As most of us are all too aware, finances can be a significant source of stress for the everyday American — especially when times are tight. And surveys bear this out. For example, one recent survey showed that nine in 10 Americans say finances take a toll on their stress levels. And in another, nearly three-quarters of American consumers even ranked finances as their No. 1 stressor.
But by employing the right worry-reducing tactics and financial wellness tips, concerned consumers can take big steps toward easing their financial stress — and even toward improving their overall mental health. If you’re among the many Americans whose money concerns make an outsized impact on their overall anxiety levels, consider taking these nine steps toward improving your financial well-being and your money-related mindset:
- Build a budget — Creating a personal/household budget is the first step to taking more control of your finances. Doing so can give you a clear picture of how much money you have coming in, where it’s going and — perhaps most importantly — where you might have opportunities for improvement. (Creating a budget can bring a range of other benefits, too.) For step-by-step guidance on how to build a personal budget, check out the Arthur State Bank blog article titled “9 steps to creating a personal budget.”
- … and prioritize taking control of your discretionary spending — By creating the budget discussed above, you should be able to identify areas where you can save — which, of course, is a great way to cut down on any financial stress you may be feeling. Your clearest savings opportunities will typically fall into the area of discretionary spending on non-essentials. And if you can take greater control of this spending, it should give you a chance to devote more dollars to higher-priority expenses and debts.
- Tackle your highest-interest debt first — Speaking of high-priority debts, most experts recommend that consumers looking to create debt-payoff plans focus on paying down the debts carrying the highest interest rates first, which should result in reducing the amount of money spent on interest over the long haul. And for many consumers, the highest-interest debts they’re facing come in the form of unpaid balances accrued on credit cards, which typically carry higher interest rates than other types of personal loans. Whatever debts you may have, look into the amount of interest being charged on each, then let that info guide your decision-making on which debts to focus on first. (Of course, you’ll want to make sure you pay at least the minimum payments due on all your debts each billing cycle to avoid penalty fees and credit-score impacts.)
- … and consider consolidation — Especially for those with a considerable number of outstanding debts, a debt consolidation loan can both simplify their monthly bills and, potentially, lower their interest rates. That’s because these loans can provide borrowers with the money needed to pay off their various debts in full, then replace the monthly bills for all of those debts with a single monthly loan payment due. And a debt consolidation loan can do all of that while potentially offering a lower interest rate than some or all of the debts being paid off were carrying.
- Find ways to earn extra income — By adding to the money coming into the household budget, finding ways to earn extra income is a great way to reduce any stresses you may be having on the financial front. Possibilities here include putting in extra here and there on your current job (which could even qualify you for overtime pay), negotiating with your employer for a pay increase, selling off any household items that you may no longer need and taking on a side job. If you have a hobby or special skill that you may be able to monetize, that could create another option for added income.
- Build an emergency fund — From surprise auto repairs to unanticipated medical bills to costly home repairs that we just didn’t see coming, we all encounter unexpected expenses from time to time. And by setting money aside in a “rainy day fund” whenever possible, we can reap a range of benefits (with added peace of mind/lowered financial stress being a welcome highlight among them). For some ideas on how you can start building your emergency fund or rev up the amount of savings you contribute to one you’ve already got started, check out the Arthur State Bank blog article titled “We could all use an emergency fund — here are 6 effective ways to start building one.”
- … and make a mental note of your savings progress — As you grow your emergency fund and otherwise add to your savings, keep track of the progress you’re making toward your savings goals. By knowing that you’ve got an emergency fund to fall back on and are building up the amount of money you have in savings, you can begin to reduce any stress you may feel regarding your finances — and all the while contribute to both your financial and your mental well-being.
- Reach out to your lenders and/or service providers — Lenders and service providers are sometimes willing to work with consumers who are facing financial hardships to help create some (at least short-term) financial relief. And whether this comes in the form of an extended loan term (to create lower monthly payments), a reduction in the interest rate being charged on an outstanding balance or a discount on the amount owed if paying in full, every little bit can help lower your financial stress. But to receive such accommodations, borrowers typically must request it first.
- Get expert guidance — When it comes to setting financial goals, saving money and reducing personal debt, a little expert help can often go a long way. If you’re struggling with finance-related stresses and looking to make a plan to improve your financial situation and outlook over time, consider working with a financial advisor to help you put your plan in place — and, hopefully, work toward putting some of your financial worries behind you.
