7 tips for beating financial stress


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Even if you’re not the worrying type, there certainly is a lot of financial stress right now, enough to keep even the most stoic person up at night.

Inflation has been hitting 40-year highs; the supply-chain disruptions of the pandemic have led to ongoing scarcity and labor shortages. Chances are, you are shelling out more for groceries, gas, and other essentials.

Rising interest rates are threatening to price some people out of the housing market and can make credit card debt harder to eliminate. What’s more, rumblings of a recession and consequently job cuts fill the news. More than 80% of Americans surveyed are concerned about hard times ahead.

If you’re feeling as if you want to hide under the covers (or the bed itself), it’s understandable. But don’t: Life goes on. The economy is cyclical, and America recovered from a serious downturn that hit in late 2007. One smart move to make right now is to work on managing your money stress so you can keep calm and carry on — and stay on track with your goals.

Here, you’ll learn steps you can take to tackle financial goals during this or any other challenging moment in our economic history.

While there’s no one-size-fits-all solution to wranging money stress, there are strategies that can help most people feel more in control of their finances. Try one or more of these tips, and see what works best for you.

Recommended: Learn how to prepare and survive a recession with this guide.

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1. Tackle One Decision (or Problem) at a Time

Part of the problem with money stress is that it can snowball. You may feel overwhelmed and try to tackle too much, too soon. Pace yourself, and don’t try to solve all your issues at once. Otherwise you can become burned out and make less wise decisions.

“Our willpower is like a muscle. Similar to how your muscles get tired at the end of a workout, the strength of your willpower fades as you make more decisions. Researchers often refer to this phenomenon as decision fatigue,” writes James Clear, the author of the best-seller Atomic Habits.

A good first step to lowering your financial stress can be to figure out what’s making you feel most anxious. Is it your spending, your student loans, your mortgage, or saving for the future?

Once you identify the key source of your stress, you’re better able to move forward with fixing it. Do so methodically, one worry at a time, to avoid making too many decisions, too fast.

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2. Create a Budget

A major facet of money stress can involve feeling out of control in terms of your finances. There’s a simple solution to that: making and sticking to a budget. In one recent survey, 85% of respondents credited budgeting with getting them out of debt or had helped them stay out of debt.

Creating a personalized — and realistic — budget can be key to unburdening yourself from your money stress. This way, you don’t even need to think about your cash flow, because you’ll know where every single cent you make is going.

To create a line-item budget that captures your cash flow, you first need to know your post-tax income plus your basic living (housing, food, car payment, insurance, and any debt payments you might have). Also calculate how much you are spending on what are known as wants vs. needs: entertainment, clothing, takeout food.

Finally, list your income and savings goals. From here, you should be able to adjust and figure out how to increase your savings goals based on how much you have left over after necessary spending.

You can then choose among a variety of methods to budget, such as the envelope system, the 50/30/20 budget rule, and zero-based budgeting. As you decide which is best for you, consider the ways you might manage your budget, such as:

  • Pen and paper
  • Online spreadsheet, like budgeting with Excel
  • Mobile apps, including ones offered by your financial institution
  • A money journal
  • Consulting with a financial advisor

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3. Prepare for the Unexpected with an Emergency Fund

One way to allay your financial stress is to know that you have some back-up funds in case you really need them. By saving an emergency fund, you know that no matter what happens, you’ll have it covered.

A healthy emergency fund should be stocked with at least three to six months’ worth of expenses. And since you already created a budget, you know exactly how much money you’re going to need each month.

It’s OK to start small with an emergency fund; even $25 a month will be a start. Consider setting up an automatic transfer on payday from checking to a linked saving account so you aren’t tempted to spend that amount.

Also consider keeping what’s known as a cash cushion of a few hundred dollars in your checking account, if possible. This money is there in case you, say, get hit with a higher than usual bill or forget about an automatic deduction. With a cash cushion, you’ll avoid those hefty NSF (nonsufficient funds) and overdraft fees.

