Do you want to get more done at work or at home? Want to get ahead and make more money? Find ways to get rid of financial stress! Read more to find out how!
Financial stress is one of the leading causes of poor work performance and lost time on the job. One study even suggests that workers who are financially stressed perform worse on concentration tests than workers who are sleep deprived! Lost time to financial stress costs businesses millions of dollars per year nationwide, and it takes its toll on people’s careers as well. When you’re financially stressed at work, you aren’t on top of your game. It is much more difficult to make winning moves and get ahead when you are constantly worried about your money.
Research shows that employees who are not under financial stress are more focused, more creative, and earn higher salaries than employees who are highly stressed.
Financial Stress is also one of the leading causes of relationship problems and disputes. When nerves are frayed by stress over money, your relationships usually pay the price. This is often a vicious cycle, where household money problems lead to poor job performance, which leads to missed opportunities, which leads to more financial stress at home, and so on.
So how do you stop this cycle? By taking charge of your money, you also take control of your destiny. Many people report that once they organized their fiances, other areas of their lives improved as well. Often, we are more worried about money than we realize, and by removing that source of hidden anxiety, our mind and emotions are free to focus on other things, like caring more deeply for our loved ones and developing new ideas for our careers. Below are Five actions you can take to beat financial stress and put an end to the cycle of lost time in your work and home life!
- Begin Budgeting
Track and measure your money. Where is it? How much is in your account right now? A budget is simply a way for you to know what your money is doing for the week or for the month. This can be thought of as getting organized. start small and implement a system to track your bills, spending, income, and obligations. Get a picture of your spending and saving habits. There are a million ways to budget, but the very best method is any method that you will use consistently. If you’re not using it, it can’t help you. Consistency beats intensity. For now, just pick a style and commit to using it for three consecutive months, and I assure you that you will feel more organized.
- Destroy Debt
Too much debt is the most common reason people cite for not having enough money to save; not having enough money saved for emergencies is a major cause of financial anxiety. Give yourself the option to save by getting rid of your debts as fast as you can. Use the proven “snowball” method: get into equilibrium, get all payments current and make minimum payments on everything. Start with the debt with the smallest balance and throw any money you can at it until it’s gone. Take what you were paying on that and throw it at the debt with the next smallest balance while continuing to make minimum payments on the rest, and so on. Cleaning up your debts like this even a little bit will start making a huge difference in your level of financial stress. Fewer bills in the mail is always good for morale.
- Start Saving
Sock a little money away for the unexpected. Most experts recommend at least three months’ worth of expenses to cover the loss of a job or other emergency. For most people, this is around $6,000 – $10,000. If you’re just getting started, throw together a mini-emergency fund of about $1,500 in cash that you will pledge to use only in emergency situations. Things you can’t have insurance for, for example. This mini fund covers the gap while you work on eliminating your debts. Once your finances are under control, you can increase the size of this personal safety net to it’s full amount.
- Eliminate Expenses
Once you have started on the first three steps, the next logical step is to slash your spending in certain areas so you can free up even more money to turn the tides in your favor against your debt. I advocate looking at your monthly bank statement and highlighting the five biggest withdrawals. Take a look at these and ask “is there anything I can do to make these numbers smaller?” You’ll probably find that there is at least one thing you can realistically do to reduce the big ticket spending in your budget. Sure, moving into a smaller home might save you on your housing costs, but that is not always a reasonable option. You want something you can do in a week or less that will “liberate” at least a couple hundred dollars per month. Common ones are selling a car with a huge payment, changing your cable/internet/phone package, changing your food habits, or adjusting subscription services.
- Establish a Comprehensive Financial Plan
Elements of a complete financial plan include provisions for retirement savings, insuring things you can’t replace, making sure you’re putting enough money away for yearly expenses like taxes, holidays/birthdays, and vacations, and generally giving you a satellite-view picture of your financial situation. A comprehensive plan will take into account your unique needs, your strengths, and things that might derail your plans if they are not dealt with. Your financial plan acts as a flight plan for your money and your goals. It can be used as a motivator to keep budgeting, saving, and defeating debt, as well as a mirror by which you can gauge your progress. A Personal Financial Plan should be among your most important personal documents along with your will and life insurance policy. You can create a plan yourself or use a trusted service to create one with you. Whatever you choose, you need to have a plan so you can see whether you are gaining ground or just spinning your wheels.
There you have it. If you take these five actions, financial stress will soon become a thing of the past. Once you are controlling your money instead of letting it control you, your mind will be free to focus on other important things. Congratulations!
What are some things you have done to beat financial stress? Let us know – we’d love to hear from you!
Until next time,
Do Brave Deeds and Endure
– Ben at Debt Freeks