The past year has been a particularly stressful one for many Americans, especially regarding finances. Financial stress is a massive problem and can lead to depression, anxiety, health issues, and even marital problems. If you have struggled throughout this year, here are some steps you can take to address financial stress.
Don’t avoid the issues
When dealing with financial stress, it can be tempting to avoid looking at the issues directly. However, this type of avoidance only leads to more stress later on. Instead of avoiding the problem, determine to face it head-on. Get out a notebook and write down all of your expenses, past due bills, and upcoming needs. Then, list out all of your income and start forming a plan.
Create a budget
Your financial plan should start with a budget. Once you know how much money you have coming in and how much you owe, create your budget. The idea of following a budget might sound restricting, but it actually provides you with the freedom to spend where you need to.
Cover necessities first
If you’ve really been struggling this year, you may have past due bills. However, you should cover all your necessary expenses before you try to catch up. Make sure your “four walls” are covered, which include food, shelter, clothing, and transportation. Once those bases are covered, you can plan to pay other bills.
Save for emergencies
Your financial plan should include saving for emergencies. Seventy-eight percent of Americans report living paycheck to paycheck, which means that the majority of people are one lost paycheck away from disaster. As soon as you can, make a plan to save at least three months of expenses. That way, when a problem occurs, it won’t become a financial crisis.
Evaluate your habits
This past year, much of Americans’ financial stress has been the result of lost jobs or wages due to the pandemic. However, many people live with chronic financial stress because they don’t evaluate their spending habits. It’s important to reflect on your finances and habits at least once per year and make changes to improve your situation going forward.
Financial stress is a massive problem, but there are practical solutions. If you start taking these steps today, you will find yourself in a much better place by this time next year.