Financial stress can significantly impact well-being and day-to-day life, and it isn't just those on low income who suffer. Financial hardship comes in all shapes and sizes, and when it hits, the effect on your mental health can be crippling. Learning to manage financial stress is the first step in getting out of the situation.
How Can Financial Stress Affect You?
If you are struggling with your finances, you may already know how financial stress affects your life. However, how it manifests is different for everyone, and some people may not even realize that their problems are rooted in their financial state.
The signs of financial stress are often similar to anxiety and may include any of the following:
• Mood swings
• Difficulty sleeping
• Lack of focus
Along with these symptoms, people with financial stress often have very erratic spending habits, saving every cent some days and then going on a spending spree on others.
Examine Your Finances
It might seem obvious, but the first step is to analyze your finances. When you are in a financial hole, it's easy to see the bottom line and watch your account drop lower. Instead, you need to dig deep down and find what you are spending and where.
Take statements from the last few months and go through every transaction, noting what is coming in and going out, and see if there is anything you can immediately cut. Sometimes a subscription that's been forgotten about could be canceled. Or you could be paying account fees when there are free alternatives. Whatever you find, cut the apparent expenses and make immediate savings where you can.
Essentials vs Luxuries
With the rest of the transactions, note whether they are essential or luxury items. Essentials include bills, groceries, and your mortgage or rent, whereas luxuries could consist of streaming subscriptions, takeaways, or electronic devices.
When you have your lists, go through each and see where you can cut back on your spending. It will be easier for luxury items, but remember that the idea is to minimize your spending, not reduce it to zero. Quality of life and social events are still important, so rather than cut them out completely, see where you can save money.
For the essential items on your list, the aim is to reduce the expense to a more manageable level. You could search for alternative suppliers for your utility bills, or if you rent, you could consider moving to a cheaper place. For your groceries, you could buy more affordable brands of your favorite foods, get non-perishables in bulk when they are on offer, or freeze fresh produce when it is cheap.
Use Money Mindfulness
It's great to have a plan of where you can save money and how you can get your finances down, but you also have to implement it. For many, impulse purchases make up a large section of their outgoings. So, this means laying down some ground rules to ensure you stay on track.
Money mindfulness aims to make you more aware of your financial decisions. Overspending often comes from habit, so stopping and thinking about each purchase helps to curb your impulses. Before you buy anything, ask yourself three questions:
1. Is this an essential purchase or a luxury item?
2. Can I get this item cheaper elsewhere?
3. Is this item essential for my well-being?
Going through this process should clarify the importance of the item in your mind. Plus, the extra few seconds allow you to pull away from impulsive purchases.
Try and Keep a Little Bit Back
Financial stress isn't just about the present. It can be worrying to think about the future if you have no savings and your life is uncertain. It isn't always possible, but keeping a small amount a week in a savings account can help alleviate this fear.
One of the best ways to accomplish this is to budget effectively. Take away your essential spending from your income, and what remains is available for luxuries and savings. Commit to saving a small percentage, and put it into a savings account to slowly build up a safety net.
Taking control of your finances can help relieve financial stress and help you through times of hardship. Analyzing your outgoings and minimizing what you can, can help you keep aside a small amount that will provide you with a safety net. Then, if you fall into hard times again, you will have money available to help you through.