Sunday, December 4, 2022

How To Handle Financial Stress

Take Inventory Of Your Finances

How to deal with financial stress

How much are you saving and how much do you owe? Are you spending more than you make? Are you maintaining manageable debt levels and staying current on all bills?

These are all questions you need to answer and assess honestly. Its important to know where you stand financially, including regularly reviewing your spending habits, debt levels, savings and investments, and credit reports and scores.

Start by reviewing your cash flow. Its important to know how much is coming in, where you are spending, and where you can cut expenses and increase savings. You will need to inventory all debt and categorize it by type, institution held, interest rates and maturity dates. Also look at all recurring costs, such as utilities, to determine what must be paid each month.

Make sure you have enough in the way of cash and other liquid assets that can carry you through tough times, said Eisenberg

Physical And Mental Health

According to WebMD, 43% of all adults suffer adverse health effects from stress, leading to physical symptoms that may worsen in time. Those symptoms may include anxiety and depression, putting a strain on your physical and mental health.

If you’re experiencing these symptoms, it is okay to reach out for helpwhether it is a trusted friend, a family member or a therapist who can listen and help you navigate this hardship. Check with your employer to see if there are opportunities to meet with a therapist at no or low cost to you.

Remember That Net Worth Does Not Equate To Self

It can be really easy to fall into the trap of measuring your overall success or hinging your happiness on the amount of money you make or how much you have in the bank. Though keeping track of your net worth can be a great motivational tool to help you reach your financial goals, remember that there are many ways to measure what a successful and happy life looks like for you.

Financial surprises happen in everyones life and it is important to know how to cope if youre feeling stress from the situation. Stay positive and focus on planning your way to your future goals, one small step at a time, to keep financial stress under control.

The views and opinions expressed in this content are those of the author and do not necessarily reflect the opinion or view of Intuit Inc, Mint or any affiliated organization. This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Save more, spend smarter, and make your money go further

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    Pick Up An Extra Shift

    For those who are stressed because they feel like theyre not pulling their own weight financially, ask yourself if there is anything else that can be done. Can you pick up an extra shift? Is there any other revenue coming in? Do you need to work on finding new ways to earn money rather than letting bills pile up every month so finance becomes an issue?

    Signs Of Financial Stress

    How to Deal With Financial Stress &  Avoid Panic Mode

    Signs of financial stress include:

    • Constant worry and stress about money
    • Feeling like youre drowning in debt, bills, and overall financial problems
    • Taking on more work or a second job to make ends meet

    People will sometimes neglect their mental health because the psychological effects of the two issues often feel similar. The fact that finances are such a big part of your daily life can make it hard to differentiate between the two.

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    Everyone Comes Into Adulthood With Money Baggage

    The most important advice: dont beat yourself up. Everyone makes financial mistakes and everyone feels money stress. A lot of people screw up their credit or lose income or have a hard time saving. Dont let a misstep prevent you from taking action. Focus on the wins that you feel good about. Its more important to do anything beneficial than to try to do the perfect thing and delay.

    Cant save $250 a month for your emergency fund? Save $25 and enjoy your win. I firmly believe in treats. When I first started therapy years ago, it was hard work. So after a session, I went across the street to the drugstore and got a cheap treat a new nail polish, a candy bar, a trashy magazine. This also helps with financial goals. Did you make your budget this week? Candy bar. Did you hit a debt paydown milestone? Get the whipped cream on your boba tea. Its so important to highlight and focus on the positives, however small.

    The last one, investigate the money messages you grew up with. Everyone comes into adulthood with customized money baggage. Great ways to unpack it: talk to the people who raised you about how they thought about money when you were a kid. Take notice of financial topics and ideas that make you anxious, take a deep breath, and explore that feeling. Once you understand your feelings, its a lot easier to make money moves.

    Money Cant Buy Happiness Were Told

    In some ways, thats correct. Money cant purchase community, understanding, or compassionate love for one another. But it can buy the building blocks. And no amount of quotes from billionaires about what really matters can change that.

    Worrying about money is validwe live in a world where money means resources. From the basics like food, housing, and healthcare to luxuries like electricity, internet, and transportation, most of us need money.

    Worrying about money is validwe live in a world where money means resources.

