10 min read
Financial Stress: How-to Deal with Financial Stress and Financial Pressure
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We’ve all heard sayings like “you can’t buy happiness” or “money is the root of all evil.” Money isn’t the most important thing in life, but it can help someone achieve their goals in areas such as providing for their family, having more freedom around lifestyle choices and taking care of their health. Some people may have negative feelings about money due to bad experiences in the past, but money can be a positive part of a person’s future.
LESSON CONTENTS
How to manage money issues
Face it head on
Money issues are not easy to deal with. Many factors go into our ability to solve these types of problems such as limited income, lack of knowledge or resources, or a lack of time. We may have other short-term priorities that hold our attention, like taking care of family or work obligations.
However, the biggest mistake you can make with money problems is ignoring them. Money problems won’t go away by themselves, and they may compound and grow over time. You will be much better off the faster you can confront and understand the problem. Writing down the financial problems you’d like to solve in a journal or list can help relieve some of the mental burden. Crossing off completed tasks can help visualize your progress and give you some positive reinforcement.
We all know how painful it can be to look at a monthly credit card balance or bill when we know we don’t have enough money to pay it off immediately. But keeping track of your obligations might help you.
Make a plan
The next step to tackling your money issues is to create a plan of action. Once you’ve confronted the problem, you can decide the best course to take. To make a plan, use the following steps.
1. Research – no matter what money-related issue you’re facing, understanding your options is important. Find a medium that you know you’ll be able to stick with (don’t force yourself to buy personal finance books if you’re not a reader) and dive into some of the topics relating to your problem. You can use many great resources, including podcasts, books, videos and blogs.
2. Organize – once you have a better idea of your problem, you can create your own personalized strategy. When doing this step, it’s important to organize your thoughts. Create actionable steps, milestones to reach and visualize what life will look like and how you’ll reward yourself once you accomplish your goal!
3. Implement and Refine – you’ve organized your plan, and it’s time to test it. Start taking the action steps you’ve created for yourself. It may also be a good idea to reflect on your progress on a weekly or monthly basis. Use a journal or spreadsheet to track your progress and review it to refine or improve areas of your plan.
Reach out for help
You don’t have to face your financial problems by yourself. If you are overwhelmed and don’t know where to start, reach out to trusted friends, family members or professionals for advice. Getting feedback and advice from your network can help you better understand the problem and lower your stress levels by making it more manageable.
Working with a financial advisor or coach gives you access to their advice and experience and makes it easier to stick to your plan through regular check-ins. They will help you create a personalized savings plan based on your current financial situation.
Telling people about your goals creates a social contract and may help keep you motivated and accountable. A support group can encourage you to stay on course so you can manage problems better. Monitor your health throughout the process to ensure you are in a good position to make these decisions. Look for natural ways to deal with the physical symptoms of stress by eating healthy, spending time outdoors and exercising regularly.
What money topics should I learn about?
If you want to brush up on your financial knowledge to live a happier, healthier, or more productive life, start off by learning the basics of the following topics.
Cash management
Cash management is important for understanding where your money is going and coming from. This topic would be a great place to start if you live paycheck to paycheck or have problems overusing credit cards.
Use technology to help you keep track of your spending habits and see where your cash is going. Many financial institutions already have apps or other digital tools to help you consolidate all your accounts into one, easy-to-understand dashboard. If you use mobile banking apps with your bank or credit union, check out the features and notifications they offer to make cash management easier.
Planning for unexpected events
People generally underestimate the possibility of bad things happening and consequently fail to plan for them. Planning for unexpected events not only provides peace of mind but also can help prevent financial stress. Unexpected events may be natural disasters, health events, car troubles, loss of income or even veterinary bills for your pet.
The first step to planning for these events is to create a cash emergency fund with approximately three to six months’ worth of expenses. An emergency fund should not be accessed for other purposes. The next step is to make sure you have the appropriate insurance coverage for various situations. Insurance can help reduce the financial risk of unexpected events and will prevent you from having to pay too much out of pocket.
Investing basics
Investing is an important skill to learn that can help you meet your long-term financial goals. Some people may find investing too intimidating, but it doesn’t need to be overly complicated. You can use a simple savings account to grow your earnings over time without risking your money.
When investing, use tax advantaged retirement accounts, find investments with low fees, invest in broad indexes or other diversified funds to reduce risk—and do so consistently throughout your career. If you don’t feel comfortable investing by yourself, seek a financial advisor’s help or look at online investing platforms to get started. You can even use automated investing services to walk you through the basic steps.
Manage your credit and debt
Having good credit will make your life a lot easier when it comes to applying for different loans. It can also help you get lower interest rates which could potentially save you thousands of dollars over your lifetime. Learn about the factors that can affect your credit score and avoid building up high-interest debt.
If you already have debt like credit cards or student loans, learn about strategies that are specific to that type of debt. Having low amounts of debt will go a long way toward lowering your financial stress and helping you speed toward goals like saving for retirement or buying a home.
*PLEASE NOTE: This article is intended to be used for informational purposes and should not be considered financial advice. Consult a financial advisor, accountant or other financial professional to learn more about what strategies are appropriate for your situation.
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