Many of us at different stages of our lives are concerned about our money. Starting your career can be a bit restricted in finances, but reaching the mid-career can help you control your finances.
Everybody has different concerns and commitments relating to money. It may become a reason for stress resulting in distraction, anxiety, exclusion from social circle etc.
Tips to Manage Your Financial Stress
Here are few ways that will help you to cope with financial stress. Also, it may lead to financial wellness too.
Take Charge on financial stress
You do not have to be an expert to manage your finances. You should be aware of your financial situation and get control over it.
Planning your finances in an organized way will help you to get control over your financial status. The first step to control finances is to set a budget that will help you be aware of all your spending and savings.
Your budget has to be a complete list of all of your finances, i.e., long-term and short-term.
Once you have set a budget, it is necessary to prioritize your spending areas.
Your budget should include realistic goals. For example, planning a vacation in the Bahamas is not an achievable goal if you have a nominal income.
Manage all your accounts
Different banks offer different services on their bank accounts. These services also vary depending upon the type of customer.
Managing your bank accounts is an essential step. With everything going online, it has made banking easy too.
You can keep n eye on all your accounts and make transactions online. You can manage your credits and debits through your mobile phone.
In some cases, you can automate your payments and be stress-free. But then, it is essential to keep a regular check on your accounts and keep the pending payments into consideration while checking the accounts.
Set a Budget to avoid financial stress
Creating a budget may seem like a task but is the most crucial step of your financial management. It has to be done with discipline. Many people do not budget their finances and are likely to fall into a debt cycle.
To set your budget, you must calculate your total income from all the sources. Your total income includes your salary and incomes from all other sources. Do not count the income that you are not sure of, as if it doesn’t materialize, it will create an imbalance.
After noting your income, list down all your essential expenditure such as rent, bills, food expense, fuel expenses, health services, insurance and other miscellaneous expenses.
After your expenses, note down your non-essential expenses such as vacation, leisure activities etc.
You should double-check your non-essential expenses to eliminate the ones that can be avoided or reduced.
Once you have noted all types of expenditures, you can now compare your essential expenses and various websites to get the best deal in the market.
Ask yourself few questions such as how can I save more money? What can I eliminate from my current expenses?
The art of debt management
Borrowing a debt is often a liability on your finances. But some debts such as mortgages and student loans can be considered good debts and your future investment.
If you pay your debts on time, they never are a problem but not paying your debts on time can become a problem and lead to further financial issues.
Defaulting on your debts makes it impossible to cater to your regular expenses too.
Many people often borrow loans for bad credit that requires no guarantor. It is advisable to ensure timely payments for your loan as its nonpayment may lead to further damage to your credit score.
For managing your debts, plan to get a credit card that charges zero per cent interest.
The right customer dealing
It is your prerogative to prioritize your debts in the order of urgency. Everyone wants their funds back on time. You have to decide as per your funds and prioritize your repayments.
One tip is to pay your creditors on time but the one shout the loudest, pay him the last as there is no scope of negotiating lower repayments. If you negotiate your repayments with your creditors, you can manage your cash flow.
It is a warning for you not to ignore the calls or letters from your creditors, as they have the legal power to take any action against you. You may ask for time for your repayments to avoid getting into any legal trouble.
Create a Contingency Fund
You can plan a contingency fund in case of surplus cash with you. You can plan to go for an emergency fund. There can be a sudden financial crisis, and you should be ready for it. Ideally, you should build up a fund that should be sufficient to cater to your 3 months of expenses.
If suddenly you are laid off from your current job, there is a break in your income source. Hence, this fund will help you cope with your hard time and ensure sufficient cash for you.
It is advisable to keep your emergency fund separate from your day-to-day bank account to avoid using your contingency money for regular expenses. Clubbing both accounts can tempt you to use your emergency money. Make sure the money is used only for contingency purposes.
Future savings for financial stress
Savings are a saviour when you are stuck in a financial problem. Focus on saving for your future and take out at least 10% of your income every month for your savings fund.
Maintain a savings account and keep it separate. Plan your savings in such a way that you can take out 10% of your total income.
Think for the long term, even if you are not left with any assets. These savings will pass on to people per your will and wish.