With so much going on in the world today—from a global pandemic through economic hardship—it comes as no surprise that many people have recently found themselves under heavy financial stress. Whether it is due to the loss of a job, illness, or the need for time to take care of family, many people are feeling the pinch.
You too might be looking for ways to ease your financial stress and allow yourself to get back on track toward your financial goals. Below are just a few steps you may incorporate into your financial routine that may help reduce some of the financial stress you may be feeling.
Set and Stick to a Budget
When money hits your bank account, it is easy to assume that the flow will never lessen or stop. This might lead to impulsive purchases that end up as part of your debt if your regular income were to slow down. While it may seem like a daunting task at first, a budget can actually help reduce your stress by providing you with a roadmap to paying all of your bills and laying out funds for other goals or wants.
To set your budget, start by listing out all your bills for the month. Get granular with this list, including specifics like how much you put in savings and an average for food, clothing, entertainment, and other inevitable expenses. You can look back at previous months’ spending to get a realistic feel for how much you actually spend.
Then, make sure your income covers all your expenses. If it does not, you will need to look for areas where you may be able to cut back. Or, if you do not have enough for the necessities, you will likely need to consider ways to increase your monthly income.
Build and Maintain an Emergency Fund
One major cause of everyday financial stress is not having money when you need it most, when something unexpected occurs and requires spending beyond your regular monthly budget. The need could be for something like a major home repair, car expense, or to cover lost wages when seeking new employment.
A good way to prevent this type of stress is by building and maintaining an emergency fund to better plan for the unexpected. Experts usually recommend setting aside three to six months’ worth of expenses in your emergency fund[1]; but if that is beyond your current reach, even starting smaller with $1,000 or $2,000 as a goal for your emergency fund could provide you with comfort.
Whatever you set as the goal for your emergency fund, place a small bit of money into it each month until you hit your goal. If you ever use up your emergency fund, make a plan to refill it. Once you have eliminated other debt and have a bit more cash flow, consider following the recommendation to make your emergency fund contain those three to six months of living expenses. This will help protect you if you lose your job or face some unexpected medical issue.
Seek Out Assistance
Avoiding financial stress sometimes requires outside assistance from a professional, who can advise you on budgeting, investing, and saving within your specific situation. Together, you may work towards getting yourself into a financial position that will help alleviate constant stress.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This article was prepared by WriterAccess.
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Footnote:
[1] https://www.cnbc.com/select/how-much-to-save-in-emergency-fund/
Sources:
https://www.cnbc.com/2020/10/09/feeling-anxious-about-money-increasing-financial-knowledge-can-help.html
https://www.apa.org/topics/holiday-stress-money
https://www.thebalance.com/dealing-with-financial-stress-2385957