Have you been having sleepless nights, headaches, excessive worrying, angry outbursts, crying, or stomach problems lately while trying to deal with your money issues?
These are a few ways your body could be trying to tell you that you need to make some changes in your financial life, like yesterday.
It’s no secret money issues can cause some major stress in someone’s life.
If you have symptoms like the ones above and are going through a tough financial time, please keep reading to learn some ways to start changing your financial path.
Here are five tips to help get yourself on the right financial course so you can reduce financial stress.
Also, keep reading for a list of different stress management and relaxation techniques you could try to help manage your stress while you are getting your financial life in order.
How to Deal With Financial Stress: Get on the Path to Wellness
Financial wellness is your ability to effectively manage your finances from month to month without feeling stressed or worrying about how you are going to pay your bills or survive a major unexpected expense should one arise.
When someone has financial wellness they are paying their bills on time, have an emergency fund for unexpected expenses, and are actively putting money away for their future.
Sounds awesome right?
Feeling stressed and worrying about money is a sign that you don’t have financial wellness. If your financial stress is affecting your life, you should take action.
Whether your stress is stemming from a recent, sudden financial hardship or a longer-term financial downslide, you should start making changes now.
Experiencing stress is detrimental for your mind and your body and you should quickly take action to improve your situation.
Here are some tips to help you improve your money situation and get started down the path to financial wellness.
#1 Learn the Truth About Your Financial Situation
Finding out the truth is not always the most pleasant thing to do, but it is necessary to know so you can figure out where you are starting from. If the cause of your stress has been more recent or sudden, you may already know what kind of debt you are dealing with.
However, if your finances have been on a steady decline due to spending habits and lifestyle inflation, it is time to sit down and figure everything out.
You will want to sit down and write down all of your debts. Make a list of all of your debts and include the name of the company you owe money to, the total amount you owe, and the interest rate you are paying.
Total everything up so you can see the entire amount you owe to really get a handle on where you are starting from.
#2 Create a Budget and Stick to It
If you already have a budget, great! You will want to review it and look for ways to tighten it up in order to “find” money to start putting toward the number you just figured out.
You’ll want to scrutinize every line in your budget to see if it could be reduced.
Let me just say, every little bit helps! Please don’t think any amount is too small and will not make a difference. It will add up.
Let’s say you can swing decreasing 5 lines in your budget by $5 dollars each. That’s $25 a month you could be paying on your debt. That’s $300 dollars a year!
That’s no pocket change!
If you need help finding ways to save money in your budget, here are some posts that could help:
- 70+ Frugal Living Tips to Help you Spend Less Money
- 20 Ways to Save More Money Every Month
- No–Spend Challenge Guide: Rules & Tips for Success
- How to Live Below Your Means: Benefits & Tips for Success
- 5 Tips to Help You Stop Living Paycheck to Paycheck
If you do not have a budget and need help creating one, check out my post on creating a budget. You can also download my free Budgeting Workbook to help you get started with creating a budget that works.
Here is what it looks like:
The important thing here is creating a realistic budget you can stick to. What you don’t want to do is make your budget so tight that it’s impossible to follow!
The purpose of a budget is to dictate where your money will be going every month. You have to put your money to work for you.
In this case, your money will be paying your recurring monthly bills and paying down your debt, which brings me to tip 3.
There are many ways to make a budget. You may find that the traditional way of budgeting by using categories doesn’t work for you. It’s so important to find a way to budget your money that works. My friend, Lindsey, uses a non-traditional way of budgeting across time instead of by categories. The key is you have to figure out what works for you.
#3 Start an Emergency Fund
If you don’t have a savings account, now is a good time to open one and start putting a few dollars in every month. I would suggest putting half of that “found” money from tip number 2 into a savings account until you get a nice cushion.
This cushion of money will help you sleep better at night. It will help decrease your stress level!
Your emergency fund is there for unexpected expenses that you are not able to pay for out of your monthly income.
This account is there for you to use so you don’t go further into debt if something unexpected and out of your control should happen.
How much should you have in your emergency fund before redirecting that money back to paying down your debt you ask?
