Scan the business pages of your local newspaper, or check in with friends and family, and you’ll find a few common financial worries come up again and again: High inflation. The threat of recession. International conflict affecting the costs of fuel, food and more.
And that’s not even factoring in the unexpected. Sudden illness or injury can also add to your financial burdens.
At which point, you might be tempted to change the subject to something fun and light, like the movies or (by comparison) your next root canal.
But if you’re feeling stressed, don’t change the subject. Instead, use this guide to find ways to manage and reduce financial stress to maintain a healthy and balanced lifestyle.
Create a budget
Creating a budget is crucial in managing financial stress because it provides you with a clear understanding of your financial situation. This can be done using a simple spreadsheet, a budgeting app, or a pen and paper, as long as you are accurate and consistent.
From there, you can identify areas where you can cut back on spending money and prioritize your expenses. For example, you may be spending a large amount of money on non-essential items, such as eating out or streaming services. By cutting back on these expenses, you can free up more money to cover essentials like rent or your mortgage, utilities, and groceries.
To create a budget, you can follow these steps:
- Determine your income.
- Track your spending: Write down all of your expenses for one month, including fixed costs (rent, insurance, utilities, etc.) and variable expenses (groceries, entertainment, transportation, etc.).
- Categorize your expenses: Group them by housing, food, transportation, and entertainment, to see where your money is going.
- Set spending limits: Decide how much you can spend in each category and stick to it.
- Make adjustments: If you’re spending more than you’re earning, look for areas where you can cut back. If you have extra money left over, use it to pay off debt or build an emergency fund.
- Review and update your budget regularly: Review your budget regularly, at least once a month, to see if you are on track and make any necessary adjustments.
Remember, creating a budget is a process, and it may take some time to get it right. But it will be worth it in the long run, to help you better manage your money and reach your financial goals.
Practicing mindfulness is another effective way to deal with financial stress. Mindfulness is paying attention to the present moment without judgment or distraction. When it comes to financial stress, this means focusing on the present and not getting caught up in worries about the future or regrets about the past.
There are several ways to practice mindfulness, including taking a walk, meditating, or simply taking a few deep breaths. These can help you stay calm and focused, even in the midst of financial worries, which in turn can help you make better decisions and take actions aligned with your goals and values.
Mindfulness can also help you sleep better and boost your immune system, which is vital for reducing stress and improving your overall well-being.
Here is a step-by-step guide to mindfulness:
- Find a quiet place: Choose a place where you won’t be disturbed for a few minutes.
- Sit comfortably: Sit in a chair or cross-legged on the floor. Keep your back straight but not stiff.
- Focus on your breath: Close your eyes and take a few deep breaths. Pay attention to the sensation of the air moving in and out of your body.
- Observe your thoughts: When thoughts come up, observe them without judgment. Don’t get caught up in them or try to change them. Simply acknowledge them and let them pass.
- Bring your attention back to your breath: Whenever you realize your mind has wandered, simply bring your attention back to your breath.
- Start small: Begin with 3-5 minutes, and build from there.
- End the practice: When you’re ready, take a deep breath and open your eyes.
It’s essential to be patient and gentle with yourself as you practice mindfulness. It may be challenging at first, but regular practice will make it easier and more natural. You can also try incorporating mindfulness into your daily activities, such as eating, walking, or doing household chores.
Seek professional help
If financial stress overwhelms you, seeking professional help is a good option. A financial advisor or financial therapist can help you develop a comprehensive plan to manage your finances and provide the necessary tools and resources to stay on track. They can help you create a budget, establish a savings plan, and even guide managing debt, investing, and retirement planning.
Working with a financial advisor can also help you identify and address any underlying issues contributing to your financial stress. For example, they may help you understand your spending habits. Or they can work with you to develop a plan to manage unexpected expenses, such as medical bills or car repairs.
Here are some steps you can follow to find a great financial advisor:
- Determine your needs: Before you search for a financial advisor, understand your financial goals and what you want to achieve. This will help you determine the type of advisor you need and the services they should provide.
- Ask for referrals: Talk to friends, family, or colleagues who have worked with a financial advisor. They may be able to recommend someone they trust.
- Research potential advisors: Once you have a list of potential advisors, check their credentials and experience. Look for someone who is a Certified Financial Planner (TM) professional or has a chartered financial analyst (CFA) designation. Also, check if they have any disciplinary actions or customer complaints against them.
- Schedule consultations: Set up consultations with several advisors to better understand their services and approach. Ask questions about their experience, fees, and investment philosophy.
- Consider compatibility: It’s essential to find an advisor you feel comfortable working with and trust. Consider factors like communication style, availability, and personality.
- Verify credentials: Check your advisor’s record with the Financial Industry Regulatory Authority (FINRA) and/or state insurance department.
- Evaluate fees: Find out how the advisor is compensated, whether through commissions, fees, or a combination of both. Make sure that the fees are reasonable and in line with industry standards.
Consider life insurance
Life insurance is a proactive way to avoid financial stress in the event of the death of a family member. It is a type of insurance that provides financial support to your loved ones in the event of your death, and can help reduce the financial burden that comes with their loss. The benefits of term life insurance include peace of mind and security, especially if you have dependents who rely on you for financial support.
There are several types of life insurance, with term life insurance being among the most affordable. Term life insurance works like this: You select an amount of coverage and a term length (10, 15, 20, 25 or 30 years). In exchange for monthly premiums, the insurer will then pay your designated beneficiaries the coverage amount in the event you die during that term. If you outlive the term, no benefit is paid (unless you extend your term, typically at a much higher premium) — but hey, you’re alive.
If you happen to die, your family will receive the death benefit, often as a lump sum payment. This money can be used on any expenses they face: funeral costs, outstanding debts, mortgage payments, tuition, groceries and more.
Here is a sampling of quotes for a 20-year Haven Term life policy, issued by MassMutual or C.M. Life, for people in excellent health:
Term life insurance quotes
Estimate based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.
Remember, life insurance is a long-term commitment, so it’s important to take your time and find the right insurer for you and your loved ones. But rest assured: It is possible to get high-quality term life insurance on a budget.
Focus on what matters most
Finally, it’s important to remember what matters most in life: Spending time with your family, pursuing your hobbies, or simply taking care of your mental and physical health.
Doing so can help provide perspective and reduce stress levels. Concentrating on the things that bring you joy and fulfillment can help put financial worries into perspective and give you a sense of balance and calm.
Taking care of your mental and physical health is also essential when dealing with financial stress. This may involve engaging in exercise, meditation, or therapy. These activities can help reduce stress, improve mood, and increase overall well-being.
In addition to taking care of your mental and physical health, it’s crucial to maintain strong relationships with your loved ones. Family and friends can provide comfort and support during difficult times, and can also help bring a sense of joy and fulfillment to your life. There’s always room in your budget for that.