Tips & advice on getting your finances back on track.
With 62% of American adults carrying credit card debt in the last 12 months and 70% having no retirement savings, there are plenty of people suffering from financial anxiety. The stress caused by money, or the lack of it, effects individuals regardless of race, income, gender, or marital status.
When someone is struggling with their finances, the accompanying anxiety can be an unseen stressor across our communities. Financial anxiety is defined as “a psychosocial syndrome whereby individuals have an uneasy and unhealthy attitude toward engaging with and administering their personal finances in an effective way”.
Financial anxiety affects 65% of Americans’ overall confidence. This anxiety has a detrimental effect on relationships. About 56% of Americans cite finances as their single largest source of relationship problems. As relationship and financial problems increase, this in turn causes a potential mental health decline. There are ways to relieve the financial anxiety that can feel as if it is taking over your life. Here’s how to cope with it.
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Have an emergency fund
Knowing you have an emergency savings fund may be enough to ease some of your financial stress. Statistics show that 60% of Americans don’t have enough savings to handle a $400 emergency, with some believing that they don’t need one. In truth, everyone needs an emergency fund regardless of their financial state. You never know when your life will take an unexpected turn or when a crisis will occur. It could be as simple as a car repair or broken washing machine. These unexpected financial burdens can seem insurmountable without the readily available cash in an emergency fund.
Your emergency fund should have at least three to six months of essential living expenses saved. This is an anxiety-laden number when you’re starting at zero, however, start slowly with aiming for one month of living expenses and build from there. Once you begin, your financial anxiety will start to ease.
Having the financial safety net of an emergency fund will help reduce anxiety when an unexpected financial burden comes about. Financial emergencies do happen, it’s just a matter of when and how much you’ll need to overcome the problem. If you’re unsure about how to go about setting up an emergency fund, you can read more information here.
Have open conversations about money
It’s not uncommon for people to not want to talk about money. Money might not be something you discuss openly with your friends, but discussing money with your partner is a crucial part of a successful relationship. Being transparent about money and financial problems with your partner can prevent financial anxiety. Having an overdrawn account or out of control credit card debt puts stress, not just on your finances, but also on your relationships if they’re kept a secret. Financial infidelity can destroy an otherwise solid relationship. Your partner may have hurt feelings and trust issues if they discover you have been lying about the state of your finances, even if it’s a lie of omission.
Just talking to your partner about your financial struggles can ease some of your financial anxiety. If you’re struggling with money, sit down together with all of your financial documents in a calm moment to discuss where you are going financially. By sitting down and having an open conversation about finances, you can come up with a plan to get back on the right financial path, which may ease your financial anxiety.
Don’t try to keep up with the Jones’
Feeling that you need to keep up with everyone financially can cause some serious anxiety. It’s so easy to feel as if you need to keep up when you see what your friends are doing on social media. Watching your friends on social media, going on lavish vacations or flashing their designer labels can cause FOMO and stress you out. Feeling like you have to keep up and spend money you don’t have on things you don’t need can increase your financial anxiety. Don’t fall into the trap of comparing your finances to other people’s when in reality you have no idea what their financial state actually looks like.
Learn More: FOMO vs. Finances
A large contributor of financial anxiety is comparing you self to others. If you see your friends spending money it’s tempting to want to do it too. Take heart, all of their fabulous expenses could all be thanks to some large credit card balances.
If you’re starting to feel anxiety because you can’t keep up with your friends financially, just remember, people are posting the best versions of themselves on social media. You don’t get to see the reality of their financial or personal lives. Don’t overthink it. If you still find yourself having financial anxiety over this, it could be time to take a break from social media.
Reconfigure your budget
If you feel your financial anxiety starting up, it could mean your budget isn’t in sync with your lifestyle. You might not be abiding by your budget the way you should and overspending in certain categories. When was the last time you checked in with your budget? When creating your budget, it could be possible you didn’t allot the correct amount of money in certain categories. Evaluate your budget at least once a month, but more often if you start feeling financial stress.
Review your budget thoroughly. If there’s a category in your budget you find yourself overspending in frequently, don’t panic. Although you’re spending over the allotted amount, are there other categories that you can cut or trim from your budget? Keep an eye on your monthly subscriptions. Are you using them all, every month? Would you miss that item or service? Can you cut it out completely? A simple budget makeover can help ease the burden of your financial anxiety. You can learn more about establishing and maintaining a budget here.
Read More: Budgeting For Every Dollar
Seek professional help
Having a crazy amount of debt is something that can send anyone into a financial anxiety tailspin, regardless of how you accumulated your debt. Debt can feel like a dark cloud over your life and it can sometimes be too much to handle on your own. Some feel embarrassed about their debt and are ashamed to seek help. Calling a non-profit credit counseling company and talking to a certified credit counselor can alleviate a lot of stress. A debt management program may help, although eliminating your debt doesn’t happen overnight. Just knowing you’re on a plan working towards becoming debt free can feel freeing.
Read More: How Can Navicore’s Counselor’s Help You?
Don’t put financial anxiety on the back burner because you don’t think it’s important or that it’s not personally affecting you. In reality, this stress impacts your mental health negatively, and can take a serious toll on your overall physical health too. You could be so worried about your money and finances that you don’t even take a second to see how you’re doing mentally, physically, and emotionally. The certified credit counselors at Navicore Solutions can help put you back on the road to financial success and greatly reduce your financial anxiety. You can reach us at 800-992-4557 for help.
Katherine Fatta is the Social Media Coordinator at Navicore Solutions. She creates fun and informative social media posts that engage the public.