It's a funny thing about money; we don't really talk about it, even though it's frequently on our minds. It's especially true when we experience financial difficulties, like a job loss or an unexpected expense. When such things happen, money is at the forefront of our minds, but we keep the worry inside, which leads to financial stress. And that like any other type of stress, can keep you up at night and take a toll on your health and wellbeing.
So, what can you do alleviate that financial stress?
You can start by taking these important steps:
- Diagnose your financial problem. If you're feeling overwhelmed with your finances, the first thing you should do is confront your challenges head on. Start by examining all your finances and asking some key questions like: Do you have enough money to cover your monthly expenses? Have you set aside for emergency savings? Are you able to put away money for retirement? Do you have too much credit card debt? Can you afford your mortgage or rent?
- Find a treatment. Once you know the financial challenges you face, create a plan with detailed steps on how to resolve them. So, for example, if you're having trouble meeting your bills, analyze your income and expenses. Then, look for ways to reduce those expenses. You may decide to cut your subscription services or to get a second job to help boost your income. You may also want to look for a part-time job to help pay the bills or to take in a roommate to lower your rent. Once you have a handle on your income and expenses, create a monthly budget and stick to it.
- Get your debt under control. It's easy to get into debt; digging out of it is a little more challenging. You can start by writing down the debt you have and the interest rates you're being charged. Once you know what you owe, make a plan to pay down higher-interest debt first. Also, pay more than the minimum amount due. If you have multiple credit cards with high interest rates, consider consolidating that debt to a lower-interest card or to a fixed-rate personal loan. Be sure to make your payments on time, since that could result in costly late fees and even higher interest rates.
- Prepare for emergencies. Let's face it, life is unpredictable. You never know when you'll experience a major life change or expense. The best way to protect yourself financially from unexpected events is to have an emergency fund. If you don't have one, it's easy to get started. Just open a separate savings account and contribute a fixed amount of money each pay period. If you have a tight budget, start small with as little as $10 a pay period. This will help you get in the habit of saving. Then as your financial situation improves, you can increase the amount you save.
- Maintain good financial health. Reviewing your finances isn't something you should just do once. You need to constantly analyze your income, expenses, savings, and debt to ensure you're sticking to the plans you set. If you experience a life event, such as a job loss or even a promotion, you should revisit your budget and make any adjustments.
Treat yourself to better financial health and wellbeing by taking these steps today.