How often do you worry about money? Financial anxiety can follow you everywhere in your everyday life, but not all financial struggles are equal. For one person, it may mean cutting costs on material items, like clothes, while for another, it may mean relying on a food pantry or a second job to cover household bills. Money worries can lead to stress, anxiety, and depression. They may even present themselves as physical symptoms including headaches, loss of appetite or not being able to sleep.
People who are struggling financially often have poorer diets, can fear losing their homes, and typically experience strong feelings of shame about not being able to provide for themselves and their families. Whether you're planning for the future or managing existing debt, getting your finances in order is essential to your physical, mental and emotional well-being.
Let’s take a look at the 5 steps you can use to improve your personal financial well-being.
- Take Control
If costs are rising, take an honest look at your income and outgoings, and set some smart, realistic financial goals or targets that you want to achieve. Begin by listing the financial goals you have for the future. These may be modest and relatively short-term, like saving enough for a vacation. They might be urgent and essential, like clearing your smaller debts. The more specific your objectives, the more likely you are to make them a reality. As with all goal-setting, make sure that yours are SMART goals.
- Organize Your Accounts
Feeling in charge of your finances will make you feel more proactive. Getting organized now is a great way to stay on top of your finances. Do a little research to find the best bank deals for you. Banks may offer incentives, such as reduced fees or cashback, when you switch to them. Others might have useful apps to track and manage your spending. In general, use a current or checking account to manage day-to-day transactions. Most banks offer free online banking, so you can keep on top of income and outgoings from your laptop or phone.
- Create a Budget
And stick to it. It may seem like a chore, but it’s an important part of the process. And it helps you to identify your income-to-debt ratio. The first thing to do is make a list of all your regular income. Second, list your essential expenditure, which includes mortgage or rent payments, water, electricity, food, and health insurance. Third, make a list of all non-essential outgoings. These include leisure activities, cable plans, and vacations. Finally, target your non-essential list first and see what you can reduce.
There are many free resources that can help with your financial well-being and alleviate your stress. For example, your employer may offer an employee assistance program. Online guides can provide free downloads and tools to help you build, track and adapt your budget.
- Manage Your Debts
Not all debt is “bad”. Good debt, such as a mortgage, can boost your credit rating and prove your reliability to lenders. Debt becomes a problem when responding to demands to pay it off is impossible. So, if you have something spare after the essential spending in your budget, consider getting ahead of your creditors and paying off your debts using either the "snowball" or "avalanche" method.
- Get Support
When you’re experiencing financial stress, you can be embarrassed and feel shameful. It can be challenging to reach out to family members and friends to share what you’re going through. However, you can trust that the people who truly care for you will be supportive, understanding, and compassionate. Shame is a very negative emotion that can contribute to your stress load.
If your finances are causing you stress, reach out to a financial advice service for help. Seeking help from a professional with the experience, knowledge, and solutions for your financial situation is an important step. Century has helped hundreds of thousands of people settle debts that they otherwise couldn’t pay, and has saved clients a lot of time, aggravation, and money in the process.