It seems like more and more Americans are struggling with financial stress. According to the latest survey involving 1,000 respondents 18 years and older, it is revealed that 85% feel stressed about their finances. It is also revealed that 30% are constantly stressed about money.
None of us want to be constantly worrying about our finances. The truth is, stress can make you feel tense and wound up. That is not a great condition to be in all the time. While stress can be motivating at times, too much of it can be dangerous to your health. This is why you need to make sure that you pinpoint the reason why you are feeling stressed about your finances.
Sometimes, when you are feeling too much stress, it keeps your mind clouded. It will distract you from what you need to focus on – which will make you less productive. It will also make you feel unhappy and somehow unfulfilled. These are only a few of the effects of financial stress.
The thing is, this feeling is not eliminated by increasing your income alone. It is more of learning how to manage your finances so you feel content about your financial situation. When there is contentment, you will be more confident in facing any financial issue that will go your way.
What causes financial stress?
But before we go into the specific ways that you can get rid of financial stress, let us identify the reasons why you feel it in the first place. Most of the time, people have different reasons why they feel stressed about their money. Once you get to know the cause of the stress, it will be easier for you to deal with it.
Here are the common reasons why Americans are feeling stressed whenever they think about their personal finances.
Living from paycheck to paycheck
Despite the improvements in our economy, there are still a lot of people living from paycheck to paycheck. According to CBS, there are about four out of every five workers in the country who are living from paycheck to paycheck. This is a serious problem for a lot of consumers because this usually leads to debt. One late paycheck and people can start to miss payments which can result in being charged with fees and other charges. When you barely have enough to cover your expenses on a monthly basis, this causes people stress. They know that one wrong move can lead them into further debt. After all, when your expenses are bigger than your income, you are forced to use debt to pay for what is lacking. The increase in debt will no doubt just add fuel to the stress that you are feeling.
Too much debt
Too much of anything is bad for you and your finances are no exception. On that note, having a lot of debt obligations result in financial stress because you need to keep track of a number of details. Several lender details, multiple payments amounts, as well as varying payment due dates, are more than enough to keep you stressed out every month. Not to mention the interest rate that you need to pay on your debts.
It would be quite a feat to lower down your payment obligations considering you have a number of utilities at home. However, there are a number of debt accounts you can control. Your credit card debt would be one example because you can simply consolidate your debts. This would allow you to take control of your payments better.
Not having a plan for the future
Financial stress can also stem from fear of what might happen in the future. What we do not know can seem daunting and that can make a seemingly harmless future appear threatening. If you are not prepared for the unexpected, that can blow up in your face really badly.
In 2016, more than half of Americans above the age of 25 have a form of financial plan in place. By coming up with a plan for your future, you get to feel like you are more in control of your finances. This control will help make financial issues and changes easier to face. Your plan can take many forms. It can be in the form of your retirement plan, college plan, etc. It will all depend on what you want to happen in your future.
Failure to save for an emergency fund
In connection with the previous one, preparation for the future can be financially arranged in the form of an emergency fund. People who fail to put up a reserve fund are more prone to stress compared with those that have some funds for the rainy days.
There are a lot of things that can happen which can put you in a serious financial situation. Some might be simple but sudden expenses such as house repairs or even the car needing a new battery. However, there are instances where an unexpected situation can put you in a lot of financial trouble.
One such circumstance is losing your job. This can put a serious strain on your finances especially if you have a number of financial obligations. If you have a mortgage payment or even a car loan, you risk losing these properties if you fall behind on your payments. Getting seriously ill can have the same effect because your income is affected.
All of these reasons contribute to the financial stress that you are probably feeling. If one or more of these hold true for you, then you know that there is work to do.
How to avoid feeling stressed about money
So what can you do so you do not feel financially stressed? Here are a couple of tips that you can follow.
Create a new budget
It does not matter if you already have one or not. If you are feeling stressed about your money, that means your budget plan is not working for you. Some people make a budget plan once and think that is enough. You have to keep in mind that this is a constant work in progress. Your financial situation and priorities change over time. Your budget plan should do the same. Make sure your budget takes into consideration changes in your income and expenses. If you have new financial goals, your budget plan should reflect that.
Get debt relief
When the cause of your financial stress is too much debt, you know that the only way you can solve it is by getting rid of the debt. Fortunately for you, there are so many debt relief options that you can use to achieve debt freedom. You have debt consolidation, debt management, credit counseling, debt settlement, and even bankruptcy. Make sure you understand your financial situation so you can choose the right solution. Your focus should be in choosing an option that you can afford to pay back completely. Failure to choose the right debt relief program might end up making your financial situation worse.
Set up a plan for the future
Most of the time, we feel stressed because the future is so uncertain. But with a little planning, that uncertainty does not have to feel so daunting. There are certain life events that need financial planning. You might want to prepare for buying your first house, getting married, having kids, and retirement. All of these are big milestones in your life and you want to make sure that you are prepared for all them. Making financial plans should help make these changes possible and smoother.
Build an emergency fund
While planning is a great way to deal with financial stress, there are things that you can never prepare for. But that does not mean these unexpected events should be allowed to destroy your life. Having a backup plan is one way for you to feel secure about your future. And when you are secure, you will feel less stress. When it comes to your finances, the best back up plan is to have an emergency fund. This is the money that you will rely on if something unexpected happens.
Involve the whole family
Truthfully, managing your finances can be overwhelming at times. This is especially true if your finances are limited and you are struggling to make ends meet. If this is your situation, you might want to be more open with your family about your current finances. Even if you are trying to limit your spending, if the rest of the family is not doing their part, that will make financial management a lot stressful. So make sure everyone is helping out in their own way.
While you want to put a lid on the financial stress that you are feeling, it is also advised that you keep some of that concern. Stress is a great way for you to stay vigilant. You want to feel contentment with your finances but you still have to maintain a level of concern. This will ensure that you will always be careful of how you make financial decisions. Try not to be too cocky about your finances. That might lead you to make irresponsible choices.