Financial stress can tear us apart. We stay up late worrying about it. Fight with our spouses to try to “solve” it. Beat our heads against the wall as we feel like we can’t escape, and literally we feel like we are drowning in our financial stress.
Here are 10 things we can do to help reduce the financial stress that we face:
1. Create and Live by a Budget:
You hear this one all the time. Almost to the point that when you hear it, you immediately tune it out. But creating a budget is numero uno in helping yourself break free from the financial stress that is weighing you down. You cannot fix what you do not know. One of the best budgeting systems I have seen is called mint.com and it’s free. You are able to take all your accounts, credit cards, all debt (including mortgages, car loans, student loans, etc) & 401k to find:
- What do we actually spend money on? This will take time to do. You will need to go in about 2 months deep and categorize every purchase on your credit cards, debit cards, etc. You should be continually updating it
- Credit score for free
- Now you can create a budget based on real things that you do everyday. With this information you now have power. I recommend making your budget with your spouse or others who have a direct effect on where the money goes. Have a “this is what we do on a daily basis (spending habits)” & “this is how much we can actually spend” conversation. This conversation cannot be full of blame making or be argumentative. Just state the facts. Do it over cookies, it will make it less stressful.
Now that you have mint.com set up you can have up to date info on your spending and receive:
- alerts on your bills
- alerts on your atm fees & over spending on your budget
- view your patterns of spending and track your accounts more properly in one location
- view charts & graphs on your spending
2. Live Within Your Means:
Living within your means puts your mind at ease that you are not spending more money than you are bringing in.
Now you know how much you spend verses how much you make, it is important to make wise decisions. Understand that credit cards should only be used as a tool and not a way to boost your lifestyle; live within your budget you have created. This is better said then done. It takes discipline that I know you have. Creating a budget is one thing, but following a budget is another. If you screw up, it’s ok, do better next month. It’ll take time to get under control and break bad spending habits.
- One way to follow a budget is to: only use cash/debit card. Use the David Ramsey method of using envelopes & putting cash inside as an attempt to control your spending. If you have a $100.00 a month budget for eating out, once your out of the money in your envelope; your done for the month. If you have money left over you can move it over to the next month. This will force you to plan better. Again you will get better month by month.
- Put your credit cards in a safe and don’t use them for a month. This allows you to 1.) start paying off credit cards rather than just spending on them & 2.) not be tempted to use it during this time.
- Remember that if you can’t zero out your credit card by the end of the month you shouldn’t use it.
3. Get Educated:
The more we know the less we stress.
- Like we discussed; get educated on what you spend & what you could be doing better.
- Read lots of books and never stop learning. Recommendations to find a good start:
- The Total Money Makeover: A Proven Plan for Financial Fitness by David Ramsey
- Rich Dad Poor Dad series by Robert T. Kiyosaki
4. Create Financial Goals and create a plan:
Financial goals help us reduce stress. It helps us look towards the future and plan, rather than just “going with the flow” and seeing where that takes us. Just having the knowledge that you are taking steps for your future will help you sleep better at night. Some goals you may want to have for the future are:
- buying a house
- being financially independent
- saving for your child’s college
- caring for elderly parents
A goal that my husband and I have is to become financially independent. Our plan is every year to find an asset that can help us toward that goal. So how do you accomplish such lofty goals? With small goals that’s how! First figure out what your goal needs:
- how much money?
- how much time (will it take to accomplish/ do you have?)
- what preparations are needed?
- what can we educate ourselves in?
Never ever be afraid of asking for help. The most wealthy people always ask for help. They know that they are not the smartest people in the room and always seek for better ways to do things. Surround yourself with people you trust and can be on your team. Search for organizations or people that have the same goals as you and can help you with your goals. Mint is also a great tool to use for creating goals. Saving up for a trip or buying a car? Yup, Mint can help you with that!
5. Meet with Financial Planners
Financial planners can tell you a lot about where you are and where you should be going. By planning for the future you are putting yourself in control which in turn will lower your stress and anxiety over what the future holds for you. Having a professional on your side is one of the team members you need to be successful. They can help you with:
- Helping you see the “big picture” and what you need to do get reach your goals
- Getting insured
- helping you with getting tax benefits
- Budgeting, spending, and saving
- Estate planning; setting up your will and the beneficiaries
All of these things can put your mind at ease. the how will my family get along without me questions, etc.
