Prices for gas, food, clothing, medical care, and housing increased an average of 8.6% from May 2021 to May 2022 according to the U.S. Bureau of Labor Statistics
If you’re struggling financially or are worried about your future, you’re not the only one. A poll from May by the Pew Research Center showed that 70% of Americans see inflation as a very big or moderately big problem in the country.
This puts economic concern ahead of all other problems facing the United States today that were included in the survey, such as the pandemic, healthcare affordability, gun violence, illegal immigration, racism, climate change, and others.
87% of adults in a March poll from the American Psychological Association ranked inflation as the top source of stress. This is the highest percentage in the 15 year history of the poll.
Although it may seem difficult, it is possible to improve your financial wellbeing and ability to bounce back no matter how much money you have.
In a January 2015 report on the goal of financial education, the federal Consumer Financial Protection Bureau (CFPB) defined financial well-being (or financial wellness) as meeting the following criteria:
- Control over day-to-day finances
- Ability to absorb a financial shock
- Being on track to meet financial goals
- Freedom to make choices that help you enjoy life
Essentially, financial wellness is not just about being financially responsible, but also about having a healthy relationship with money. This includes handling any anxiety or stress you may feel about money-related issues.
Here are steps you can take to boost your financial well-being and resilience:
Track Your Finances
The first step to reduce financial stress is to create a monthly budget. This will help you to get a clearer picture of your overall financial situation:
- Determine your total household income: Record every source of income for your household.
- Track how much you spend each month: Save every receipt over the next 90 days, even if it seems a small, meaningless expense.
- Make a list of all debts: Include credit card bills, monthly mortgage or rent, other loans, late fees, and anyone else you might owe money to.
- Keep a money journal: Write down events that often trigger an urge to overspend. For example, you might find you’re more likely to spend money when you are bored, tired, stressed, or sad.
- Create a budget: Include your necessary monthly housing, food, and transportation expenses. Budget for other costs, including setting aside money for unexpected costs.
- Start small: Once you have a better idea of your incoming funds and where those funds are going, you can start looking for opportunities to make small changes that might ease stress.
Everyone’s situation is different, and some people might not be able to easily make adjustments to their spending. The often repeated advice to just cut down on things like lattes and avocado toast is not helpful, realistic, or accurate for many people.
Recognize That Your Net Worth Doesn’t Define Your Self-Worth
First, it’s important to recognize that money and finances should not play a defining role in your life. Your financial situation may affect many of your choices, but it doesn’t have to be the only factor. “Your self-worth is not the same as your net worth,” says Preston Cherry, PhD, a financial therapist and assistant professor of finance at the University of Wisconsin in Green Bay.
How much money you have should not define your worthiness, explains Dr. Cherry. This can be harmful to your emotional well-being. Dr. Cherry is the president of the FTA and has researched how personality traits affect financial uncertainty risks.
A person’s well-being is worse if they value money and status more highly, even if they have a high income.
Cherry says that living in a way that makes you happy and that is consistent with your values is a better way to build a healthy sense of self-worth.
Cultivate Self-Love
Cherry suggests that practicing self-love and self-compassion can help ease money stressors.
Ed Coambs, a certified financial planner and licensed marriage and family therapist says that self-compassion is an important part of getting more comfortable with money.
Talk to a Financial Professional
Talking to a financial counselor may be helpful if you are dealing with financial worries or debt problems that seem impossible. They may advise you to take steps such as:
- Cutting out unnecessary spending
- Creating a budget
- Paying down high-interest debt
- Restructuring current debts
- Working with creditors to repay debts
- Finding additional sources of income
- Applying for available sources of financial assistance
A financial professional can help you understand your financial situation, identify goals and strategies, and start taking steps to reduce stress.
Explore Ways to Tackle Debt
If you have extra money each month, you can use it to pay off your credit card debt. This will give you more financial freedom and peace of mind.
Although it may be difficult to change at first, it is possible to break the habit of buying things that are unnecessary. These things are often bought for the convenience, to make oneself feel better, or out of habit.
The key is to change your focus or the meaning you attach to the things you spend money on. For example, if you want to change your spending habit of eating out instead of cooking meals at home, focus on how you’ll enjoy saving money instead of the convenience of dining out.
Know Your Numbers
If you want to be financially well, it’s important to have a handle on your finances and know your numbers. According to Saundra Davis, a financial planner and professor, this includes being aware of your income, expenses, net worth, savings, retirement goals, and debt. Davis is the founder of Sage Financial Solutions, an organization that strives to provide financial literacy programs for low- and moderate-income people.
