A recent survey shows that 72 percent of Americans suffer from money-related stress, making it one of the most common worries consumers face in their daily lives.
The best way to reduce your financial stress is to gain a clear picture of your situation, take control of your finances, and make incremental improvements that address your biggest worries. Here are some practical tips to help you lower your stress level and move you closer to reaching your financial goals.
1. Set a Budget and Track Your Spending
Financial stress is often, at a fundamental level, caused by a disconnect between the money you’re spending and the money that’s coming in. You may be avoiding creating a budget and tracking expenses for fear of what you’ll learn about your spending, but creating a budget is the most important step toward making changes that improve your finances and reduce money-related stress.
Establish a budget that fits your monthly income. Then use a spending tracker or other money management tool to follow your progress. You’ll learn about your spending habits and identify new ways to reduce your spending. These insights may spark some added worries depending on what you discover, but the knowledge you gain will put you in a position to make meaningful changes.
2. Give Yourself a Financial Buffer
For many people, financial stress is associated with a slim margin for error. If you’re living paycheck to paycheck, financial stress is sure to worm its way into your head: One unexpected bill or expense could put you in a hole that’s tough to climb out of.
In these situations, an emergency fund gives you peace of mind. By making small contributions to a savings account or other emergency fund, you can create a buffer that offers relief in times of high financial stress, such as during a job loss or after receiving medical bills. With that emergency fund in place, you can rest easier at night.
3. Create a Debt Repayment Plan
Struggling to pay off credit cards or other debt? By establishing a repayment plan, you can force yourself to make scheduled payments with the comfort of knowing that you’re making progress toward your goal.
If debt repayment feels endless, use our Debt Payoff Calculator to figure out how long you’ll need to pay off your debt under certain conditions. You can use this calculator to set up a repayment plan that minimizes interest paid and eases some of your financial stress.
4. Set up Automatic Contributions for Savings and Investments
If you’re worried you’re not saving or investing enough, take yourself out of the decision-making process. Automatic contributions are a great way to force saving and investing in a way that makes this process feel like paying any other bill.
It can also protect you from your own worst impulses, such as taking that money and spending it on luxury items or experiences.
5. Consider Adding an Additional Source of Income
Along with the tips outlined above, adding a new source of income can help ease some financial stress.
Whether you seek out a second job or a side hustle, it can be a permanent income upgrade or a short-term option to help you tackle financial goals such as paying down debt and building up an emergency savings fund.
6. Get Help from a Financial Advisor
Sometimes, financial problem-solving can seem too big to handle on your own. If you’ve tried the above steps and still haven’t made the progress you need to alleviate your financial stress, it might be time to seek out help from a financial expert who can help you create a plan.
A financial advisor will go through your various challenges and needs and take your income into account when finding a manageable way to address the root causes of your financial stress. This can also be a great opportunity to learn additional money management skills that will benefit you well into the future.
Sometimes the feeling of uncertainty around personal finance creates more stress than the actual financial challenges you face. Taking steps to understand your financial picture—whether on your own, with a partner or friend, or with a financial advisor—can help replace financial stress with confidence and motivation. Have questions about your financial situation? Get in touch with our team anytime here.