You meditate, workout, and even splurge on travel and massages, yet you are stressed all the time? You are not alone; financial stress has become a common problem among the millennials.
It is rightly said that “Money is a good servant but a bad master.” Whether we like it or not, money plays an important role in our life and well-being. Yet, money is also a cause of stress for both the rich and the poor. Financial anxiety has become a part of life for most of us.
Financial stress should not be taken lightly; it has a significant impact on our health. Living in a constant state of tension can put you at risk for major health problems including hypertension, chronic pain, fertility issues and Type 2 diabetes (to name a few).
According to a study, 71% of Americans identify money as a significant source of stress in their lives. There are many reasons why people stress about money these days – not having enough money than desired, unemployment, high rent, higher spending than income, high standard of living, increased cost of education, sagging real estate value, high debt, etc.
Here’s how to avoid financial stress in life now and in the future and if you are already dealing with it, we’ve added tips on how to reduce your money stress and take control of your finances. It’s easier than you think!
1) Cut your coat according to your cloth
For better Money management, one should always mind their expenses according to one’s income. Spending more than what you earn will lend you up in problems. And we might begin to finance our expenses through debts like a credit card, short term loans, or other lending platforms but that’s where the actual money-related stress starts to kick in. So the key takeaways are –
- earn, spend but also save
- Don’t borrow and spend
- Debt should be only taken for creating value in life, eg education. Learn more about when to take debt Good Debt vs Bad Debt
2) Prepare a budget
Preparing a monthly budget may sound overwhelming and you may think it’s only going to add to your financial stress, but the truth is far from it.
Budgeting will help you decide when and how much you can spend, giving you a clear idea of your expenses without exceeding your earnings. It might be challenging at first to prepare and stick to a budget, but once you get used to it, you’ll find it the best way to plan your expenses.
There are many online tools available that will help you record and plan your budget. Some of the popular and easy-to-use personal finance and budgeting tools you can use are Intuit Mint, Buxfer and BankBazaar (mobile app).
3) Cultivate a habit of saving and get an emergency fund
While a few people earn over a crore rupees in their lifetime, most people make their fortune through saving money.
The problem is most people make one financial mistake that adds stress to their lives. They pay their monthly bills (rent, electricity, EMIs, etc) and use the remaining income to enjoy themselves – go out for dinners, travel, shopping, etc. Whatever is left, if anything, goes into their savings account. Biggest mistake.
Financially smart people, however, do it the other way around. Before they spend a single paisa on non-essential lifestyle expenses, they first deposit a portion of their income into their savings. Whatever is left, is used for their desires – dining out, traveling, and having fun.
Now that you have decided to start saving, your first step should be to set aside a part of your income for emergency fund – that should be 6-months of your salary (or expenses). Saving may seem difficult at first, especially if you are struggling to meet ends. But we strongly recommend you to start by setting aside a smaller amount of income, no matter how small. You can then gradually increase the share of your savings when it becomes a habit.
4) Identify your reasons for stress
It is essential to understand what is the reason behind your stress, is it the pressure of paying the debts? Or the inability to meet your ends? Is it low income and high expenses or worry about retirement?
It is important to identify the cause of anxiety and the best way to do it is to pen down the biggest sources of financial stress you are grappling with at the moment.
Once you have identified the reason causing stress, your next step should be to seek help of a financial expert, like a financial planner, to help you find a solution and fix it. While you can always take help from your family or friends, a financial planner will be able to give you a better, scientific and more objective advice. Your planner will also help you create a long-term saving and investing strategy that will take care of your current needs and plan for the future.
5) Give it a positive spin
Believe it or not, positivity helps in bringing out the best in you. Stress is a state of mind, and by simply changing your outlook, you can get rid of stress in no time.
Once you have identified the source of your stress and put together a plan to fix it (or are working on it), its important to have a positive outlook so you are better able to manage your finances. To beat the stress, join activities of your interest like sports, music, etc.
Whenever you’re feeling overwhelmed, grab a cup of coffee with a friend, or just take a walk around the block. Taking your focus away from stress and living a little not only helps get rid of the anxiety. but also clears up your mind to focus on solving the problem permanently.
Having said that, you must realize that having more money is not the real solution. Even those making millions a month are stressed because the more money we have the higher our financial stress. The key to dealing with financial stress is to change your behavior towards money.
Spend smarter, save more and invest more. And never forget, while money can make life comfortable, it cannot buy happiness.
To make your life financially Stress-free, book a personal counseling session with our team of Certified Financial Planners today! Click here for details.