For most of us, some level of financial burden is inevitable. You always have to pay bills, keep a job, and handle emergency expenses on occasion. What really matters is how you deal with that stress.
With a little foresight and a great deal of soul searching, even the most fearful consumer can gain a sense of control over their financial and mental health. Following these tips can go a long way towards getting you back in the driver's seat.
Face the music
A recent poll by Cushion found that over 50% of Americans don't know their bank balance. The reason? You're too scared to look.
The first step in managing financial stress is to make an honest assessment of your situation. Make a list of all the aspects of your financial life that weigh on you. Are you afraid of all of the credit card debt that you have amassed? Are you concerned that if you lose your job, your meager emergency fund will not keep you afloat? Are you ashamed of not having a budget?
Then start organizing your financial accounts. Make sure that online accounts have been created for every bank, investment and loan account. Set up notifications for due dates so you never miss a payment.
Check your credit report for free at AnnualCreditReport.com. Your credit report will show all of your current and active credit accounts in case you forget one.
Then set up a time to review each account. If you have multiple bank accounts, consider consolidating them to make the process easier. Look for recurring fees, subscriptions that you no longer use, or fraudulent fees.
By highlighting all of the financial problems that you are afraid of, you will likely realize something important – none of these problems are as scary as they seem, and you are more than able to deal with each and every one of them.
Create a budget
After reviewing all of your accounts, take some time to track your expenses and create a budget. Using a budget will help you identify leaks in your spending where you could see savings.
Budgeting and tracking your expenses may seem like punishment for your past spending mistakes, but see it as the path to redemption. If your main goal is to manage your financial stress, knowing where your dollars are going is important. If you can focus your money on savings or debt payments on a budget, you will ultimately end up in a healthier financial and emotional place.
If you've never been on a budget, don't be discouraged if you over-spend in a few categories to begin with. Budgeting is like cooking. Just because you're not following the recipe perfectly doesn't mean the food doesn't taste good. Keep adjusting your budget until you find a happy medium.
Divide your tasks
If you are financially drowning, finding a life raft may seem impossible. Instead of fidgeting aimlessly, it's time to choose a direction and start swimming.
Get a notebook or computer and write down any tasks that will help you feel better. Try to break them down into manageable tasks. For example, instead of writing, "Are you considering a personal loan," write: "Complete a personal loan application with three companies."
The aim is to make the tasks less overwhelming and to make you more motivated to tackle them. When you've written everything down, assign each task to a specific day. Allocate more time per task than you think is necessary in case you run into problems.
If you get caught, take a breath and think of a few possible solutions. Try to finish each task before starting a new one so you don't get distracted.
Feel your feelings
When you're feeling stressed out, it's easy to calm down with food, alcohol, or binge-watching. While relaxing is important, make sure you aren't using an unhealthy coping strategy to avoid processing your emotions.
Take some time to sit with your feelings, as tough as that may be. Go for a walk, sit on the porch, or write in your journal. Feeling your feelings doesn't mean wallowing in despair or sadness. It just means honestly acknowledging what you are feeling.
Recognizing your feelings will also help you avoid retail therapy. This is critically important when you are on a budget, trying to pay off debts, or living from paycheck to paycheck.
Ask for help
If debt is your main source of stress, the first thing to do is reach out to your lenders and billing providers and ask how you can reduce your monthly payments.
First, call your cellular, auto insurance, internet, and cable service provider to see if you can get any special discounts or tariffs.
Make a list of all of your lenders and contact each of them to see if there is a deferral or forbearance program. Since the Covid-19 pandemic, many lenders have become more sympathetic to borrowers in financial distress. Before signing up for any forbearance program, make sure you understand how interest will be accrued during that time and whether any special fees will apply.
For example, most mortgage lenders allow you to defer payments for a few months, but you owe the full amount once the deferral period has expired. This could be a huge shock if you don't plan ahead.
If you have credit on a credit card, contact any company and ask about a lower interest rate. Remind them that you have been a reliable and loyal cardholder. When a company says no, set a reminder on your phone to ask again in a few months.
Take care of your mental health
In a 2019 survey by the Money and Mental Health Policy Institute, 72% of respondents said their mental health problems made their financial situation worse. If this describes you, consider speaking to a licensed mental health expert to help build a healthier relationship with your finances.
Use resources like the Open Path Collective, where therapists only charge between $ 30 and $ 60 for each session. The Substance Abuse and Mental Health Administration also has a list of community clinics that provide low-cost services. If you already have a therapist in mind, ask them if they offer a tiered payment system.
Many universities also offer therapies on a discounted or sliding scale. Contact the local psychology department and ask if they accept outside clients. Psychology Today has a therapist finder tool that you can use to filter by price.
Depending on your specific health insurance plan, your insurer may also cover some sessions. Ask your HR department if your company has an employer assistance program that includes psychological counseling.
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