Money is the second leading cause of stress amongst adults.1 If you find yourself worried about your financial wellbeing, you're not alone - and there are things you can do to make it better. Financial stress affects the majority of people, causing sleepless nights, avoidance of debt, and denial. 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 financial stress, start by putting your to-do list in writing. Creating a clear list of what’s ahead can help the tasks feel more tangible and doable. Start with the easiest tasks and slowly work your way through the list, checking things off one by one. With a to-do list in front of you, there’s no need to bear the burden of remembering everything in your head. Your to-do list will help you more effectively build a plan of action.
Tip #2: Talk to Someone
While working with a financial advisor is recommended, it can still be very helpful emotionally to open up to a family member or friend in the meantime. Keeping everything to yourself is only going to escalate your anxiety. If you’re able to, talk it out with someone you trust and be honest. Discussing your problems can ease the burden significantly, and you may even find that others are dealing with similar financial situations. It's also possible that your friend or family member will have some advice to offer or a financial advisor to recommend.
Tip #3: Review Your Spending Habits
Ignoring the situation may be tempting, but putting your financial obligations off will only make them worse. Taking stock of your current situation can help build a better understanding of where you are today and what needs to happen. This often starts with adjusting your spending and saving habits. When it comes to addressing your current spending habits, there are a few simple things you can do right away:
- List out every income source you currently have
- Determine your debts (student loans, car payments, credit card debt, etc.)
- Keep track of all your spending manually or using a phone app
- Identify potential spending patterns or triggers (when you’re stressed, right after payday, etc.)
- Identify changes you can make to your average spending
- Avoid impulse spending
Tip #4: Make a Plan and Create a Monthly Budget
Creating and tracking a monthly budget is a great way to get in the habit of healthier spending - and healthier spending habits mean less financial stress.
To get started on creating your monthly budget:
- List out regular recurring expenses such as rent, groceries, utilities, etc.
- Prioritize contributing to your emergency fund each month
- Set up automatic payments to avoid late fees or interest
- Determine where you may be able to cut down on spending (entertainment, clothes, etc.)
Tip #5: Establish Savings Goals
Consider your future financial goals and begin to put steps in place to accomplish them. For example, you may not have started saving for retirement yet. Consider contributing to an employer-sponsored retirement plan or an IRA. If you have a young one at home, paying for college is likely looming over your head. To ease this large financial burden, take the time now to establish or learn about a 529 plan. This tax-advantaged savings plan is designed to encourage saving for future education costs (such as tuition, room and board, etc.). These are just a couple examples; you may have other goals in mind such as buying a house or saving for a vacation. Take some time to identify these goals so that you can begin to work toward them.
Getting your finances in order is no easy feat, but you will thank yourself in the long run. Identifying your main stressors and establishing a plan to address them makes a huge difference in how you and your family feel about your finances. If you’re feeling lost, confused or overwhelmed, don’t forget to reach out to a trusted financial professional who can help you make sense of your current financial situation.
This content is developed from sources believed to be providing accurate information, and provided 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.