    And we arent alone in our worries. In the past three years, nearly two out of three Americans have reported finances being a significant stressor in their life, according to a yearly survey by the American Psychological Association.

    This stress can impact how we make future financial decisions and even our physical health. But what can we do about it?

    Because money is tied to nearly everything in our day-to-day lives, we cant just take a singular, pragmatic approach to it. Our emotional relationship with this resource matters, too, even if it sounds absurd. Aside from a regular mindfulness practice or choosing to live a minimalist life, what else can we do to support our financial wellbeing? Heres a step-by-step, guided by my own research and experience, on how to find a better balance.

    Take Inventory of What You Have

    The only way to change the way things will be is to know where theyre at.

    Review Your Spending

    Focus On What You Can Control

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    You Can Learn To Deal With Financial Stress

    The National Institute for Mental Health defines stress as, how the brain and body respond to any demand. Financial stress can present as feeling overwhelmed, anxious, or frustrated whenever you think about your money. My grandmother would say, At my wits end! However, you can learn to cope with financial stress. Below are a few tips to cope with financial stress and anxiety.

    When facing financial stress, dont bury your head in the sand. Rather, bury your head in a relaxing meditation to calm you before thinking about your money situation.

    Dont tackle your money challenges alone. Enlist a trusted friend or confidante to be your support on this journey.

    Let bygones be bygones. Rather, let buy-gones be buy-gones. Take time to forgive yourself for your past money mistakes and leave them in the past.

    Set smaller financial goals to give yourself the adrenaline rush of accomplishment, success, and fulfillment. Then build on that success.

    Create a spending plan that includes a line item for fun. The plan will help you tell your money where to go and the fun line items let you reward yourself.

    Take a six-month sabbatical from one spending category that is not a need. During that time, use the money you save to help reduce anxiety in another area.

    Lastly, remember you are not the first person to be in a financial challenge and you wont be the last. Be kind to yourself.

    Bottom Line: You Are Not Your Bank Account

    How to deal with financial stress caused by COVID-19

    Financial stress can be overwhelming on multiple levels. You can feel blindsided by the emotional tension, which can prevent you from feeling capable and in control of your expenses. Managing money stressors, though, is easier when you can try to take the negative emotions out of the equation. Even if your finances look bleak right now, your value isnt represented by the number in your bank account. You can build new money habits, make more informed financial decisions, and create the bank balance to match.

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    Grant Yourself An Allowance

    While it’s essential to save aggressively, saving too aggressively isn’t great for your mental health either. To avoid this, carve out a little extra change every week or month to give yourself an allowance just like your parents might have when you were a kid.

    An excellent savings account will give you the freedom to make fun purchases or treat yourself from time to time. Not only will this help you stick to your new saving habits, but it’ll also make you feel better about your financial situation without sucking the fun out of your daily life.

    Planning Ahead Can Help Alleviate Money

    Forward planning is the best way to alleviate the financial stress and anxiety that many Americans have faced during the COVID-19 pandemic, according to a group of financial experts that took part in Investopedia’s “Your Money Your Health” virtual conference.

    The second panel of the eventwhich saw Investopedia’s Editor-in-Chief Caleb Silver joined by Amy Morlin, Editor-in-Chief of Verywell Mind life development coach Mike Bayer George M. Blount, a financial therapist and financial planner Carolyn McClanahancentered around the topic of managing financial and mental stress, a major issue for many Americans at this point in time. The main takeaway was the importance of discipline, not rushing into decisions, and having a clear plan in place to ensure that we are always ready to handle whatever life throws at us.

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    Chip Away At The Problem

    Example Problem: Lets say someone hasnt balanced their bank account for months, theyre overdrawn on their checking account, have a stack of bills piling up, and they started getting calls from a collection agency. This person is feeling overwhelmed, like theyre drowning, and dont know where to even begin to tackle this huge hole theyve dug themselves into.

    1. Chunking helps reduce the overwhelm by breaking down seemingly huge tasks down to smaller, manageable chunks. For the example situation above, the problem can be broken down into at least parts: balancing bank account, prioritizing the stack of bills, and responding to the bill collectors. Those three issues can be further broken down even further into chunks, such as with balancing the account can be chunked into balancing one weeks worth of transactions. Then once that one weeks transactions are balanced, theyd move onto the next weeks, and so on.

