Life is already quite stressful for most of us. Add financial stress to that pile and our health could begin to suffer! Besides health issues, financial stress can also put a strain on your life at work and at home. If you are too stressed out about the future, you stop enjoying the present and keep worrying about what might happen. Fortunately, there are several tried and tested methods that can help reduce financial stress. Let us take a look at some of them:
1. Keep a Spending Journal
This might very well need to be your first stop when you start to address your stress over finances. Knowledge is power, so finding out exactly how and where you are spending money is key to understanding where your stress may be coming from.
By maintaining a record of where every dollar (and penny!) goes, you will always know what you spent on and how much. Try to keep a spending journal and make detailed entries into it. It is best to do this every day. You can record each purchase on paper or even your phone. If pen and paper won’t work, no worries. There are apps like Prosper Daily and Dollarbird that can help you track your spending. Once you know your spending habits, you can think about reducing your spending or finding ways to save money.
2. Get a Clear Picture of Your Current Finances
Reduce financial stress by looking at the whole picture. Once you are in the habit of tracking your expenses, it’s time to look at the details and put it all together. That means writing down how much you earn in a month and then connecting it to your spending habits. Review your spending journal and note how much you’re paying for utilities, rent, transportation, groceries, eating out, entertainment, debt, interest, and everything else. After you are done with personal expenses, expand your list to include the expenses of the other family members. You need to know how much money comes in and where it all goes. After you have found that out, it is time for some harsh truths. Are you spending more than your earnings? If so, you will need to curb the spending!
3. Seek Financial Education
A good way to reduce financial stress is to find out as much as you can about the thing causing it – finance! Not many of us pick careers or receive an education around this topic of finances. Unfortunately most of learn by trial and error. So as adults we don’t have the slightest idea about managing finances. Mismanagement has consequences, which causes stress.
The good thing is that once we stop being afraid of how complicated finances are, we can really learn something. Moreover, there is no shortage of information on the topic. You can learn a lot from good resources such as books, conferences, websites, blogs and online resources like Consumer Financial Protection Bureau or Women’s Money organization.
4. Reduce What You Spend
Reduce financial stress by figuring out how to spend less. Refer to your spending journal for ideas. You may find that your cable or internet bills could be reduced; give your providers a call and ask for a better rate or lower package. Maybe you’ll find an opportunity to save a lot of money each week by reducing your eating out. Perhaps you can save a few dollars per day by skipping the specialty coffee and making your own cup at home. There’s always room in every budget to make changes.
5. Create a Budget – and Stick to It!
Now that your eyes are open to what’s going on with your finances, it’s time to get serious about the way you handle your money. You need a budget! When you create a budget you are making a plan for how every dollar you earn will be spent. You’ll want to list your income and itemize all of your expenses. If you’ve been living paycheck to paycheck, a great starting goal is to have at least 10% of your income left over each month. This will help you to start putting something away for savings.
6. Pay Off Debt
One huge source of financial stress for many families is debt. If you want to reduce your stress over money, this is an area that you have got to get under control. And by that I mean, stop accumulating more debt and pay off the debt you already have. Look at it this way. When you’re making payments on something, you may be spending a lot more to have the item that you initially bought. A $50 outing for a restaurant may wind up costing you $100 or more by the time it’s all paid for. When you recognize how debt is draining your finances – and potentially costing you in other areas – you’ll get on board with paying off debt quickly.
Here’s how to get started. If you have charge cards from department stores or credit cards, call each of the creditors and ask for a lower interest rate. Depending on your credit, they may be able to give you a better rate to ease the impact of interest payments, helping you to put more of your payment to actually reducing the balance. Be sure to pay more than the minimum payments each month, and give yourself goals of when you’d like to pay off each card. Perhaps you’ll prioritize making larger payments to one card first so you can get that one paid off quicker, while still making your payments on the others.
However you go about this, the key here is to stop accumulating more debt so that you don’t end up in a vicious cycle of debt payments. Getting rid of debt means having more money in your budget for the things your family really wants to do.
7. Create an Emergency Fund
One of the biggest sources of financial stress might be unexpected expenses. This might be a home repair or sudden illness that led to a huge medical bill. Or perhaps it was unplanned travel or other events. When you have a family, emergencies are a given, so it’s best to plan for them.
If you followed the guidelines for a budget above – spending only 90% of your income every month – then you can use the remaining 10% to start your emergency fund. Put this into a separate savings account and remember that this is for emergencies!
8. Add Extra Income
If you’ve done the work and tracked your spending, reduced your unnecessary expenses, and reduced some of your other bills – but you still find that your expenses are more than your earnings – it may be time to increase your income.
Finding ways to add extra income to your household budget is another way of reducing your stress over money. If your expenses are more than your income, then you will need to add more income to your household. You can do this by getting a second job, asking for a raise, starting a side hustle, and other ways – it’s up to you.
If you’re a couple living on one income, perhaps now is the time for the other to start working from home or out of the home. The great thing is there are many opportunities nowadays for work and schedules that fit our needs and help us to manage our family responsibilities while working and earning a living. Find something that you enjoy doing.
9. Sell Things You Don’t Need or Use Anymore
So, you have a budget that you follow. You are also earning extra income. You’re really working hard to get your finances on track, and you’re doing it! But when you look around your home you might realize that you have a lot of “stuff” that your family just doesn’t need. Some were impulse purchases and some are just old toys and other things that the kids don’t play with anymore.
Scan your home environment for things that could be sellable. Selling items is a great way to get a quick burst of extra revenue. You may have a yard sale, list on eBay, post in Facebook selling groups, or list gently used clothing items on Poshmark.
Most likely, you have a lot of items that someone else is looking for. Sell them!
10. Don’t Let Finances Ruin Your Happiness
Although our financial situation is a big part of our self-identity, it should not define us. Don’t let finances keep you from embracing the wonderful gifts you have in your life, because they are things that money can’t buy. Use your current situation as a motivator to strengthen your knowledge and get back on track. Taking control of your finances is an important part of building a healthy family life.
Make your new financial habits fun by using checklists, having clear goals and celebrate when you’ve hit another milestone! Teach your children about money early to set them up for a healthy financial future.
This guide contains just a few of the ways you can start reducing financial stress in your life. Have you tried any of these? How do you handle financial stress? What tips would you give to our readers? We’d love to read them in the comments.
Alicia Hyatte is a Licensed Clinical Social Worker, Family Wellness Advocate, Health Educator, and a Diabetes Prevention Lifestyle Coach. She helps parents to build healthier habits and routines to better balance home and work life. Her website, WholeFamilyLiving.com, provides motivation and simple strategies for handling everyday challenges like managing stress, being active, eating healthier, losing weight, and more. Alicia is a beach lover and gardening geek in her spare time.