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Take a Breather: 8 Effective Ways to Deal with Financial Stress
Wednesday, 28 August 2019

 Having trouble dealing with financial stress? You're not the only one. Read on for some effective strategies to deal with stress.

 The majority of Americans feel stressed out about money. 72 percent of us worry about our finances some of the time, and 25 percent are extremely stressed out. 

So if that's you, just know you're not alone. Financial stress is real for the 78 percent of Americans who are living paycheck to paycheck every month. 

There are some things you can do to deal with money worries. Here are our top eight ways to manage financial stress.

1. Take Stock of Where You Are

When you wake up in the middle of the night in a panic about your finances, it's easy to believe the worst will happen to you and your family. Before you let your stress take over, take a deep breath.

Wait for the sun to come up, pour yourself a cup of coffee and get ready to face your finances. It's terrifying to confront reality, but it's the only way to manage your anxiety and begin to deal with it.

Some people are so overwhelmed by their financial situation, they throw bills away without opening them or stuff them into a kitchen drawer.

This is the time to dig them out. If you've thrown them away, get online and look up all your accounts. 

Make a list of all your debts and expenses. List the total amount you owe, how many payments you're behind and how much you need to bring the accounts current. 

Your list should include:
  • Mortgage or rent
  • Utilities
  • Cable and/or internet
  • Phone bills
  • Credit cards
  • Personal loans
  • Car loans
  • insurance (home and auto)

Remember to list any student loans you or your family members have. If you need money to keep your house out of foreclosure, you might have to ask a friend or relative for a loan. You can even find payday loans with bad credit that will help in an emergency. 

2.  List All Your Assets

Don't worry if this isn't a long list. Write down the exact amount of cash you have in your bank accounts and on hand. List your income from full-time employment and any side jobs you might have. 

List non-cash items that are part of your assets. These might include:
  • Your home if you own and don't rent.
  • Your car. If you're making payments on a car loan, subtract the amount you owe from its value. This will tell you how much equity you have in the vehicle.
  • Jewelry and other valuables
If you have retirement and/or investment accounts that you can access in an emergency, list them here. For example, some 401(k) plans will allow the account owner to withdraw the money under certain circumstances, like to avoid eviction.

3. Declutter to Make Money

Take a look at the list of assets you just made. Is there anything on that list you can turn into cash to help with your bills?

You might have some old jewelry you can sell or sports equipment your kids have outgrown. There's no reason to hang on to stuff if you can reduce your financial worry by selling some of it.

4. Create a Budget

Now that you know what you have and what you owe, you can begin to create a budget for your household. It's helpful if your spouse or partner can join you in this since you're going to make some big changes in your spending habits.

Money is the number one issue married couples argue about. Hopefully, working together on a family budget will begin to alleviate any trouble you might be having. 

This is also the time to go through your bank statements line by line and account for everything you spend money on. You want to get a very clear picture of where your money is going.

If your income is barely covering your bills and nothing more, you need to explore ways to increase your income and reduce your expenses. It might be time to get rid of cable for a few months. Or, you and your spouse might decide to sell one of your cars. 

5. Pay off Debt to Reduce Financial Stress

Easier said than done, right? But, now you have your list of income and expenses. You've also accounted for everything you spend money on.
There are several ways you can organize your debts to determine which ones to pay off first.

If you're looking at credit card debt, you can tackle the cards with smaller balances first and get them paid off. Or, you can start with the high-interest rate cards and begin to pay down the balance.

If you use online banking, you can even set up automatic transfers from your checking account to your credit card. Determine how much you want to pay on your first card every month, and schedule it as a recurring payment. 

6. Develop Stress-Management Techniques

This may be the last thing on your mind when you're up to your ears in bills, but your life depends on it. That's not an exaggeration either. 

Stress is linked to six of the leading causes of death. Those are heart disease, cancer, lung ailments, accidents, cirrhosis of the liver and suicide. 

How is that possible? Prolonged periods of stress can lead to physical problems like headaches, upset stomach, elevated blood pressure, chest pain and problems sleeping. Stress can also cause depression and panic attacks.

You can explore ways to reduce your stress that don't cost a thing. Take a walk outside after dinner. Read a book in the evening or play a game with your kids.
7. Develop an Emergency Fund

You might not be able to do this right away, but eventually, you'll be able to start saving. A good rule of thumb is to save six months worth of income in your emergency fund.

You might have to give up dinners out or a new car, but having money set aside will do wonders for your emotional health. If you have kids, this is something worth sharing with them.

You can model responsible saving for your children and help them learn to do the same. They might not need an emergency fund, but they can learn to save money for something special they really want.

8. Create a New Income Stream

Once you have your debts paid and an emergency fund established, you might think about ways to increase your income over time. The gig economy is real, and you might be able to earn extra money without giving up your full-time job.

You might do taxes on the side, write blogs, fix cars or clean houses. This new income stream might eventually earn enough to allow you to work for yourself one of these days.

Final Thoughts

If all of these tips seem overwhelming to you, ask for help. Financial stress doesn't go away on its own.

You can find free resources through community newsletters, churches, and even the public library. You can find free courses online that will help you understand budgeting, taxes and investment strategies. 

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