Proven Ways to Reduce Your Financial Stress Significantly - Life's Little Pleasures and Struggles

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Financial concerns have been proven to cause much stress and anxiety. Almost everyone is affected by financial stress at some point in their lives. It comes with various levels of intensity. According to a 2018 study conducted by Northwestern Mutual, 44 percent of Americans were more stressed out about money than any other issue.

A person’s financial situation has a significant impact on their mental and physical well-being. WebMD lists finances as a major stressor that’s capable of triggering long-term diseases – causing you more stress and busting your budget even more.

Financial stress can put a strain on other aspects of your life, too. It can affect your relationships with your family and your overall quality of life. Financial stress is almost always the result of another problem. Your financial stress can stem from not earning enough money, being in debt, the expense of raising kids, or not living within your means. Sometimes even being married to someone who isn’t good at dealing with money can cause you much financial stress.

How to reduce your financial stress and improve your life:

The American Psychological Association’s annual surveys have consistently concluded that money is the first cause of stress for over 70% of Americans. If you are one of them, there are some proven, effective ways to deal with your money stress and improve your life.

From my personal experiences I know that it’s never really possible to completely eliminate your financial stress, especially in this day and age. Though you may never eliminate all stress in your life, managing it well can help you improve your relationships, mental and physical health, and overall quality of your life.

By reducing your financial stress and improving your finances, you can also focus on other important and meaningful aspects of your life, relax more, and feel happier.

Track your expenses:

Before you do anything to reduce your financial stress, you first need to take a careful look at your finances. Many people are deluded into thinking that they’re aware of where their money is going. But the reality is often the opposite. That’s why, you need to find out where your money is going, how you are spending your hard-earned money, whether you are over spending, and where you can cut back and save some money to meet your important financial goals to reduce stress.

You might need to adjust your spending habits to meet a financial goal such as getting rid of debt, building an emergency fund, or saving for retirement.

Be smart with your spending:

Once you track all your expenses, be smart with your spending. Don’t buy anything that will put you in debt or cause you further financial stress by not having enough money. From now on, before you buy something new, take some time to think about whether they will really improve your quality of life, or they will just cause you stress and eventually add clutter to your home and your mind.

Spending less can reduce your stress level significantly.

Live within your means and don’t keep up with the Joneses:

This is one of the most important steps you can take in order to live a financially stress-free life. Financial stress comes about when your lifestyle doesn’t match up with your income. You begin to finance your expenses using some form of debt, like high-interest credit card, a personal loan, or a home equity line of credit. Some of you might even tap into your long-term savings or retirement funds to pay your current bills.

Without living within your means and without making the most of what you have, you can’t reduce your financial stress. Be content with what you have, and focus on what is truly important and meaningful.

Create a sustainable budget, and stick to it. Spend less and save more. Embrace frugal living if necessary. Once you learn to live and manage well within your means, your life will get so much easier and stress-free.

If your housing expense is a source of financial stress, consider downsizing or relocating to a less expensive neighborhood or town. Taking a similar or better job in a less expensive area is another solution to get ahead financially. If your total housing expense, which includes your rent or mortgage, insurance, property taxes, maintenance, and utilities, is 40 percent or more of your total income, you are likely under financial stress.

Transportations are another expensive category to cut, to live within your means. Buying a pre-owned/used vehicle is much better for your financial health than buying a new one. You will lose 5,000 to 8,000 dollars as soon as you drive off the lot when you buy a brand new vehicle.

Also, don’t bother what other people may think. Don’t even try to impress them. Remember that just because someone appears to have it all, doesn’t always mean they are able to afford it. If you could peer inside the Joneses’ homes and bank accounts, you might not always get an enviable picture.

Do what gives you long term pleasures and what is right for your family. While making financial decisions, you have to do what is right for you and not be influenced by the many temptations that surround us. Don’t make your life harder trying to impress others whose approval or envy doesn’t matter at all. Make the best of your situation, and focus on what truly matters to reduce your financial stress.

Get rid of your debt:

Debt can be a major financial stressor for anyone, and it comes at an emotional and physical cost.

If you are in debt and that debt is causing you stress and keeping you up at night, get serious about drastically reducing expenses so you can pay it off as early as possible. Look for things you can cut out of your budget and put that money toward paying off your debt. You will eventually have something that you value more than those extras that you cut back on: your financial freedom and peace of mind.

Even if you don’t have the extra money to reduce the debt balances faster, you can significantly cut your interest expenses. Consider options such as refinancing, doing a balance transfer at 0% interest, consolidating your debts, or changing payment plans on student loans to make debt more manageable.

Related post: 15 Possible Reasons Why You Are In Debt

Build an emergency fund:

Once you pay off your debt, build an emergency fund. An emergency fund is a savings account meant to cover unexpected expenses and financial emergencies. Having an emergency fund will reduce your financial stress to a large extent. When you know that you have a cushion to fall back on in case of an emergency, a lot of your stress will go away, you will sleep better at night, and enjoy great peace of mind.

Ideally, you should have enough to cover at least 3 to 6 months worth of living expenses, but any amount is better than not having anything at all. Having even $1,000 saved can get you out of many financial scrapes. Start putting something away now, and build your fund over time. You may also consider selling any unused items around the house to build up that cash as quickly as you can.

Create an additional source of income to reduce financial stress:

Financially stress usually results from either earning less money or spending more than your income or the combination of both.

In order to meet some of your important financial goals and reduce your financial stress, you might need to create an additional source of income. With a modest boost to your income, you can save more money for the things that matter to you or you can use the money to pay off debt and be stress-free.

There is no shortage of side hustle options to earn some extra money. Consider starting one that fits into your lifestyle.

Automate your payments and savings:

If you have your financial priorities defined, such as saving for retirement, building emergency savings, saving for your kids’ college education, or buying a home, making your savings automatic can reduce your stress level. Automate as many of these transactions as possible so they happen without you having to think about it.

Also, at times life can be hectic and overwhelming. This causes you to forget things from time to time. Setting up automatic bill pay can help alleviate the stress of remembering to pay bills on time, and avoid costly penalties for missed/late payments.

But you also have to make sure you have the money in bank. By careful planning and sticking with a budget, you can see your savings grow while reducing your stress.

Focus on the positive:

One of the easiest ways to eliminate stress from your life is to be thankful for all of the amazing opportunities and experiences in your life. Focus on what’s going right in your life instead of dwelling on what’s wrong with your finances. Think about your blessings and practice gratitude.

Try to maintain a positive mindset. Your mindset can play a significant part towards overcoming financial stress. Notice the brighter sides, make peace with your problems, face your struggles with courage and positivity, and decide to learn from your challenges.

Seek help:

Finally, seek help from others if you feel your finance is out of your control. Talking to a financially intellectual or wise friend, a family member, a colleague, or a financial advisor can help you see options and solutions to your financial problems that you might be overlooking. At times, just sharing the issue with others can bring you relief. The solution might be as simple as chatting with someone else who is better with finances than you about your financial situation.

Asking for help when you are in need is one of the smartest choices you can make in order to reduce your stress.

Parting words:

We all stress about money from time to time, but implementing any of these simple actions can help you feel more in control of your situation. Don’t let financial stress consume most of your life. By regularly taking some small action steps you can attain your financial stability, slowly but surely. Reducing your money stress will generally improve your quality of life. You will be able to enjoy life more when you have to worry less about money.