Fretting over paying the bills or worrying about having enough money by the end of the month isn’t uncommon at all. In fact, a recent study conducted by Forth With Life, found that money is the most common cause of stress amongst Brits1. Financial anxiety can affect other aspects of your life too. You may struggle to focus at work or at home and you could become more irritable. Money worries can even lead to serious health issues, such as panic attacks and high blood pressure. So, don’t ignore financial stress, get a handle on your worries with these tips.
Assess your financial situation
Before building any plan of action, make sure you know where you’re starting from with your finances. Review your bank account and emergency fund. How much goes in? How much goes out? And where does this money go? This might help you identify what you’re spending too much on and could cut back or save on, to alleviate the stress of overspending or the fear of not having enough left over.
Set financial goals
Once you’ve assessed your financial situation, you could work out your financial goals. Make sure they’re precise and measurable. For example, instead of saying ‘I’d like to save more money’, say ‘I want to save £100 each month’. When setting your financial aims, be realistic, don’t try and set your savings goals too high if you know you have little chance of sticking to it. Also, good financial goals should be aligned with your long-term objectives. So, ask yourself ‘what are you saving for?’ and see how much and how long it’ll potentially take you to make your dreams a reality.
Create a budget…
Although budgeting can be a Herculean task, it’s key when dealing with financial stress, since it gives you control over where your money goes. Start by listing your monthly expenses (rent/mortgage and groceries), then determine how much you will put in your savings account each month. Finally, decide what to do with the left-over money. You could use it to buy things you fancy or keep it to enter the investing world.
… and stick to it
After creating your budget, you’ll need to stick to it and a good way to do so is to treat your savings like any other monthly outgoing, not an optional extra. Set a direct debit or standing order to easily transfer funds into your savings fund at the start of each month. Remember it’s better to spend what you don’t save rather than save what you don’t spend. Also, sticking to your budget requires you to keep a close eye on your spending. At the end of each month, look at your spending habits and see what you can cut. Are you going to restaurants too often? Or are you paying too much on energy? Keeping track of your finances can be easy, you could put everything on an Excel spreadsheet or use mobile apps that help you analyse your spending and give you breakdowns of where you’re spending too much.
If you want to reduce financial stress, try to avoid impulse buying. Fighting your impulses is no easy task but there are many ways to control yourself from making unplanned purchases. Let’s imagine you walk into a shop and see a pair of shoes you really like. Before splashing cash, ask yourself the right questions: Do you need these shoes? Will your life without them be that bad? Could you not wait maybe a week or two to see if you still fancy them? According to neuroscientists, you can beat impulse buying by delaying the purchase since the buzz your brain gets from shopping tends to decline with time. So, walk out of the shop for 10 minutes and see if you still like the shoes.
Ask for help
If you’re really struggling to take control of your finances, don’t be afraid to ask for help. You could ask your family or close friends to give you some tips and help you budget. But you could also go for professional help. There are free money management classes out there you could take. Alternatively, you could hire a financial planner who would review your finances and implement strategies to get your finances on track. The fact you’ll have to report to someone might force you to adopt good saving habits.
Plan for the long-term
Fighting financial stress requires you to adopt a long-term vision. Remember you’re trying to bring your goals to life and this cannot happen without some planning. So, once you’re happy with your budget and have developed a good savings routine, you could start investing to potentially help your finances grow over the long-term. However, if the very idea of entering the investing world is stressing you out, you could opt for a digital investing platform, like Wealthify, where your portfolio is built and managed by investing experts.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.