Stress comes in all shapes and sizes, but finances are an ever-present burden for many people. A recent PwC study showed 63% of employees say that their financial stress has increased since the start of the pandemic. So it’s essential to take a step back and make sure you have your finances under control and plan for the future. Planning ahead is one of the best ways to reduce financial stress and keep you on track to meet your financial goals.
Use these tips to help get you on your way to financial comfort. Here are 5 ways to reduce financial stress.
Focus on What You Can Control
Unfortunately, you can’t control every aspect of your life that’s causing you stress. For example, with your finances, some things will always have to be paid, but there are still ways you can adjust and prepare for those necessary costs.
One thing is sure, you have to spend money on food, housing, clothing, and other essentials, so accept that as part of your costs. What you can control is the level of spending that you do in these situations. You have to buy groceries, but not everything has to be a name brand or the most expensive version. Also, you have to pay your mortgage, but you could consider refinancing your mortgage to get a better and more manageable payment. You could also consider renting instead if it makes more sense for you.
There are a few common ways people tend to overspend their money, and eating out is a big one. Occasionally treating yourself to a meal out is a great way to celebrate something, but making a habit of eating out can be costly. Meal prepping and bringing a lunch from home is a great way to cut down on the cost of dining out and will help save you money.
Using a credit card is a great way to save some money, provided you are responsible. Many cards will offer you a percentage of the money you spend as cashback, but you have to control your spending, as you can easily overspend with a credit card. In addition, pay attention to how many lines of credit you have and how to use them properly.
Knowing what items you will have to spend money on can help you get a better idea of where you can cut back on your budget. Focus on what you can affect and make adjustments there instead of stressing about things outside your control.
Prioritize Your Financials
In life, there will always be things that are more important than others, and it’s key to identify those aspects and prioritize them. These priorities can and will change over time, so it’s important to reevaluate them as time goes on.
In many cases, debt significantly impacts your life and can keep accruing interest and growing larger. There are some great tips for getting debt relief fast and eliminating that from your list of worries. It might be in your best interest to pay off your debt first before looking to other larger financial goals. A budget can help people have a clearer picture of their financial breakdown and help them choose what to prioritize.
As mentioned, things such as food and housing are priorities that you control. However, things such as choosing between fixing your house’s heating during the winter or putting a down payment on a new car are types of choices that you should be thinking about. One is more time-sensitive and currently affects your wellbeing, while the other may be able to wait.
While everyone has their financial priorities, it’s crucial to identify your own to be prepared to address them. In addition, giving yourself a head start can help relieve yourself of stress during the decision-making process.
Look to Earn Passive Income
Passive income refers to earning money without having to actively manage or participate in it. This is great for people who lead already busy lives but want some alternative ways to make a little extra money without sacrificing more of their time.
There are a few popular methods that people opt for to make a passive income. For example, renting out your home to tenants is a great way to earn a substantial amount of money while not being directly involved. You could rent the whole house or a single room, rent long-term or short, whatever works for you and your schedule. If you choose this route, it’s essential to make sure you have a home warranty or homeowners insurance to protect your property and your income on the off chance something happens.
Another great option is starting up a website or blog. This can help you earn income in several ways, such as utilizing affiliate links or advertisements on your site and typically doesn’t require a significant monetary investment. If you work remotely, consider house or pet sitting for people. You can still earn money from your job while also earning some income on the side and getting to hang out with some furry friends.
While passive income may take some time or funding to start, it can be a great way to earn some extra income on the side without devoting too much of your time and energy towards it in the future.
Start Saving Early (and Often)
Saving is one the most critical aspects of your finances and is often the way that can help relieve the most stress. If you know you have money saved away and it’s earning you interest, you can be comforted by the knowledge that you are making money and have some set aside for the future. That amount of money in your savings depends on several factors:
- Your current standard of living
- Do you have children/relatives?
- At what age do you want to retire?
All of these and more will factor into the rate at which you save your money in addition to how much you will need at various points in your life.
While saving money, in general, is great, it helps to identify short-term and long-term goals or objectives. Short-term refers to expenses that you might be making in the next six months to a year, such as paying for a new semester of school or buying a new laptop. Longer-term financial aspects are farther down the road, such as starting a family or purchasing a home. Investing early is a great way to help begin building generational wealth for you and your future family.
Regardless of how much you can save, always start saving as early as possible. Even if it’s simply five dollars a month, over time, that will grow into a lot more and help you relieve some stress knowing you have money saved away for the future.
Always Plan for the Unexpected
While the unexpected is its namesake, it’s still important to do your best to be prepared for any situation that comes your way. While you may not know the exact problem you could encounter, you can still be financially prepared for it to some extent.
Building an emergency fund can be as simple as putting aside a small amount of money each month into a separate account. Creating and putting the funds into a separate account can help you mentally and visually separate your savings from your spending accounts. For some, without this very clear mental distinction, it can be tempting to dip into your savings accounts for unneeded purchases.
If you have trouble remembering to make contributions to your emergency fund, try automatic payments. You can either ask your employer to directly deposit a certain amount each month or, often, banks can take a set amount out of your main account and transfer it to your savings account.
Unexpected circumstances can range from hospital bills to car maintenance and anything in-between. Knowing that you have funds set aside to help you can significantly help reduce your stress during what could be an emotionally turbulent time.
Moral of the Story
Stress has been a common occurrence in the lives of many people recently, financial stress especially. Unfortunately, the last few years have created a lot of financial turmoil, and it’s more important than ever to make sure that you have a firm grasp on your finances.
Making sure you control your finances and prioritize the most critical financial needs is one of the best ways to reduce financial stress and can help make sure you are on the right track. In addition, finding ways to supplement your income can help give you some more flexibility with your budget and allow you to breathe a little more easily. Begining to save your money as early as possible is imperative for creating a solid financial future and for preparing yourself for any unexpected events that might occur.
Finances are often a point of confusion and stress for people of all ages, so preparing yourself and knowing your options are key to staying ahead of the game. Organizing your finances can relieve a great deal of stress and allow you to better focus on other aspects of your life while knowing your future is secure.
Which of the above ways to reduce financial stress will you try?