Money is a resource we could all use more of. But the more money you have, the more critical it is to manage it well. Otherwise, you’ll have more issues with money than successes. And then comes the overwhelming financial stress.
Instead of letting money-related issues and financial stress swallow you up, do these six things to reduce financial stress and gain a better relationship with money.
1. Cut Costs Wherever You Can
First, you must understand where your money is going. When you know exactly where your money is going, you can determine which expenses aren’t necessary. And once you know that, you can begin cutting costs, alleviating some of your financial stress.
Sit down and document your fixed and variable expenses. Get a complete picture of what you’re spending your money on. Then, list the expenses you can do without, like subscription boxes, cable television, or expensive gym memberships. And finally, cut these costs.
2. Lean Into Budgeting
A budget is the difference between a financially whole person and a financially stressed one. If you don’t know how much you bring in a month and where that money is going, there’s no way you can get a handle on your financial situation.
On the other hand, having an intentional plan for your money will help you dig out of debt, save, and invest appropriately, helping you set a solid foundation for your financial future. In addition, a budget helps you learn to live below your means, something critical for mitigating financial stress.
Budgeting doesn’t have to be complex. If you did the above, you’re already halfway through creating a budget. In addition to documenting your expenses, write down how much you bring in every month. And record how much is left over once you cover your costs.
You may find that you can’t cover your expenses with what you’re bringing in. If this is the case, you must figure out a way to bring in more money or follow the advice above to cut unnecessary expenses.
If you have money left over after expenses, make sure it’s going somewhere productive. For example, put some of it toward savings and allocate the rest to any outstanding debt.
3. Work to Pay Off Your Debt
According to The Money Charity, £65,746 was the average total debt per household in the UK in 2022, mortgage included. Sitting on a debt load and struggling to make payments is one of the most stressful financial situations. Even if you can make the payments, it’s difficult to see the light at the end of the debt tunnel.
Working diligently and deliberately to pay off your debt will help. The first step is tallying up your debt. Document each creditor, how much you owe them, the interest rate, and your monthly payments.
Then, choose which one to start putting more money toward first. For example, many people prefer credit cards. You could start with the card with the highest interest rate or the lowest balance.
Once you pay a card off, you’ll need to decide whether to close or keep it open. Keep in mind that closing your card can affect your credit score. For instance, it can decrease your available credit. It can also alter the average age of your accounts and the diversity of your credit types. So, really make sure closing the card is the right decision for you.
4. Start a Side Hustle
Managing your money better will help you reduce financial stress. But so will making more of it. Bringing in more money every month can help you easily cover your expenses, fast-track paying off debt, and save regularly.
One of the best ways to make more money is to start a side hustle. Side hustles are great because you can do them in addition to a full-time gig and the rest of your responsibilities. It’s all about finding one you’re interested in and can commit to.
Here are a few side hustle ideas to get you started:
- Starting a blog
- Selling homemade goods
- Dog-walking or pet-sitting
- Opening an eCommerce store
5. Enjoy Budget-Friendly Activities
Unfortunately, many people use being stressed out as an excuse for irresponsible spending. But the reality is, as fun as the night may have been, spending frivolously only perpetuates stress and digs you into a deeper financial hole.
Coping with stress doesn’t have to be expensive. There are many affordable ways to release tension and simultaneously increase your quality of life. These budget-friendly activities will help you feel and deal with your money better:
- Practicing mindfulness activities
- Thrifting to update your wardrobe
- Writing down a to-do list and conquering it
- Starting a workout routine to support physical and mental health
- Reconnecting with old friends at a hike, chess game, or another affordable leisure activity
6. Continuously Grow Your Financial Knowledge
Reducing financial stress is absolutely an ongoing project. Even after you’ve eliminated all your debt, are making more money, and have a handle on your budget, you need to continue doing the things that got you there. You’ll also need to learn new things to ensure you’re getting the most out of your money.
So, it’s essential to grow your financial knowledge continuously. Keep learning about responsible money management. And dive into ways to invest your money better and help it grow.
7. Conclusion: Reducing Your Financial Stress Will Lead to a Better Life
Stress, in general, is tough to deal with. But financial stress is a beast of its own. However, conquering financial stress can be a bridge to a better life. So, adopt the practices above to ensure you win the battle with the financial stress beast.