An increasing amount of Americans are dealing with financial stress and the effects that come along with it. According to a survey by Varo Money in 2018, an astonishing 85 percent of Americans admit to occasionally feeling stressed when it came to money while 30 percent said they felt constant pressure and stress from financial issues. For some, it is dealing with the rising cost of living and raising a family while others find themselves tensed over little or no savings, debt levels or saving for the purchase of a home. It is safe to say that money worries are alive and well, leading to the increased need to become familiar with ways you can reduce financial stress and all that comes with it.
Understanding Financial Stress
To begin to correctly handle financial stress, it is important that you first understand what financial stress is and its causes. With the rising income not being matched to the rising costs of living, many Americans are left wondering how to fund the gap. As a result, their financial health takes a hit. One of the leading causes of financial stress: high debt levels.
As of 2017, the average credit card debt per household stood at $16,000 while the average overall household debt in 2017 climbed by 0.9 percent. Interestingly, the highest levels of debt in 2016 were found in the 55-64-year-old age bracket, with the younger 35-44 coming in behind at $134,100. As a result, older people find themselves seeking ways to manage their money tension. As for retirement, recent polls show exactly how worried seniors are about coping with retirement and the loss of income. Have they saved enough? Will they be able to stay in their own home? All of these are questions that tend to add to the financial stress dilemma.
Financial Stress & Your Health
As a result of financial stress, both your physical and mental health can be affected. A common consequence of financial stress is the increase in anxiety and depression. This affects your productivity at work and your focus at home. The constant worry about pending payments and debts can weigh heavily in your mind, leaving you persistently worried and anxious. Physically, financial stress has been linked to stress eating, substance abuse, insomnia, and hypertension. A survey commissioned by CreditCards.com in 2017 revealed that over 65 percent of Americans lose sleep over money worries. So how can you avoid these knock-on effects? While you may not be able to avoid financial stress, it can be managed in several ways.
Life can be unpredictable. Unforeseen events can become incredibly stressful, especially if you have no backup plan in place. This is why you need to be proactive. Make an emergency plan, along with the funds to go with it. For a rainy day fund, you need to save 3-6 months worth of your total income so that you can have some room to figure out your next move. Finally, speaking of planning for the unexpected investing in insurance is always a great idea to protect yourself from debt and your family in the event of unfortunate situations. With these taken care of, you can feel more relaxed knowing that should the unknown occur, you won’t be caught completely unprepared. By replacing uncertainty with plans, you can become more positive and feel more in control of your life.
Make a Plan For Your Debt- And Stick To It
Another part of the uncertainty factor comes with not having a plan. Sometimes the financial commitments or even debt levels can become overwhelming. It can be hard to know where to begin your journey to financial success. However, you can begin the journey to improving your financial health by simply making a feasible plan and sticking to it. Once you have been able to choose the best debt repayment or savings method for you and your family, you can then map out payment schedules and monitor your progress as you chug along to your goals.
By making debt repayment a priority, you can avoid it creeping up even further. This greatly reduces the chances of financial stress. Having a repayment plan and budget allows you to actively tackle your debt and improve your improve your money management skills. It also allows you to take responsibility for your actions; the first step to self-improvement.
Leave Yourself Breathing Room
Finally, make some time for budgeting and more importantly, allow yourself some room. Make note of all your expenses so that you can visualize where your income is going. Using this you can then cut any expenses so leave some discretionary funds in your budget each month. Think of it as resetting your financial clock. The power of witnessing your ability to actively reduce your spending and live within your means can have a positive impact on your mindset.
A majority of people deal with stress in their lives, including financial stress. Whether it is worrying about keeping up with your bills or saving enough for retirement, many Americans feel tensed and are searching for answers. Making use of these tips along with the advice of a financial advisor can help you rest easy when it comes to your finances.