How to manage financial stress

7 steps to manage financial stress

Sooner or later, you’ll probably deal with some financial stress. Many Kiwi’s are already in this position, which might be caused by rising debt, a job loss, insufficient earnings, high living costs, or even money troubles in your relationship.

Whatever the circumstances, being worried about money takes a mental and physical toll, plus it can strain relations with your significant other, family, workmates, and friends.

Everyone deserves the chance to live a comfortable and happy life, free from unnecessary financial worries.

Financial stress symptoms

In many cases it may be obvious for you to recognise if money is stressing you out, sometimes it can happen seemingly out of nowhere.

To help self-evaluate your current financial stress levels, here are some questions to ask yourself:

1. Do you control your money, or does it control you?
2. Are you feeling uneasy when you think or talk about money?
3. Do you often think negatively about your current and future finances?
4. Have you woken up lately with money on your mind? Or struggled to sleep because of money-related thoughts?
5. Is there a chance you’re ignoring issues, or are in denial about your finances?
6. Have you noticed you are gaining or losing weight?
7. Have things you loved to do stop interesting you at all?
8. At the extreme end – Are you having panic attacks often? Or feeling depressed?

Of course, these are just a few signs and your warning indications may be different from the next person.

How do you relieve financial stress?

Below are seven ways to relieve your financial stress, take control of your finances, and feel more at peace.

1. Find the source of your financial worries

While there are potentially many reasons you might find money is causing worries, you need to really look at what bothers you the most about your finances.

For example, many times, we turn to activities that can be doing harm and we think those things are the problem. We might be spending a lot shopping, smoking, gambling, drinking, or other ways to feel some relief. Most often, these things aren’t the problem at all – they’re just a symptom and there’s another issue which is causing trouble beneath the surface. Try and dig a little deeper to find what the real issue or concern is.

Ask yourself, what is it that if you specifically changed, would make you more at ease and less worried?

Maybe it’s eliminating all your debt or earning more money so you can start saving or investing. Maybe it’s only one major thing, or maybe you have a list of a few things:

• A job loss or uncertainty about a job,
• Credit card or consumer debt,
• Low income level and ability to save and invest,
• Low interest rates – especially for retirees relying on savings,
• Volatile share markets, which can make KiwiSaver and other investment values drop,
• Relationship trouble,
• Lack of financial literacy,
• Bills, such as for dental work or to fix a car,
• Unexpected emergencies not listed above, and
• Increased living expenses – overspending and shopping.

Some of these examples can be financially devastating.

Whatever the case, make sure you sit down and really think about “what” and then “why” these areas trigger your financial stress. This can be the first building block to getting on top of things.

2. Tackle one issue at a time

If you have a few money problems, your finances can certainly feel overwhelming. This can snowball and create a situation where you might feel like you have no control or even know where to start.

It’s important to prioritise matters. So, after you’ve identified your biggest issue (or issues), you can start to focus on the main source of the problem.

Be realistic when you determine what you can achieve, and then dedicate yourself to following through each month. For example, this might be promising yourself: “Each month I will spend less and put the difference toward my debt so my balance declines by at least $100.”

3. Learn how to handle money stress

How you personally handle such situations will be different from the next person and will of course differ depending on the preparation you’ve been able to put in beforehand.

Even financially stable people can still stress about money as well and worry about their own financial future.

During the current tough economic times (the recession that NZ is entering), it’s okay to accept and acknowledge a little stress. Be brutally honest with yourself about how you might handle that stress, and also be honest with yourself that the overall NZ economy is going to get worse before it gets better – which could impact you further.

Look for healthy ways to manage your stress, like working out, taking a walk, listening to music, creating something, or learning a new skill — anything that helps you relax and think more logically.

If you need more help, reach out to someone you trust, or even a professional to help your mental health.

4. Declutter your budget, then stick with it

Take control of your finances by setting aside some time to schedule, organise, and declutter all the money coming in and out of your bank account. The more control you have, the less stress you will feel.

There are a heap of great tools to help you do this. You can use this online budgeting tool, or just download a budgeting app to your smartphone or tablet – there are plenty to choose from.

5. Set realistic goals

Financial goals will make a world of difference. It helps you have something to strive for and can help you stay motivated.

Yes, it’s cool to have long-term and maybe more challenging goals. But if you’re financially stressed, it’s usually best to keep your goals simple, short-term, and achievable. This might be:

• Find three ways to save $xxx this month
• Put xx% of extra money towards debt repayments this year
• Put $xxxx from each paycheck towards savings

When you can cross a goal off your list, it will lift your spirits and keep you motivated towards achieving another.

6. Build an emergency fund

An emergency fund is a savings account meant to cover unexpected expenses and financial emergencies. Building an emergency fund may seem tough at first, especially if you are struggling to make ends meet. Start to build it up by putting aside a small amount, maybe $10 or $100. You might consider selling any unused items around the house to build up that cash even quicker.

If you’re starting from scratch, try working towards amassing a $1,000 sum. Then, once you’ve achieved that, as a guideline, you should aim to have three to six months' living expenses set aside.

7. Ask for help – from the right people

Sometimes, financial stress is not something you can handle on your own. There is no shame in looking for support or help. There are plenty of free services available to people who are struggling financially, for example, there are nationwide government-funded charities with budgeting mentors who offer ongoing, confidential, & free budgeting mentoring sessions. They’ll often visit your home to do so, and many can visit outside of usual work hours. If you’d like to learn more, then let the Become Wealth team know, and we can put you in touch with someone in this field.

A word of warning: be wary when friends or family might offer such assistance. Although these people may have the best intentions, they might not be experts in financial matters, and often will be in a worse situation than you! Even if they are well-organised financially, they still may be in a very different overall situation, and so you risk getting irrelevant tips.

The bottom line – how to manage financial stress

Too often, we let money control us and let it dictate what we do, which can result in stress and worries. Instead, your money should be working for you.

Coping with financial stress and taking steps to correct any issues will help you take control of your money. Let’s recap the top seven ways to manage financial stress:

1. Find the source of your financial worries

2. Tackle one issue at a time

3. Learn how to handle money stress

4. Declutter your budget, then stick with it

5. Set realistic goals

6. Build an emergency fund

7. Ask for help – from the right people

None of the above will be easy, regardless of where you might be financially. Some of your goals will take time and require plenty of effort to achieve (even then, you might not reach everything as you want).

Stay patient, celebrate the small wins, and look for the positives as your situation progresses.

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