If you want to make sound decisions about your money and feel less stressed about your finances, it’s important to have a clear understanding of your current situation and continue to track any changes over time. This will give you a better idea of where you stand and what your options are for improving your financial situation.
Be Smart With Spending
Before making any new purchase, think about whether it will improve your quality of life. In some cases, buying something new may actually cause more stress because it will leave you with less money. Reducing your spending can help to reduce your stress levels.
It takes time to get used to this new way of shopping, especially if you’re used to doing it when you’re feeling stressed. But eventually it will become second nature.
Start by getting rid of any old clothes or items you don’t use anymore. Once you have a pile of things, sort through it and decide what you want to keep and what you can sell. You can then have a garage sale or sell the items online. This is a great way to make some extra money while also decluttering your home.
It is better to spend money on experiences rather than buying things. This could include taking classes, going on vacation with your family or anything else which would create positive memories, enrich your life and help you to deal with burnout.
It may sound counterintuitive, but you may find that spending money on experiences rather than only saving can help you stay motivated to be frugal.
Set Financial Priorities
If you want a better relationship with money, it’s important to know your financial priorities. Ask yourself what matters most to you, and then think about how your current financial situation and money decisions align with those priorities.
When you understand what your priorities are around money, it will be easier to make decisions that support them.
If one of your top values is education, setting aside money specifically for learning new things each month will make you feel better. If you value seeing new places, spending a portion of your income on travel expenses will feel worthwhile. If supporting the community you’re a part of is extremely important to you, spending more on local goods and services will feel very worthwhile, even if you could get the same or similar goods and services elsewhere for less.
You should be close with the people you share money with
Arguments about money are usually more common and harder to solve than other types of arguments between married couples, which can negatively impact both partners’ financial stability and overall quality of life.
Coambs helps couples to be open with each other about their finances and emotions regarding money in order to reduce arguments about money. “Financial intimacy is being able to talk to your partner and to yourself honestly about both the good and the challenging feelings you have around money, and being able to discuss all financial topics openly and candidly,” Coambs says.
Get Emotional Support
It can be more difficult to deal with stress related to money when you don’t have anyone to talk to about it. Having social support can be very helpful in these situations. Try to find a friend or loved one you can trust to confide in about your concerns.
Many people struggle with their fears and worries about money alone because it is a taboo subject. Whether you are embarrassed about poor financial choices you’ve made in the past or afraid to let others see that you’re struggling in the present, you are not alone.
Practice Stress Reduction Strategies
Getting social support can help you manage money stress, as well as other stress management techniques.
Although it cannot be fixed overnight, there are ways to deal with stress related to money and financial anxieties. If budgeting does not help because rent and groceries are unaffordable, try looking for ways to increase your income. Additionally, if you have extra money, put it towards your debt so you can begin to pay it off.
Because of this, it is essential to find ways to care for yourself and protect your mental well-being in the present moment. Some strategies that can be helpful as you are coping with money stress include:
- Getting Enough Sleep
If you’re not sleeping well, you’re more likely to have mental health concerns, including anxiety and depression. It’s also harder to deal with stress and worry when you’re tired from not sleeping well.
If money is worrying you and preventing you from sleeping, there are some things you can do to ease your anxiety. Try following good sleep habits, relaxing your body before bed, and thinking of more calming things as you drift off to sleep.
- Engage in Regular Physical Activity
Exercise is an effective way to manage stress and anxiety. It can be difficult to make time for exercise, especially when you are busy with other responsibilities like work and family.
You should aim to do 30 minutes of exercise a day, four or five days a week. You could also break this up into two 15 minute sessions or three 10 minute sessions. Walking, doing some simple bodyweight exercises or yoga (via an online video) are all cheap things to try.
- Practice Relaxation Techniques
When you’re feeling stressed and anxious about money, a stress management technique can help you feel better. These tools can help your body relax, which can reduce stress and anxiety.
For many people, money is a leading source of stress. While there are ways to improve your financial situation, most of these require time and effort to change. They may not be easy fixes, but they can help in the long run.
It is important to find ways to cope with stress related to money. Taking care of yourself is very important. Consider doing things that will help your well-being and make you stronger, like getting enough sleep, being active, and using relaxation methods to reduce anxiety.
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