🌼5 Simple Ways to Reduce Financial Stress(HIGHLY RECOMMENDED)
Small actions that make all the difference
The American Psychological Association released its October 2022 report on stress in America. Money makes the list once again.
Here are some of the statistics.
83% of adults feel like inflation is a source of stress.
57% of adults who indicated money was a source of stress said that having enough money to pay for things in the present (food or housing) is their main source of stress regarding money
43% reported feeling that saving enough money for the future is their primary source of stress.
The statistics back up our feelings. But everyone I know is aware of the inflation. We see it every day. Groceries that used to cost me $100 a year ago ring up closer to $125 for me today.
My coworker, who felt ready to buy a home, is crushed by the higher interest rates. She now has to listen to real estate agents telling her to “date the rate, marry the home.” Then, of course, the rates can decrease, and she can refinance. But her affordable monthly mortgage payment still slipped out of her grasp.
It’s naive to accept that financial stress will leave us. But when you come back to your financial pillars, the stress affects you less than before.
Here are five ways you can reduce your financial stress.
1. Bills: Prioritize what’s in your control
When I feel overwhelmed with expenses (a normal feeling while wedding planning), I have to rein in my emotions.
I can’t control inflation. I can’t change the expensive price tag of weddings. On top of that, I have little influence over vendor prices behind a little negotiating.
Ultimately, I can only focus on what’s in my control — how much I’m willing to spend. And how smart I can be with the money I have.
When I apply the same logic to my everyday spending, my stress decreases.
How can I keep my costs down?
Food: Meal prep at home. The simple but obvious option. After I go grocery shopping for hours and fill up the refrigerator, it’s harder to ignore all of this.
Spend quality time: Instead of spending excessive money on food and drinks, I invite my friends over. We cook a tasty meal, open a bottle of wine, and even clean up together.
Travel: I reduce my travel expenses with annual companion fares instead of stressing over the high fares. This Christmas, I took advantage of my companion fare and paid 40% less on flights for my partner and me. Buy one flight, get one for $121 is a steal during the holidays.
If you’re too deep in debt, these micro-actions won’t give you the desired result. But the little changes will help you feel more in control if you’re feeling stressed.
2. Habits: Feel like you’re wasting money? Declutter
Accumulating more stuff in your household creates stress in three ways:
You feel guilty for not using it.
You feel guilty for more clutter.
You feel guilty for wasting money.
The biggest clutter culprit in my household is food. When your refrigerator and freezer can’t close, it screams at you to use your food. The worst is when you buy something you no longer want. It takes up space, and then it goes bad. Waste galore.
I buy a lot of groceries in bulk to save money. It’s great for my wallet, but eventually, my freezer is filled with frozen fruit, meats, and other items. To combat this, I started doing a monthly refrigerator detox. We clear out the extras and start the month fresh.
Additionally, we receive a lot of prizes from our company raffles, parties, etc. A recent item we got was a brand-new Amazon Echo. Did we need it? No? Did we feel like it was a waste throwing it away? Yes.
After the dust settled and we realized we would never use it, I put it on Facebook Marketplace. We got $180 for it, and the seller drove to our meetup spot near me.
My stress reduces with decluttering because I’ve solved all the “guilt” problems. Decluttering also provides a clean slate. You can more accurately assess what material items you value or things that possess practical utility.
3. Income: Increase + diversify your income
How can you increase your income?
Be your advocate.
Regarding your full-time job, it’s essential to research market data and stay on top of the market.
For example, my friend felt happy with her new job. But she was also of the mindset that more money would be nice. So, with recruiters flooding her inbox on LinkedIn with higher starting wages, I suggested she mention that to her manager.
Her manager called her to inform her they would implement a 10% raise to adjust for the market.
Coincidence? I think not.
Here are a few other ways you can improve your income:
Negotiate. Don’t just sign the offer letter presented to you. Negotiate for a higher salary, sign-on bonus, or benefits. Most companies are willing to negotiate salary or sign-on bonuses because there are fewer legalities.
Ask for relocation assistance. Moving to a new job can be a pain. It’s also inconvenient for your wallet. I asked and was rewarded with my flight and moving expenses covered.
Work extra overtime. Working overtime can add a nice cushion to your paycheck if you’re an hourly employee. For example, I earned thousands of dollars a year extra for helping out the team.
Side hustles. Writing and user interviews are my current side hustles. After three years, my friend started freelancing for video editing and garnered enough customers.
I’ve noticed these strategies are particularly stressful before I take action. But after the nerve-wracking hype session I have for myself, the results are always worth it. Even if your side hustles aren’t taking off, the pure act of diversifying helps you sleep at night.
4. Budget: Money disappearing? Track your spending
I’ll be honest. I’m not a fan of budgeting.
Why? Because it takes time, I’d instead automate my spending, saving, and investments to enjoy life.
I’m not saying my strategy is one-size-fits-all. Some people need to live by a budget, or they’ll go haywire. But there needs to be some form of tracking to avoid reckless spending.
Here are the simple steps I take:
Calculate income. My full-time job pay is stable, while my side hustle income fluctuates.
Determine expenses. My main costs include the mortgage and utilities.
Automation. I contribute the same percentage to my 401(k) each paycheck. In addition, my credit card payments are set up for auto-pay.
Spend guilt-free. Once I have the boring adult things covered, I can spend it with peace of mind.
I don’t think you need to track every dollar. But it would help if you had a general sense of where your money is going. More importantly, is your money allowing you to achieve the goals you want?
5. Indulgences: Appreciate the little things
Have you heard of the lipstick effect?
The phenomenon is when consumers willingly spend money on small indulgences during recessions or economic downturns. Their indulgent purchases continue on a small scale since people don’t have disposable income for extravagant or luxury items. As a result, consumers focus on more minor things — like premium lipstick.
Whether it’s a recession or not, focusing on the little things helps reduce my stress around money.
Some of the small purchases I’m grateful for include:
Shoes. A decent pair of athletic shoes are comparable to a consumer’s premium lipstick. A well-crafted shoe can last me a long time. But one pair is not fun. I want different colors! It also acts as an encouragement to maintain a healthy lifestyle. That’s a win-win for me!
Coffee. Is it necessary? No. But it’s a home-brewed daily indulgence. I’m also known to support a local coffee shop for a drink I don’t have enough time or skill to make daily.
Road trip. With the cost of travel skyrocketing, it’s nice to hop in the car and go for a day trip. I recently went on a ferry to the Washington Islands and achieved a total change of scenery. Making it home in time for dinner was a plus too.
The little things may outweigh your luxury urges. So participate in the “lipstick effect” and see how it goes.
Read also: The psychology of money (must read)
Here is a quick recap:
1. Bills: Prioritize what’s in your control. If you can’t control inflation, focus on what actions you can take.
2. Habits: Feel like you’re wasting money? Declutter. I’m happy as a clam when a guest comments on how clean my house is. I clean regularly, but the golden trick is not having a lot of stuff!
3. Income: Increase + diversify your income. You can work all you want, but unless you speak up, it can get noticed. If you don’t put all your eggs in one basket, you won’t panic as much when your full-time income drops or you lose your job.
4. Budget: Money disappearing? Track your spending. Find what works best for you. I live by percentages and automation.
5. Indulgences: Appreciate the little things. Treat yourself, but on a small scale.
Contributed by Jessie Vee
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