    Financial Stress Causes Psychological Stress

    How to Deal With Financial Stress &  Avoid Panic Mode

    When these issues enter our psyche, they create psychological distress as a result of their effects on our moods. For example:

    • When youre worried about money, its hard to concentrate or focus on anything else. You might snap at the people around you because of financial stress and anxiety
    • Your thoughts are preoccupied with your financial debts, your credit score, your bank account balance. How much money is in there, when did you last put more cash in? It occupies mental time that could be used for other things like family or leisure activities
    • The constant worry about money keeps us up at night. We sleep less than normal, which wreaks havoc on our physical health. Even if we do fall asleep, we may not rest well because of the ongoing stress

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    Why You Can Trust Bankrate

    Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

    Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.

    Our banking reporters and editors focus on the points consumers care about most the best banks, latest rates, different types of accounts, money-saving tips and more so you can feel confident as youre managing your money.

    Maintain An Emergency Fund To Ease Financial Anxiety

    Having an easily accessible emergency fund can reduce your financial stress.

    If you lose your job or experience another unforeseen circumstance, there are expenses that will need to be handled right away, says Fitzmorris. If you dont have an emergency fund, where is the money going to come from? It’s all interconnected and can be accounted for in a financial plan.

    Fitzmorris suggests that your emergency fund should hold enough money to pay for at least six months of your living expenses.

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    Dealing With Financial Anxiety

    • Schedule a money check-in: Set a financial goal for yourself to save a set amount by a specific date. Then start putting money aside.
    • Create a household budget: Putting your income and expenses on paper will show you exactly where your money is going so you can take control of your spending.
    • Manage your debt: Debt is one of the biggest factors that creates financial stress. Having a financial plan can help you avoid debt. If you are carrying debt, developing a strategy to pay it down will help put you in control of your debt.
    • Create an emergency fund: Having an emergency fund can give you peace of mind because you know you have enough money set aside to pay your bills if you become sick or lose your job.
    • Discard financial shame: Comparing your lifestyle or spending to others, especially on social media, only feeds money anxieties. Spending and accumulating wealth is not a contest.
    • Practice mindfulness: How do you physically react to things associated with money? If your heart rate spikes, you begin perspiring or your mind starts racing. Try to relax with deep breathing exercises. You also can try to restructure your thinking by reminding yourself that there are things you cannot control.

    Don’t Give Up On Budgeting

    How to manage financial stress

    One of the biggest misconceptions around budgeting is that you have to follow it perfectly or else you’ve failed. A budget is a plan, and the best-laid plans should have the flexibility to adapt as your needs change.

    Some months may go well, and some may feel like a disaster. It’s not a failure to overspend it’s an opportunity to learn and adjust to get back on track.

    If you’re a first-time budgeter, give yourself grace. It takes time to see if your spending limits are realistic and practice sticking to them. Even if you’re a seasoned budgeter, you’ll have your share of hard months. Life often presents us with situations that force us to rework our plans. Let your budget be a living document that ebbs and flows with you.

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    Get An Emergency Fund

    An emergency fund is a savings account meant to cover unexpected expenses and financial emergencies. Although a car repair can be expensive and stressful, if you know you can tap into your emergency fund to cover it, a lot of the stress will go away. It is also easier to use the money in your budget the way you planned if you know you have the extra money in the bank ready to cover the unexpected emergencies that may crop up.

    You should have at least $1,000 in your emergency fund until you are out of debt. Then you should aim to have three to six months’ living expenses set aside.

    Building an emergency fund may seem tough at first, especially if you are struggling to make ends meet each month. Start by putting aside a small amount, whether it’s $10 or $100 each month, so you can build up your emergency fund. You may also consider selling any unused items around the house to build up that cash as quickly as you can.

    Get Help From A Financial Advisor

    Sometimes, financial problem-solving can seem too big to handle on your own. If youve tried the above steps and still havent 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 picturewhether on your own, with a partner or friend, or with a financial advisorcan help replace financial stress with confidence and motivation. Have questions about your financial situation? Get in touch with our team anytime here.

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