That number will be different for everyone depending on their situation, but as a general rule, many finance people say you should have a minimum of 3 to 6 months of expenses.
If your family is living on one income, you may want more in your emergency fund.
If your job is seasonal and there is a potential for being laid off, say in the winter months, you may want more. If you tend to worry a lot and get anxious easily, you may want more.
The bottom line is you need to have enough in your emergency fund that will help you sleep better at night knowing that if something out of your control comes up (i.e a job layoff because of a pandemic, a broken furnace in the middle of winter, or a health problem requiring time off from work) you will be able to get through it without experiencing a major mental breakdown related to financial stress.
So now you have a realistic budget completed and your emergency fund savings account is opened and ready for deposits.
#4 Decide on a Debt Repayment Method
Sometimes just having a specific plan of action for debt payoff can help you feel better and less stressed. There are a couple of methods to systematically pay down your debt.
The first one is called the debt snowball method. If you think of how a snowball is made, it starts off small and builds up and gets bigger as you keep rolling it.
In debt repayment using this method, you would start with paying off the smallest debt you have. So you would pay the minimum on it, plus any extra you can afford to pay on it.
While you are paying the extra on the smallest debt, you continue to pay the minimum on all of your other debts.
After the smallest debt is paid off, you would take the amount you were paying on the smallest and put all of that money toward the next smallest debt, while you continue to pay the minimums on all the others.
You keep with this pattern until finally, you are down to your last and largest debt, at which time you are paying way more than the minimum and will pay that off in no time!
The second method for debt payoff is called the debt avalanche method.
This is when you focus on paying off the debt with the highest interest rate first. So you would start paying the minimum, plus whatever else you can afford to pay on it.
At the same time, you are paying the minimums on all your other debts.
After you pay off the debt with the highest interest rate, then you take all the money you were paying on that and you start paying on the debt with the second-highest interest rate.
Keep paying those minimums on all the others.
Again keep going in that pattern until everything is paid.
You can also use the debt snowflake method, which is best used along with one of the other methods.
It involves taking small amounts of money that become available to you and putting that money toward paying down your debt sooner.
So for example, say you get a Rakuten check in the mail. Instead of cashing it and spending it on something, you would immediately use it toward whichever debt you are focusing on paying down at that time.
So which is better, the debt snowball method or the debt avalanche method? You will have to decide which method will be best for you.
Which method do you think will keep you the most focused and motivated toward reaching your goals?
The debt snowball method may keep you motivated and excited about paying down your debt because you will see and feel the successes sooner.
As you pay the smaller debts off, you will feel like you made a dent in your progress because that is one less bill you have coming in, which in turn will help you stay motivated and driven.
On the other hand, the debt avalanche method tackles the debts with the highest interest rates first, thereby saving you money in the long run because you will save some money on interest.
But the debt avalanche method can take longer to see and feel the successes during your journey because debts with higher interest rates can take longer to pay off.
Once you decide which method you want to use, go back to the list you made of all your debt and decide which you are going to pay down first. Then you can begin putting the extra money you found in your budget toward that.
Don’t forget to start depositing into your emergency fund also!
If you are having a hard time finding extra money in your budget to put toward your debt and emergency fund, head over to my post, 20 Ways to Save More Money Every Month, where I have a list of creative ways you can save on monthly expenses.
You could also check out:
- 70+ Frugal Living Tips
- No-Spend Challenge Guide: Rules and Tips for Success
- How to Live Below Your Means: Benefits & Tips for Success
- 12 Easy Ways to Cut Food Expenses
#5 Be Kind to Yourself
Getting ahead with your finances is not an easy task. There may be months when you bust your budget and you just feel like throwing in the towel and giving up the effort.
Please don’t be hard on yourself or beat yourself up about it. Acknowledge what went wrong and do your best to try and correct it for next month.
I’m sure you heard the saying before that paying off debt is a marathon, not a sprint.
It takes lots of time, modifications, and adaptations to your budget and lifestyle. And it takes hard work and dedication to get out of debt.
Unfortunately, there is no easy way to do it.
There will be bumps in the road that will try to throw you off course.
Do your best to stay strong-willed, focused, and keep a positive money mindset and you will overcome and reach your goals.
