Tips to Help Relieve Financial Stress

Financial and mental health are strongly linked, with 73% of U.S. citizens reporting money as the biggest contributor to anxiety and stress. Unhealthy financial management increases stress, anxiety and depression, which can exacerbate poor money management and prolong the cycle of financial stress. There are steps, however, that you can take to transform your finances and improve your mental health.

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Assess Your Current Financial Situation

The first step to any transformational journey is taking stock of where you are right now. Start by making three lists:

•             Income: How much money comes into your household each month? Be sure to include salaries, interest and any other form of income for your household.

•             Expenses: For an accurate depiction of your monthly expenses, look at your bank statements for the past three months. Create categories for each expense. 

•             Debt: Finally, make a list of all the debts you owe. List everything from car payments and mortgage loans to money you owe your friends and family. 

Once you have your total income and living costs, you can set a clear goal. Do you simply need to reduce some expenses or do you need to generate extra income to cover the costs?

Create a Budget

The next step is to put together a monthly budget. An effective budget ideally accounts for every dollar and cent of income. So, be sure to account for every penny. A zero-based budget is a good place to start. In a zero-based budget, your income minus expenses should equal zero.

Alternatively, you could use the 50/30/20 budgeting method: Aim to set 50% of your budget aside for living expenses, 20% for saving and investment, and the remaining 30% for things you might want.

Start a Debt Repayment Plan

Reducing credit card and loan debt can give you breathing room in your budget. There are three common debt repayment strategies:

•             Snowball: The debt snowball strategy gives you an easier win by paying off the lowest loans first while paying the minimum on other loans. As a loan is paid off, you use the money you otherwise would have paid on the paid-off loan to pay the next smallest loan off, and so on.

•             Avalanche: Conversely, the debt avalanche strategy requires paying extra on the debt with the highest interest rate first. Continue paying the minimum on all your other accounts. By paying off the account with the largest interest rate first, you’ll save on the total repayment cost.

Earn a Degree

In today's competitive job market, workers are always looking for ways to stand out from the crowd. For many, going back to school to earn a higher degree is seen as an ideal way to boost their job prospects, and this can make a worker more attractive to employers.

Earning a degree is easier than ever when you enroll in an online program. For example, you can earn your MBA with a respected online school. When you learn in this format, you can complete the coursework at your own pace and keep your current job. Make sure to vet any program first, to ensure it is reputable.

Prioritize Self-care

It is important to take care of your overall well-being. Start by being more active. Going for a daily walk or another form of exercise can elevate your mood. Try meditation or breathing exercises at night to help you relax. If you do not invest in yourself, you cannot be the best employee, friend, partner or family member for anyone. So put on your oxygen mask first.

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About the guest author, Lance Cody-Valdez:  A few years ago, burned out and miserable at his job in corporate marketing, Lance Cody-Valdez decided it was time to invest in himself. He quit his job and used his meager savings to stay afloat as he built a career as a freelance writer and content marketer. He created free-lance-now.com to help others use freelancing to escape the 9 to 5 daily grind.

Maria Olsen