Whether you’ve recently been laid off or are just having a tough month thanks to a broken-down car, financial stress finds its way into our lives more often than we’d like. Unfortunately, even when you’re strapped for cash, your bills keep coming. So, what can you do when you’re feeling overwhelmed and completely out of control of your finances?
Financial stress can become all-consuming if you allow it to. We know keeping your anxiety in check when you’re having cash flow problems is easier said than done, but it can be done—and you’ll be better off for it. We’ve come up with these four strategies to help you cope with financial stress and take the first step towards sorting out your situation.
#1: Identify the Source of Your Financial Stress
The first thing you need to do is determine the main reason you’re in your current financial situation. This isn’t to place blame on any one aspect of your life, but to help you figure out a starting point so you can get some control over the situation. Some common culprits of financial stress include:
- High credit card debt that’s eating away at your discretionary income
- Overspending due to impulse purchases
- Losing your job
- Emergencies (car repairs, injuries, flooding, etc.)
While certain situations may be out of your control, like getting laid off due to COVID-19 budget cuts, it is on you to find a way to get yourself on better financial footing.
#2: Come up with a Plan of Attack
Now that you’ve identified the source of your financial problems, you can come up with a plan for how to overcome your current fiscal challenges.
The most important thing to keep in mind for coming up with a plan to tackle your financial troubles is to ensure that it’s realistic—saying you’re going to pay off $1,000 of credit card debt in two months when you’re already strapped for cash just isn’t going to happen. However, cutting unnecessary expenses and reallocating that money to your monthly credit card payment using the banks online payment processing services, is easily doable.
Some examples of how you can tackle financial stress (depending on the source of the problem) include:
- Creating a budget (and sticking to it) to avoid overspending
- Seeking out tax resolution services to repay back taxes
- Making a plan to pay off credit card debt
- Finding a new job that pays better or asking for a raise
- Cutting your unnecessary spending
- Finding ways to save on utilities, commuting, and other fixed expenses
- Getting a second job to help generate more income
Don’t push yourself too hard or you could make your financial stress even worse.
#3: Practice Better Financial Habits
It’s one thing to come up with a plan but, to really stick to it, you need to set boundaries for yourself. Getting your financial reality in check and implementing long-term strategies is essential for lasting results. After all, getting yourself out of your financial rut isn’t the only goal. You also want to make sure you don’t fall back into it (or another financial problem) any time soon.
Think about the key takeaways you learned when you were analyzing your financial situation to get to the root of the problem. Do you spend too much money on eating out or shopping? Do you throw all your fun expenditures on your credit card? Did you not save enough from your freelance gig to pay your self-employment taxes?
Once you understand the behavior that got you in this situation in the first place, you can set up safeguards to prevent it from happening again. Some examples of how to set yourself up for better financial habits include:
- Removing your credit card information from your PayPal account so that you can’t make online impulse purchases with it anymore.
- Starting a savings account for your freelance earnings with enough set aside to pay your taxes when the time comes.
- Creating a small budget for fun activities that you can use every month to keep you on track—it’s okay to let loose a little or invest in things that improve your life and comfort once in a while.
#4: Check in on your coping habits
One other important thing about financial stress is that it can lead to harmful coping habits. From drinking more often to neglecting your workout routine, financial stress can take a toll on both your physical and mental health.
Learning how to cope with your stress in a healthy way while you figure out a solution is just as important as finding a way out of your financial rut. So, be mindful of how these emotions are impacting other areas of your life. Are you taking it out on your partner? Are you neglecting your typical healthy habits? Before you know it, stress gone unchecked can become a much more far-reaching problem.
To help you cope with financial stress, try finding ways to manage anxiety and unwind, so you can channel that energy into productive problem solving. Practicing meditation, listening to music, and even journaling are healthy ways to manage stress that can put you in a better position to create a financial plan.
What to expect from the economy for 2021 may still be up in the air, but that doesn’t mean you can’t take steps to rectify your current financial situation. Don’t let your financial stress go unchecked—make a plan and stick to it.