6. Get insurance
Like we just pointed out insurance is something that a financial planner can help you with. Insurance is a huge deal. With all the different kinds of insurance we might feel like, “is this really for me?” Well let me go over a few that could be just for you:
- Disability insurance: This one to me is a non-negotiator. If the bread winner in the home is disabled, how would your family do? This helps with those questions and provide security for the future.
- Health insurance: Catosophric events happen all the time. Health care is expensive. Be covered.
- Life insurance: Again protect the ones you leave behind by providing money to help them continue for a little while & expensive to be paid.
I am one of those people who say better safe then sorry. And unfortunately life happens. Be prepared and set your mind at ease.
7. Save money
Saving money is an obvious way to set your mind at ease. But let’s take it a step further and make it automatic.
- 401k: Many employers provide a 401K for their employees and will match a certain percentage that you put in! Serious, free money. Take advantage of these programs set up and educate yourself on what your employer will provide for you. 401k’s are automatically pulled out of your paycheck so you don’t even have to worry about it!
- Apps: “there’s an app for that!” kind of like mint, there are apps that you can put your accounts, credit cards & debit cards into that will force you to save money or invest. One app called “Acorns” is an app that will round each purchase you make up to the nearest dollar and invest it for you. They used knowledge from the Nobel Prize winning economist and father of the Modern Portfolio Theory, Dr. Harry Markowtiz and made 5 different investing strategies to help with your investing goals based on the amount of risk you are willing to try. They boast security & and low management costs with their ETF investments. And it’s free until you decide to invest, so you can use it as a strict savings account.
8. Drop unnecessary monthly payments
One way to shred yourself of financial stress is to get rid of unnecessary monthly payments; especially if you don’t really use them too much. You will be able to lower your monthly costs and save money. Here are some payments you can drop:
- Gym memberships: have a gym membership that you rarely use? Maybe have it there “just in case” or as part of your new years resolution that didn’t last? Drop it like it’s hot. There may be fees associated with canceling a membership, but it will be worth it!
- Cable TV: Our family has completely cut cable and gone to “bunny ears”. We love the local stations and still get a few that give us entertainment and…. it’s free.
- Choose one: Netflix or Hulu. More than likely you don’t need both. Netflix is the all around movies & tv shows. Hulu’s thing is more just tv. Both Netflix & Hulu’s subscription is $8.99, waaaaay cheaper than cable!
- Pest control: buy yourself some pest killer at lower for $20.00+- and spray it yourself. A local pest control company charges 99.00 quarterly.
9. Lower your mortgage payment
Lowering your payments can be a great way to save money to fit your budget.
- Get rid of PMI: PMI is a special insurance you have to pay if you didn’t put down 20% on your home. Some banks will allow you to get your house appraised and show your equity to debt ratio at 20% down to drop off PMI.
- Refinance your home: Many of us entered mortgages at high interest rates. Refinancing your home gives you the opportunity to lower your rate. You can wrap up the refinancing into your loan so you don’t have to put down any money at closing. If you can drop your mortgage down by $200 a month; it will pay off big in a 30 year mortgage!
10. Never pay full price for something
Paying full price for something can break your budget and in turn causes great stress. There also comes a simple rule into play. Price verses value (or what that item is worth), just because something has a price tag of “x” doesn’t mean that it is worth that.
- Buy things on sale: Here is the consumer report that lists the time of year that is the best time to buy certain items.
- Buy things “thrift: Some of the best coats I have ever purchased were from a thrift store. Most of my baby clothes , tools, toys, & sporting goods are from garage sales. Most of my furniture purchases are through Craigslist (and they are beautiful, well made & a steal deal.)
- Wheel & Deal: Whenever I go out to stores looking for home items many of my friends can tell you the delightful experience they had with me of talking down in price with the manager. I find a piece that has a hairline crack and ask for 20% off, because I won’t ever see it, and they need to move the damaged item so its a win-win.
Everything I listed is a way to create control within your finances. Control creates order from a chaotic system. By creating and sticking to a budget you eliminate surprises. You know what is going on with your finances; you control what is going on with your finances. Control is a huge factor with stress and anxiety. When you start to lose control is when you start to feel the stress, which then turns into anxiety. Don’t lose anymore sleep, you can do it, just take the small steps and don’t be afraid of failing, you will be better in the end.
Do you have other ways that help you control your financial stress? Let me know!
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