If you are feeling stressed about your financial situation, it is important to find ways to help you cope with your stress and manage any anxiety you may be experiencing.
I put together a list of things you could try to help you relax and re-center yourself in order to stay positive when working toward your financial goals.
How to Deal With Financial Stress: Stress Management
Here is a list of ideas you could try so you can destress and get your mind back where it needs to be to keep moving forward with your financial goals.
Many of these can be used together. For example, listening to music while coloring or taking a walk with a friend who is a great listener and talking about where your stress is coming from.
I tried to include a variety of techniques so there is an idea for everyone to try. The key is finding what works best for you so you know what to do when you start noticing your stress level creeping back up.
Also, don’t wait until your stress level is at its highest before trying to manage it!
It will be so much harder to bring your stress level back down if you let it get out of hand. It’s important to find some kind of outlet for stress relief daily.
- Deep breathing. This is also called belly breathing or diaphragmatic breathing and is very helpful for many people to decrease stress and anxiety. The correct way to do it is to lay on your back. Take a deep breath through your nose and let your belly expand as you inhale. Exhale through pursed lips and your belly will return to its normal position. Do it slowly! Place a hand on your belly to feel it rise and lower to help make sure you are doing it correctly.
- Meditation. Check out guided meditation videos on YouTube or there are also tons of apps you could try.
- Exercise. This is my favorite! There is nothing like a good sweaty workout when you are stressed!
- Yoga/stretching. There are tons and tons of YouTube videos on yoga for stress relief.
- Get outside and walk, bike, hike, etc. Get some fresh air and get out in nature.
- Listen to music. Try something calming like classical music or nature sounds.
- Dance. Get into the music and dance like you think no one is watching you!
- Play with your pets. Cuddling with your furry friends is a known stress reducer.
- Talk it out. Sharing your thoughts and problems with a close friend or family member can help you to come up with solutions, build motivation, and realize a solution to a problem.
- Write in a journal. Sometimes writing things down can help you to stop dwelling on them and helps get things off your mind so you can relax. Writing is also a great way to brainstorm ideas for getting out of a situation you don’t want to be in.
- Visualize and go to your “happy place”. Use mental imagery to relax and decrease anxiety and stress.
- Take a hot bath or shower. Let the warm water relax you and your muscles.
- Use aromatherapy. You can use essential oils that are known for stress relief. Be careful with this because essential oils need to be diluted with a carrier oil before they are applied to the body. They can be applied in a lotion, on your pulse points, or you can make your home smell good with an oil diffuser.
- Clean. This is a win-win! Relieve stress and get a clean home in the process!
- Progressive muscle relaxation (PMR). The simple way to explain this is you want to breathe in as you are tensing up a group of muscles. Hold the contraction for at least 5 seconds. As you breathe out, you relax that group of muscles. Relax for at least 10 seconds before moving to the next muscle group. Usually, you start from your feet and work your way up toward your head. For more information on this, click here.
- Color. Coloring is not just for kids anymore! There are some great adult coloring books out there.
- Spending time with your children and giving them hugs. Enough said!
- Participate in leisure interests/hobbies. Playing cards, board games, word searches, baking, refinishing furniture, gardening, etc.
- Read. I love reading a book at the end of my day right before bed. It gets my mind off the crazy things that happened throughout the day so I don’t lay there thinking about them while I’m trying to fall asleep.
- Have a good cry. Let’s face it, everyone needs one once in a while.
- Talk to your doctor. If you are still struggling with high-stress levels and can’t get it under control, please talk to your doctor!
Final Thoughts on Coping With Financial Stress
Experiencing stress and anxiety over money does not have to be a part of your life. By developing a plan to get your money situation under control, you can feel more relaxed and at ease.
The key is taking action. Things won’t change unless you make them change.
And we all know change is not easy…but it is possible.
And if you are feeling stressed out about money, it is definitely time to start making some changes. Once you start making small changes, it will get easier.
Before you know it, you will achieve a state of financial wellness and will be sleeping like a baby at night. And that financial stress you once had will be a distant memory.
Do you have any other tips for coping with financial stress? What do you do to manage your stress? Please let me know in the comments.