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4. Deal With Debt

Even in the best of times, debt can cause worry and stress. It may feel like a weight that is always hanging over you. During moments of inflation and high interest rates…ouch. It can make the anxiety more intense.

Take steps to reduce the debt and the stress; think of it as a form of financial self-care. Shop around for a better interest rate on your credit cards. Rates are currently around 15% on existing accounts and 19% on new offers; both are considerable numbers. Call your credit card issuer and see if you can get a lower rate; if not, look into other offers, including low- or no-interest balance transfers. Or you might take out a lower-interest personal loan to pay off your debt. Taking control of this debt can help you sleep better at night.

Similarly, if you have student debt, see if you can minimize it by extending your student loan repayment term and paying less each month. Or see if student loan refinancing could help you qualify for a lower interest rate, which could also mean your loans could cost you less money.

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5. Just Say No to Splurging

When we’re stressed, there are a lot of ways to relax or blow off steam — and many of them cost money. Retail therapy, a big night out, a weekend getaway: Sure, they are all wonderful, but if you are dealing with financial stress, they aren’t a good option. They can add to any debt you are carrying and give you less cash for daily life.

Have a talk with yourself about this fact; how you will feel the morning after you splurge. Imagine the guilt and discomfort, and avoid it. Some other techniques for better spending habits:

  • Don’t window-shop or pit-stop at your favorite stores. That’s just putting temptation in your path.
  • If you see something you feel you must have, even though it’s not a true need, wait for a while (anywhere from 24 hours to 30 days) before buying it. You may find that the urge cools.
  • Set aside some “fun money” in your budget for low-cost treats. Buy yourself a fancy coffee on Friday morning to reward yourself for a week of hard work. Take yourself to the beach one afternoon. Climb a mountain, and savor the view. Get a 10-minute massage at a nearby day spa.

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6. Add a Second Income Stream

Sometimes it’s not about subtracting spending from your daily life, but rather it’s about adding more cash to your pocket. There are many benefits to a side hustle: Picking one that fits into your current lifestyle without taking up too much of your free time can really add value to your wallet and your life.

Before choosing a gig, think about what you’d like to do. Perhaps you’d like to put your writing skills to use by freelancing on the side, or you’d want to offer up your services a few hours a week as a social media consultant.

Maybe you really love driving around on weekends, in which case working for a ride-sharing app might be for you. Or you could walk dogs. Or sell your suitable-for-framing travel photos online.

And why not resell any possessions you aren’t using anymore? Items in good, gently used condition could easily enrich someone else’s life (not to mention the environment, by staying out of landfill). There are dozens of places to sell your stuff: For clothes, try a local second-hand store near you, such as Crossroads or Buffalo Exchange. For furniture and other goods, try listing on eBay, Etsy (yes, it’s for more than crafts), Craigslist, or Nextdoor.

Image Credit: CrispyPork/ istockphoto .

7. Reframe Your Financial Stress

Lastly, but importantly, try not to be mired in worry. Take a big picture view: Our country has seen and survived many economic downturns, and there are likely more in our future. That context can help you breathe a bit better.

Also, practice gratitude. Refocus on what is good in your life, whether that’s friends, family, your health, living in a neighborhood you love, or seeing improvement in your pursuit of a hobby, whether that’s playing guitar or pickleball.

And don’t forget to lean on those close to you for support. Let them know you are dealing with financial stress, and ask how they manage theirs. In addition to getting reassurance and comfort, you may learn some new strategies.

You might also consider consulting with a financial therapist if you need guidance; these professionals combine psychology and financial planning skills to help you manage your money.

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The Takeaway


Money worries can get the best of us, especially in challenging times, such as when inflation and interest rates are high and there’s talk of a recession. To manage financial stress, it’s wise to take steps to improve your cash situation — say, by budgeting, building up an emergency fund, and lowering interest rates.

It’s also a good idea to work on your emotional wellness by slowing down your decision making, avoiding temptation and the subsequent guilt, and seeking support from those close to you.

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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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