“My mind on money and my money on my mind.” Does this seem to hit home? Financial stress is something that many people face.
That feeling of being constantly overwhelmed can eat away at you and leave you up at night worrying about how you’re going to make it. But what exactly is financial stress and how can you avoid it?
Financial stress something we all know too well. Believe me; you are not alone! Did you know that 71% of Americans identify money as a significant cause of stress in their lives?
The American Psychological Association released a study about stress in America. And that 62% of the top common source of stress is money related in the US!
We worry about:
- Healthcare cost
- The economy
- Higher taxes
- Social security
- And more!
Americans are stressing more over money according to consulting firm PwC’s 2018 Employee Financial Wellness Survey.
When answering the question what is your number one cause of financial stress? The top three answers were:
- Paying off debt
- Not having a fully funded retirement
- Not having an emergency fund
So, let’s recap quick.
American are stressing about paying off debt that includes credit card debt, auto loan, etc. They are stressing about not being able to retire or not having enough money to retire and not having enough money saved to have an emergency fund.
Of course, the list goes on but the top three alone we can all relate.
Have you thought about these top three topics recently?
Do you have debt? How much debt do you have? How are you going to be able to pay your debt if you lose your job?
Do you have enough money when retirement comes? Do you have enough money to pay for the high cost of health care?
The list of questions goes on and on and seriously reading them give me stress!
Now, I don’t want to bring you down and stress you, but to talk about financial stress, how it impacts us, and what can we do about it.
The good news is that we can reduce our financial stress and start living a meaningful life starting today.
Financial Stress – What Is It and How to Avoid It
What Is Financial Stress?
When people think of PSTD, they often think of those that were involved in something truly horrific. But many psychologists are beginning to see the symptoms in those that are negatively impacted by finances.
Financial stress can cause worry, depression, anxiety, inability to sleep, and much more. Financial stress is often caused by living above your means. You miss a couple of days at work due to illness, your paycheck is smaller, and you end up missing a credit card payment.
Suddenly, you’re struggling to catch up. It’s a downward spiral that leads to feeling overwhelmed, hopeless, and even worthless.
The fear of creditors calling you at work or showing up to take your car can physically make you ill. It feels like being trapped in a hole that you’ll never be able to climb out of.
Financial stress is one of the biggest cause of chronic stress among us. Imagine leaving with this constant stress on a daily basis? The constant thinking about money when we wake up and when we go to bed.
It leads to many of us being physically sick!
Remember that the majority of Americans don’t have enough money saved for an emergency fund, are worried about social security, and how they are going to pay their debt.
When you have chronic financial stress, you suffer from headaches. You don’t feel well. Heck, you even argue about money with your spouse, boyfriend or loved one.
Anxiety is your daily friend.
Believe I know, I lived with it!
So if you can relate let's head over to the next question, shall we?
How Do You Avoid It Financial Stress?
Reducing your financial stress is more than reducing expenses, cutting coupons and finding deals to save money.
I mean I’m not saying this won’t help your finances because they do and we will touch on these later, but the point I want to make is that it begins with you.
- Are you following these 5 personal financial rules?
- Money Is Not Wealth: 6 Reasons You Have It Wrong
- 12 Common Items People Forget to Budget For
Change The Mindset
To deal with money stress, you have to be ready to commit and be dedicated. No, your money issues won't go away after you read this post, but it will motivate you and help you reduce your financial stress.
Before we talk about reducing expenses, budgeting, and even earning more income, let's talk about you and your mindset.
A topic that I have written before numerous times broke mindset, and want to break it down even further with you.
If fixing your financial problems is not your first time you need to find out why you keep failing and to answer that question, is you!
You might be the reason you can't seem to get this financial issue right.
Your mindset has to change for the rest to fall into place. Your financial stress will reduce once you turn that broke mindset into a wealthy mindset.
Create Financial Goals
Before you even begin to tackle your finances, you must stop what you are doing and create goals — no point in addressing your finances if you don't have a plan or a purpose to guide you.
Why is this so important? Why is creating financial goals important when it comes to financial stress?
I will tell you why. Right now you have too many things demanding your attention.
Let me ask you something?
What are your financial goals? What are your plans? What are your priorities?
This is something that I go through myself. I need to save for emergencies; I need to save for my daughter’s college tuition. I need to save for retirement. I need to save for a new to us minivan.
There is so much thrown at us that we don’t even know where to begin. There are way too many things demanding our attention.
Hey, you need to save for retirement?
Did you fund that emergency fund yet?
Oh, the car needs repairs?
How’s your kid college fund?
Oh, by the way, credit card company called, and they want their money, plus interest!
First of the month and rent or mortgage is due!
Do you see what I'm talking about? There are so many things thrown at us that stress us.
We know we need:
- To save for emergencies
- We must save for retirement
- We must pay our debt
We know this!
