An estimated 45 percent of consumers have less than $800 saved. Out of this group, about half did not have even $100 in the bank . This is a particularly troubling figure because a financial emergency can easily cost hundreds of dollars. This problem affects every age group, and it makes major financial goals like retirement difficult. At the very least, not saving money can end up leading to credit card debt or payday loans that set your finances behind even more. If you want to reduce your financial stress, you have to start working on a way to improve your finances.
5 Tips for Reducing Your Financial Stress
The American Psychological Association found that 80 percent of Americans experienced financial stress because of the 2009 financial crisis. In couples, fighting about money each week caused a 30 percent increase in getting a divorce. These statistics are probably not that surprising though. As anyone who has run into money problems knows, being broke is stressful. To reduce your financial stress, you have to start by identifying the problem.
1. Figure Out the Problem
Before you can solve your money problems, you have to figure out the problem is. Be realistic as you look at your problems. Remaining in denial about your open accounts, debts in collection or credit card bills will not help.
2. Identify the Habit That Is Hurting You
Sometimes, it is easy to figure out the problem that is actually hurting you most. Some people want nice things or fancy clothes because it makes them feel like they have made it in life. Other people run into trouble because of student loan debt. In cases like student loan debt, your only real option is to pay it off. Other problems like credit card debt can be addressed by changing your spending habits as well as paying off your current debts.
3. Always Communicate With Your Partner
If you are about to go on a financial diet, your partner needs to know. Otherwise, your financial arguments will only become worse. Imagine coming home after working overtime to earn extra money and eating top ramen to save at lunch. If your partner just bought a new sweater, you will naturally feel upset. It wouldn’t be your partner’s fault if you did not communicate your plan to them. Your goal is to work on solving these problems together and developing a health financial plan.
4. Create a Strict Budget
Once you know the problem and where your money is going, the next step is to create a budget. You need a budget that is rigorous, but still comfortable enough for you to actually stick to. Track your expenses and make sure that you know exactly which bills are due at what time. You should also work on limiting your spending on things like entertainment or eating out so that you have money left over to pay off debts and save. If you cannot afford to save or pay off debts at the end of the month, it is time to consider a second job.
5. Start Saving
One of the easiest ways to get into trouble is by not saving money. If you had to spend $2,000 on your car today, would you be able to? If you are like most people, you would have to finance your car repairs on your credit card, through a title loan or with a payday loan. All of these options will only make your financial situation worse. You need to create an emergency fund that covers at least three to six months of your expenses. While it might not be enough to cover a major medical emergency, it will cover most of the problems that life tosses your way.