A lot of people are under constant financial stress that it slowly starts to become the norm and they feel comfortable with it. This is a dangerous attitude to develop because it is a very toxic environment that will slowly suck the life out of you. It will not only dampen your mood on just about any activity from your job to your family and even with your friends.
Much worse, CNBC.com shared in an article that high level of stress coming from financial worries can ripple out to other areas of a person’s life including their health. Stress can manifest itself in health problems that can range from petty to serious cases. This effect should already be enough for any consumer to try and manage their finances properly.
There are a lot of reasons why you are having financial problems that ultimately leads to financial stress. Some people define stress as wanting to be in another place while stuck in a different location. This can be as simple as putting off for tomorrow what you can accomplish today or forgetting to make a payment because of unmanageable debt accounts.
Stress can and should be managed for consumers to get a better grip on their finances and life in general. Being in a state of stress for prolonged periods of time will not be beneficial in any short and long term goals a person might have. They could lose all their will to move on and even question why they need to put these plans in the first place.
Triggers of financial stress
When you find yourself in the midst of financial stress, here are a few things that could have led to that situation. Knowing and understanding the root cause of a problem can help you adjust and be able to look for ways to fix your situation.
- Not paying bills. There is a big difference between being unable to meet bill payments and choosing not to do so. The former can be because they do not have enough financial means to do so while the latter is just plain laziness. If you are having a hard time making payments because you do not have enough at the end of the month for bills then you need to fix your budget right there and then. Look for ways to either lower your expenses or increase your payments to be able to squeeze in those bill payments. If you just choose to not make payments then you need to see a psychiatrist to get to the root cause of the behaviour.
- Having too much debt. Nerdwallet.com shares that the average card debt for an American is around $15,000. A little more and they can already buy a brand new car with that amount. If an average household also tallies up their average debt in total, they can reach around $129,579. That includes mortgage, credit card, auto loans and even student loans. Sit back and look at these numbers again. These can definitely be stress factors that can keep you up all night. Be sure to face the problem and not try to sleep on it night after night which will only make the matters worse.
- Low reserve funds. There is no way to predict when and how severe financial problems will be in the future. It can be as simple as a broken toaster or as serious as losing your job. The one thing you can do is prepare for any eventuality by strengthening your reserve funds. This includes your emergency fund meant to address the bigger needs and your rainy day funds to offset any unforeseen small expenses.
- No retirement planning. Not having reserve funds will cause financial stress so you can only imagine the stress level when you do not have any retirement plans ahead. Retirement is not a question of “if?” but more of a”when?” The time will eventually come when you cannot report for work anymore and you have to hang up your corporate life. You need to have some form of retirement planning set early on so you can slowly work your way into it.
- Misusing credit cards. Another cause for financial stress is misusing your credit cards. These plastic credit has been receiving a lot of flak lately because they have been on the receiving end of the blame game when consumers goes under debt. They are quick to point out that their cards are putting them in debt with all their purchases. But when you try to understand this situation, the credit cards themselves cannot force a person to physically pull out their cards to pay for a dress in a store or an online delivery. These are decisions they make themselves without the cards urging them to do so. This is a common cause of financial stress and one that would require some time to fix. The important thing is to pay off any balance on the card and be more sensible in using them in the future.
Proactive financial tips to prevent stress
More than just being on the defensive side, it pays to be proactive and try be look for ways to prevent financial stress from creeping up. Here are a few things you might want to look into and consider.
- Monitor your budget. There are ways to take control of a household budget rather than waiting for it to get sidetracked with debt. You need to keep a close eye on your income and expense and make sure that the former is enough to cover the latter. If your expenses are getting bigger then you need to address it right away before it gets out of hand.
- Be smart with income and expenses. One way to be proactive in keeping financial stress at bay is to keep working on your income and expense. Try to increase your income and look for ways to lower down your expenses. Doing so will help you fend off crushing debt that you might not be able to crawl out off.
- Make smart investments. Investopedia.com explains that compound interest is earning on previous earnings. This is one powerful way in helping your investments grow over the years and keep you in track with retirement. This helps lower down the stress factor in life because you know that while you are working hard, your investments are hard at work as well.
It is easier to fall into the lull and habit of buying things that are way out of reach because the opportunity and the chance to do so are available. It can be a small plastic credit cards that you whip out when paying for an item you cannot purchase with your current income or it can be a bank loan to help you secure that house or car that you need.
Taking on debt is not the main reason for financial stress, it is staying there and not trying to find a way out of it. There are debts and loans such as mortgage loans and even student loans that can help people achieve their dreams. Credit cards can even help a person increase their credit score. The important thing is paying up and using these accounts as a stepping stone to success and not a slide down to debt.