Have you ever found yourself in a situation where you have an urgent financial need and your bank balance is not something to depend on? You have difficulty meeting your basic financial needs because your account balance is showing red. This could affect you psychologically and health-wise. There is nothing as stressful as being in deep financial need.
Financial stress is one of the major problems facing mankind. If you want to enjoy the other areas of your life, you’ve got to reduce your financial worries. There are no two ways about it. You must have working plans put in place to reduce your financial stress if not, it will be like when one is wearing over-sized shoes. He is definitely going to drag it along everywhere he goes.
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Causes of Financial Stress
Financial stress is not something to be proud of. Anything can cause it. Being in debt, lack of adequate income, family pressure, or even spending beyond your income could put you in a tight corner. There are a lot of them, though it depends on the individual involved. But the greatest myth about the cause of financial stress is the belief that it is caused by overly lavishing lifestyle. Simply put, it is not always the truth. Debt can happen to anyone, even when the person has been extra careful with spending. No one ever plans to run into debt, but it does happen, irrespective of the person involved. Circumstances beyond our control happen and most of them require money to get out of their entanglement. Therefore, anyone is at risk of running into financial stress. Here are some of the known causes of financial stress:
- Decrease in Income
You could have a well-paying job and the next thing you could know is that the company is retrenching or even folding up. Just like a dream, you are back to the labour market. Sometimes, a glint of light may shine your way, causing you to settle with a low paying job, just to keep body and soul together.
If this should continue, you are not far from being financially stressed. When you live from paycheck to paycheck, it would be absolutely difficult to save money for emergencies. And if you have no money to fall back to, you will be stressed out if issues that require money occurs.
- Medical Expenses
If you find yourself in a situation where the hospital becomes your second home or ‘place of leisure’, it will definitely tell on your pocket. What if you are bedridden for a short or long period of time? It is, undoubtedly going to lead to a drop in your income. You may even end up sinking into more debts than you could imagine. This is one of the reasons insurance policies have been one of the best financial covers. It helps you to get prepared ahead of life.
- Lack of Budgeting
If you do not have money management skills, well, it will tell on you when you run into emergencies. Most times, people are not ready to learn the simplest ways to get prepared for rainy days. And you know what? They expect miracles to happen! Some keep wondering what helps them to take out of their bank account. The truth is not far-fetched. Spending your money without a proper financial plan may not have any effect on you until the day you will run into debt. I guess you already imagined how it would be.
- Education Expenses
A lot of money is involved for one to get a degree or certification. You need the education to get a good-paying job. This is like suffering now to enjoy later. I would say it is a good expense. However, I would also advise that you start saving now if you are yet to get into school. When you save ahead, you will have no worries when you get there.
- Family Issues
Statistics show that the leading cause of divorce is financial issues. Ironically, financial issues do not end after divorce. As long as you have not figured out how to handle money, you will keep hitting the enemy at every bump of your life. You know why? It does not take miracles to handle issues of financial nature. It takes wisdom. So, when saying ‘I do’, do not forget to have a well-structured financial plan. If not, you may join the league of those who entered the statistics of divorce. Both you and your spouse must work towards the same financial goals. Communication is key here, never relegate it to the backseat.
Ways to Avoid Financial Stress
We’ve all been there before. Everyone has woken up in the middle of the night and the moment you want to close your eyes after a stressful day, your mind veers off to money, causing a little panic and distress. This could leave you worried throughout the night and into the next day. It certainly does not give joy. But then, would you continue in it or you want a way out? No one would want to choose the former, I am sure you wouldn’t as well. This is why we have compiled the following simple and practicable tips to help you put yourself in control of your financial thoughts and actions.
- Create a Budget
One of the reasons people avoid creating a budget is that they feel it is another addition to their financial stress. However, it is the best gift you can hand over to your purse. When armed with a budget, you will be able to know when and how to spend your money. While doing so, ensure that your immediate expenses are covered in the budget.
It may seem very difficult at the beginning, but the moment you figure out how best budgeting works, you will be able to monitor the flow of your money, how much you spend and avoid spending on unnecessary things. This is, in addition to the fact that the amount of time spent on worrying about your money is wasted time.
- Contribute to an Emergency Fund
We all have experienced that moment when unexpected expenses came knocking on the door. This is the reason an emergency fund is very important. It helps you to get smarter ahead of rainy days. The money kept in your emergency fund should not be tampered with. Trying to replace any money withdrawn from an emergency fund is not always easy. This is why you are required to build it up. Put a small amount of money aside each month and keep doing so. You need to discipline a lot for this task.
- Get a Financial Advisor
You need one. Armed with a financial advisor, your fears can be calmed, getting you on the right path for your financial goals. The process of seeing a financial advisor is just like seeing a therapist; your money speaks for you too. With a financial advisor, you can plan for your retirement, pick up a good investment plan, save up, or just have a definite financial goal.
- Give Yourself Financial Education
If you keep stressing yourself about money, you could turn the ‘unknowns’ into ‘knowns’. Still, confused? Let me give you an instance. If you need an insurance plan but have difficulties understanding the different types of insurance covers, you are likely to feel stressed out. What to do? Calm your fears by educating yourself. The moment you are armed with the proper education; you are good to go. How to do it? Research about it, take a short course online or offline, talk to a financial advisor, ask someone who has a better idea and so on. Do you see it? It is very easy.
- Have a Contingency Plan
For sure, one of the best ways to deal with financial stress is to fear for the worst. This might sound absurd, but it is very helpful. By the way, whether you have fears for the worst or not, it does occur. So, why not take your time and look into the future? Think ahead and ponder what would happen if the ‘worst’ locate your abode. After doing this, the next thing is to put a contingency plan in place. Then, the power of fear will automatically leave its grip on you. By predicting the future, you are some miles away from crushing the ‘worst’ of the future.
- Create a Debt Repayment Plan
By creating a debt repayment plan, you are one mile away from clearing your debt. You could use a calculator to set up a repayment plan that helps you to ease off your financial stress. With the knowledge that you are making progress in paying off your debt, you will discover that you are worry-free.
- Consider an Extra Source of Income
Adding a new source of income is one method that does not fail in easing off financial stress. It could be in form of a second job or side hustle, short term or long term; just know that this option is a sure way of having extra money on you. You know what? You can dedicate it to any of your financial plans.
- Automate Good Behaviour
Good behaviour, sometimes, is not a spontaneous action, you build it up. If you are someone always running into debts, then, you need loads of discipline to keep yourself on the right track. With all the tips above, you will be able to get yourself a good financial record.
- Discover Ways to Save Money that Work for You
With a good budget at hand, you will be in a great position to know which savings plan works for you and stick to it. You can cut down on internet costs, reduce insurance premiums, lower expenses on entertainment, groceries, gas, get a cheaper phone and so on. Well, the magic lies in understanding the areas where you overspend and cut short on them.
- Be positive-minded
A lot could be said concerning a positive mindset towards money. Of course, thinking positively does perform any magic on your finances, neither does it take away your debt. But it can perform one magic – it can help calm your fears. It also has the ability to help you look into your financial life, appreciate your strengths and look for a solution to your weaknesses.
Now, you are required to sit at a cool place, with a glass of wine and pen and paper on the table. Start listing all the positive aspects of your money management skills. By the time you are done, you will realise that you have more skills than you could imagine. Positive-mindedness helps you to be calm and clear your head.
Everyone is capable to get out of financial stress; it takes a lot of discipline to manage your money. So, inculcate a good spending lifestyle as well as add some money to your income. Balance up things in your life and you will discover that rainy days are not really rainy indeed. We wish you the best as you embark on this trip.
