4 Ways to Reduce Financial Stress
Financial stress and anxiety can have consequences that stretch far beyond your bank account, reducing emotional and physical well-being while making avenues to real positive change all the more elusive.
If you’re among the more than 60% of Americans who cite money issues as a significant source of stress, don’t despair: There are steps you can take today to help you worry less and reclaim control of your financial future.
Get a Bird’s Eye View of Your Financial Big Picture
Even if the numbers aren’t what you’d hope, having an awareness of how much money you have can help you feel more in control of your financial life. In turn, you have the breathing room to begin planning proactively and effectively for your future.
Begin by tallying your total monthly take-home pay.
Next, subtract the expenses you cannot live without or easily reduce/remove from your monthly income, including your monthly mortgage or rent, a car payment, utility bills and at least the minimum amount due for student loans, credit cards or medical bills.
The remaining funds should cover not only more discretionary expenses such as food, gas/commuting expenses, cable or your cell phone, but also be directed toward a real savings regimen. Eventually, you’ll strive to save at least 10% from each paycheck. Your first step, however, should be to get in the habit of saving some amount of money consistently. Paying yourself from each paycheck, in the form of consistent contributions to an emergency savings fund, belongs in this category, too. With an emergency savings fund, you're less likely to be derailed by unexpected expenses such as medical needs or car repairs.
If the number you’re left with is negative after you’ve tallied all of your expenses and set aside money to save, aim to cut one or two expenses. If dining on leftovers and/or using coupons helps you spend just $15 less on each grocery store trip, for example, that could mean an additional $40 or $50 in your bank account at the end of each month.
Follow the Money
Using a free budgeting app or small notebook you keep in your purse or pocket, track every penny you spend for at least one month. Finding out where your money really goes can be an eye-opening—and life-changing—experience. Eventually, try to match your spending more closely to these budget percentages:
- 50% of your take-home pay—after tax, retirement and insurance—earmarked for necessities
- 30% for “wants” or discretionary spending
- 20% to savings and debt payments
- This structure keeps expenses manageable, makes sure you save and pay off debt, and offers some flexibility so you're not a slave to your budget.
Find Support to Improve Your Financial Confidence
To learn more about ways to manage your money and build your financial confidence, take advantage of free resources recommended by The Center for Consumer Financial Education. An experienced financial advisor or planner can also be an invaluable ally as you work to take charge of your financial life—no matter your unique set of circumstances and resources.
Transform Your Relationship with Money
Though sticking to a budget can be difficult for many, the issue may often be less about willpower than steering clear of certain forms of payment that don’t serve your personality or goals.
In fact, studies recently published in Psychology Today suggest shoppers typically don’t associate card transactions with the same amount of “loss” they feel when paying with cash. The publication also reports that the lights and music in retail stores create distractions that make people less mindful about how much they spend.
Experiment to find out what works for you. For example, take your credit and debit cards out of your wallet for a set period of time and stick to cash. Or skip a few trips to the mall and shop online to eliminate in-person temptations to purchase items beyond your “true needs.” When you do hit the mall for a bit of “retail therapy,” a brief walk outside provides a health-boosting dose of Vitamin D which can raise your endorphins and lower stress levels.
Though it may seem farfetched at first, the truth is you can reduce money-related stress by making a few simple changes to your financial lifestyle. Invest in your financial well-being today and you may be surprised by the dividends those actions pay—in all areas of your life—tomorrow.
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