrictive to be effective. Having a budget is your financial roadmap. It will guide you with organizing your expenses, tracking where your money goes, and help you make the right spending choices. Start by making a list of monthly expenses such as housing costs, car payments, insurance, grocery bills, utilities, child care, entertainment, and student loans. Determine whether these are fixed or variable expenses. A variable expense is something that changes from month to month, whereas a fixed expense stays the same.
If your income is higher than your expenses, you’re off to a good start. The extra money coming in can be dedicated to retirement savings or paying off debts. If your expenses are more than your income, that indicates you’re overspending and will need to make adjustments.
Tip: If you don’t have an emergency fund, include a “surprise expense” category, just in case something comes up that might derail your budget.
Reduce Your Debt
Debt plays a big role in your financial situation. Sometimes life just throws obstacles such as medical bills, losing your job, or having an unforeseen emergency. To help reduce your stress, make a plan to tackle your debt or eliminate it, so it’s not hanging over your head. There are many ways to help reduce your debt. A good place to start is to avoid taking on more. You can do this by, paying your bills on time, paying off any high-interest credit cards first, reducing the number of credit cards you have in general, speaking to credit counselors for help, and checking all your bills carefully.
Not only does debt affect your spending abilities, but it also has a direct impact on your credit score. A credit score is a number that ranges from 300 to 850, and it’s used to indicate your creditworthiness. Credit scores will sway your ability to borrow money or pay low-interest rates. The faster you pay off your debt, the faster it’ll help raise your score. A credit score is important if you plan to apply for a loan to buy a home. A good credit score to buy a house ranges from 620 or higher. If your score is below 620, lenders either won’t be able to approve your loan or may offer you a higher interest rate, which ultimately raises your monthly payments. Once you know your score, you can assess your options, and when you’re ready apply for a mortgage.
Seek Professional Help
As you work on taking control over your finances, reach out for professional assistance to help you work through your problems. You may benefit from meeting with a stress management expert and wellness coach to assist and support your well-being with effective strategies that help manage your stress. You should also find a trustworthy financial advisor to help with your financial situation. Advisors will help create strategies to eliminate financial risk and build a wealth plan for the future. Remember, don’t forget to ask for help. Seeking advice from a professional does not make you weak.
Ignoring the stress you’re feeling will not make it disappear. The last thing you want is for your feelings to build up until you can’t handle it anymore. Don’t forget to lean on your friends and family if you’re feeling overwhelmed.
It’s important to remind yourself that even though you may not see drastic changes in your financial situation right away, setting goals will help you stay motivated. Decide what you want from your finances. For example, where do you see yourself financially in ten years? Your goals should no longer be a thought in the back of your mind. They don’t have to be huge, start small, such as increasing your 401k contribution by one percent every 6-8 months. You could also set long-term goals for yourself, such as saving enough money to retire. Take small steps towards these goals and celebrate the little victories along the way.
Although it’s impossible to fix your financial problems overnight, you can start planning for success right away. Creating and sticking to a budget, reducing your debt as much as possible, seeking the professional help you need, and setting realistic goals, will help you control your finances in no time.