3 ways to beat financial stress
Taking care of your mental well-being can help you stick to your financial goals.
Two recent reports show Americans are more stressed than ever. According to a CreditWise survey published by Capital One, 73% of Americans rank finances as their main stressor.
And a Fidelity study found that 79% of women are burdened with work and stress issues, up from 67% a year ago. The majority of participants were concerned about their ability to manage daily expenses and save for goals beyond retirement.
Studies have confirmed what many Americans already know: Managing their personal finances can be stressful.
Manage financial stress
If you’re worried about money issues, you’re not alone. And stress can easily spiral upward – psychiatrists attribute a host of mental health issues to financial worries, including anxiety and depression.
It might seem counterintuitive, but sometimes the way to reduce financial stress can be to put less pressure on yourself. It doesn’t mean throwing your budget out the window. Instead, maybe small changes will help you save money without costing you so much energy.
In the long run, it could help you pay off debt, save for short- and long-term goals, or build an emergency fund – all of which will ease your stress even more. Here are three ideas to help reduce financial worries and protect your mental health.
1. Park your money in a smart place
A 2020 Federal Reserve report notes that 30% of Americans would not be able to cover an emergency expense of $ 400. Not being able to handle an emergency is the kind of thing that can keep you awake at night.
Try to park cash in a high yield savings account, which will make it easier to build up your reserves. You don’t have to do it all at once, especially if you’re struggling to make ends meet. Move a small amount into your savings each month – you’ll be surprised how quickly this accumulates. Interest rates aren’t that high right now, but you can earn interest while still having your money available for emergencies.
When you’re ready to earn higher interest rates, you can look beyond savings accounts to other options like CDs and money market accounts.
2. Use credit cards wisely
Depending on how you use them, credit cards can be a major source of financial stress or contribute to your feeling of financial freedom. I recently jumped on the bandwagon and started using rewards credit cards. Now when I shop I earn 5% on my purchases which is hundreds of dollars every year.
To maximize this benefit, I pay off my credit card balance every month so that I don’t waste money on unnecessary interest charges.
Interest charges are the downsides of spending by credit card. Credit card companies tend to charge relatively high interest rates, so the fees can easily add up. Many Americans are making headway on paying off balances – data from the New York Federal Reserve revealed we paid off an incredible $ 108 billion in credit card debt last year. It’s a huge step forward, but the total balances still stand at nearly $ 1 trillion.
If you’re having trouble with your credit card balance, it may be a good idea to look for alternatives. For example, you might find it easier to use a debit card that doesn’t generate fees. Check out our guide on how to pay off your debt for more information on ways to lower your interest charges.
3. Invest in your goals
It might sound strange, but in order to save money you might have to spend some money.
Like New Year’s resolutions, changing your financial habits isn’t easy. And the more like a chore something feels, the higher the stress level and the less you’re going to stick to it. Making changes in a way that doesn’t add anxiety to your life can be a smart financial move, even if you have to spend money to do so.
Here are some examples:
- If your goal is to stop eating more in restaurants, invest in the right equipment to make your kitchen life easier.
- If you don’t like dealing with numbers and spreadsheets, a budgeting app can help you track your spending and savings. There are lots of free options out there, but what if the free apps don’t ease your financial worries? The best budgeting apps fit your lifestyle. Even if it comes with a monthly or annual fee, it’s still a good investment if it helps you stay on budget without adding stress.
- If you want to give up your daily habit of buying coffee and the K-cups don’t cut it, investing in a coffee grinder and coffeemaker could show you a thing or two about great coffee tasting at home. And at the end of the day, you’ll always save more than you would by buying coffee every morning.
The trick is to spend wisely. Do your research before you buy. Find ways to get deals on your investments. And don’t buy anything that you won’t consistently use to save money.
Take care of your well-being
The goal of adopting healthier financial habits is to increase your overall well-being, not increase your stress levels. Small changes in the way you save and spend money can help you gain more control over your finances and improve your overall mental health.
And remember, it’s not all or nothing. If you’re not ready to cut some habits, don’t. If buying your daily coffee helps reduce stress and keeps you going, take advantage of it. Look for other ways to improve your financial health while continuing to invest in your well-being and happiness.