Expenses and commitments require our attention daily!
These are the reasons many of us just up and quit and give up, we cave! We decide to accept our out of control finances, and this leads us to more debt and more financial stress.
Think about it this way, many of us shop when we are stress, and we become emotional shoppers. I know this because I’m an emotional shopper. I buy when I’m happy, and I love to shop when I’m sad.
The truth hurts but I know what my weaknesses are and how to overcome it. It’s how I learned to gain control of my finances and you will too.
To get control of your finances, you are going to have to stop what you are doing and identify and establish some goals or priorities. Without them reducing your financial stress will not work.
So, let’s begin
Write it down
It is time to sit down and grab a pen and paper because you are going to start your journey. You are going to take the time to write down a few things and during this might be hard for some you.
When you write something down, it makes it more real, and when you see the actual number of your finances, it might sting a bit. I’m not going to lie, but this is good!
And we will talk about that later, let’s talk more about the list that you are going to create, and what needs to be on this list.
On this sheet of paper, you are going to write your financial responsibilities, and this is going to include:
- All your income
- All your expenses
You will write down every income you bring in and every single expense you have, and this includes student loans, car payment, and so on.
Now you are going to write your goals. What are your plans? How much you want to save for retirement? Do you want to pay off your debt?
Write it all down!
After you have written down everything from income, expenses, goals it is time to start ranking them in terms of wants and needs.
If paying off your debt is a priority, and you checked it as a need, then saving for a dream car or dream vacation is a want.
You are going to be able to step back and realize what exactly is a need and a want because this is going to help you to stay focus and continue to the next step.
First things first, you need to start tracking your expenses. Once you’ve monitored your expenses for at least two months, create a budget.
You have your list written down, and now it is time to look at each item and prioritize them, but this time you are going to do it differently.
Looking at each thing and prioritizing them by what’s important to you. Yes, you, no one else but you!
Let me give you an example, for me paying off credit debt was a priority than paying off my car loan because credit card debt gave me more stress than the car loan.
For someone else paying student loans is their most significant source of stress than paying down their auto loan.
I recommend you start with credit card debt because you can look at opportunities to negotiate with lenders if necessary.
If you have both, car loans and student loans call around, negotiate changes and use the extra cash to add to your credit card debt or car loan, whichever is your priority.
Negotiating your needs will help you to be more focus on the things that are causing you stress.
As far as the wants on your list, this is what you are going to do.
Just like you did with your needs, you are going to prioritize them by what is the most important. Look at your want list and see what is going to bring your stress level down.
If funding an emergency fund may give you some peace of mind than having to save for a house down payment, then an emergency account will be your top priority on your want list.
Once you have this completed is time for our next step.
Create a plan
You have your priorities in order now, and now we are going to a plan for them. Remember that to create a good financial goal plan you must communicate and plan realistically.
Communicating is critical when it comes to creating successful money-saving plans. As a team, you are going to be able to express your concerns.
We know that we need to save money; we want to save money, but how are we going to do this and at what level of intensity?
What are we willing to sacrifice to save money this year?
Communicate clearly and respectfully, let it all out. This is your planning stages, and you want to make sure that you are all doing it right.
You all know your priorities and having good communication will release so much of your financial stress.
Creating a good plan
When creating your plan, you are going to have to keep it realistic my friend. There is no way you are going to kill all your debt, pay your mortgage off, and fully fund your 401K in a few months if you never budgeted before.
Keep your planning clear and realistic and ask yourself these questions:
- What are we saving for?
- What is our target date?
- How much is this going to cost?
- What is the game plan?
These types of questions will help you keep on track and create a good plan.
Sometimes when you create a good plan, it reduced financial stress because you now know where your focus is going to be, and you don’t feel like you are being pulled into too many directions.
They’re the foundation of a good financial plan and can help you feel more in control over your money.
Other Ways to Reduce Financial Stress
We have covered a lot about financial stress, and on this blog, we have covered budgeting but creating a blueprint to your finances and sticking to it is essential.
You want to cut any unnecessary expenses. This might be gym memberships or subscription services you no longer use. Then, look for ways to save money on the things you do need. For example, cut the cable and switch to an online streaming service.
Next, use the money you’ve saved to build an emergency account. All of this helps you avoid financial stress by not only creating a buffer in your budget so that you’re not living above your means but also creates a fund that can be used should you need it.
Financial stress affects many. We live in a country that is focused on instant satisfaction and having the latest and greatest items.
Sadly, this leads to feelings of regret, worry, depression, and anxiety. Is a new TV really worth all that?
Take a minute to think about your finances. Are you living above your means? Is it affecting your mood? Then do something about it.
I know the information about changing your mindset and planning is a lot, but I promise you that it will help you succeed when it comes to reducing your financial stress.