With the current coronavirus pandemic having a detrimental effect on the economy, many people have suffered financially as a result.
Considering the current state of unemployment, closures of businesses and the uncertainty of the economy, it is understandable that you might be feeling stressed about your finances.
This stress, however, can have a detrimental impact on your mental health and wellbeing. Not knowing whether you have enough money to pay your bills, eat, or keep a roof over your head is enough to keep you up at night!
Learning to manage your finances, like anything else, takes time. To master it, you need commitment and a deep understanding of your financial situation.
These are the first steps to effective fund management. Taking control keeps your financial life in order which is crucial for reducing financial stress.
If you have money management issues or want to know how to reduce financial stress, here are some tips that can improve your financial habits:
1. Look on the bright side
It’s better to focus on the positive aspects of finances rather than the negative ones. Of course, positive thinking won’t magically pay bills or increase your budget, but it can help alleviate your fears.
It can also help you recognize and appreciate your financial strength, which could solve some of your issues. Take a piece of paper and start listing the positives of your money management skills.
Perhaps, you have a good job, or you save money regularly through savings or have a great emergency fund?
Even if things are stressful or money makes you anxious, spending a little time focusing on the right direction can help you stay calm and conscious.
By thinking about the positives, you can start to develop a plan for the future.
2. Create a budget
You may feel overwhelmed and think that creating a budget will only increase your financial stress; but, it’s the best way for you to control your finances and stop worrying about where your money is going.
A budget allows you to decide when and how to use the money you earn.
This spending plan will ensure that you can cover your immediate expenses while continuing to work toward your savings goal. Budgeting can also generate extra funds to help you pay off debts quickly.
Planning and sticking to a budget is extremely challenging; but, once you understand what to do, you can usually reduce the time you spend on it, which in turn reduces the time you spend worrying about money.
3. Don’t shy away from getting help
If you have spending issues and find it tricky for you to control your budget, please don’t be afraid to seek outside help. You can take basic money management and investment courses to help you plan your budget and do what you need to do to succeed financially.
A financial planner can also help you formulate long-term savings and investment strategies to help you meet current needs and plans.
If you feel that your debts are overwhelming, you can work with credit counselling services to help you restructure your debts, and in some cases, you can also negotiate with creditors.
If you need help creating a budget and staying on top of your finances, Ceed might be able to help! Take a look at our money management service for more information.
4. Have an emergency fund
An emergency fund is a savings account used to pay for unexpected expenses and financial emergencies.
Take car repairs, for example. They can be expensive and stressful; however, if you know you can use your emergency fund to pay for them, much of that stress will go away.
If you know that you have sufficient money in your bank account, then you wouldn’t be worried about covering unexpected financial emergencies that may arise.
Until you’re out of debt, you should have at least £1,000 in your emergency fund. So, your goal should be to set aside three to six months of savings for living expenses.
Establishing an emergency fund may seem difficult at first, especially if you struggle to make ends meet every month. You should aim to set aside a small amount of money first like £10 or £100 per month. You could also consider selling any unused items around the house to put towards the fund.
5. Rid yourself of debt
The first thing to do, if you have debt, is to control it and try to get rid of it.
If you have credit cards, student loans and other debts; seek to combine them and try to get the lowest possible interest rate. Again, this is about taking the right steps to control your money.
Some options allow you to combine multiple unsecured debts (such as credit cards, personal loans, and payday loans) into one bill instead of paying them separately.
If you have only credit card debt and a tight budget, try to pay the minimum amount as soon as possible after receiving the credit card bill.
Afterwards, if your finances allow you and you come across more money, try to pay the same amount of debt repayment in a few weeks.
Try to maintain this repayment cycle until your debt is fully paid off.
6. Find some secondary income
We sometimes have no choice but to cut our budget from time to time, and we need to be careful not to let a tight budget become a source of additional stress. Another way to alleviate economic tensions is to take measures to increase your personal profits.
In the current economic environment, increasing profits may seem difficult, but it is not impossible.
The easiest way to earn more is to work a few more hours each week if your employer allows you. If you can’t increase hours, you can find other ways to make money. A few new, unconventional, ways to make money through this pandemic have emerged
For example, you could do some basic online tutoring in your field of expertise and subjects that you are familiar with. Or you could do paid proofreading in your spare time. Taking up some freelance work on the side can help you earn a little extra cash here and there.
7. Be mildly concerned
Even though being constantly concerned with money will harm your well-being, keeping some focus on your financial situation can protect you from making poor spending and saving decisions.
In some cases, mild financial anxiety can be helpful. For example, focusing on the future can motivate you to start saving more seriously. Furthermore, the added precaution of sticking to your budget can protect you from overspending each month.
Anxiety can also help investment decisions. If your instincts tell you that opportunities are risky, you may need to speak with a financial advisor to invest your funds in lower-risk opportunities.
Although being anxious about the future is a passive way of dealing with finances, positively respecting money and treating it appropriately can help you plan ahead and control your cash.
The bottom line
The most important thing is that staying up late and worrying about money won’t magically make cash appear in a depleted bank account or help you decide how to save for retirement.
On the contrary, learning to calm your fears and be confident in your financial choices is a matter of education, action, and respect.
When you find a positive way to control your financial situation, you may find that the anxiety caused by checking bank balances will dissipate, which is conducive to control and trust.
Finally, if you feel like you need a professional team to advise you on how to effectively reduce financial stress then check out our service!