29 August 2022 |
Virtually everyone will experience financial stress at some point in their lives. Whether it’s student debt that never ends, a car that needs urgent repairs, a cost of living that’s rising faster than average salaries, or the sudden loss of a job, we’ll all end up in a situation where our finances cause us stress.
If you’re feeling stressed about your financial situation, you’re by no means alone! In fact, according to a study by FP Canada, money is the main source of stress for 36% of Canadians over the age of 35. For Canadians under 35, the figure rises to 44%.
Although this stress is normalized, that doesn’t mean we should grit our teeth and endure it! Instead, we need to take proactive steps to reduce financial stress. Here are seven tips to help you overcome financial stress.
1. Identify the source of stress
It’s no coincidence that this is the first tip since it’s literally the foundation. You may feel generally stressed about your finances, but it’s important that you do the exercise of clearly identifying what’s stressing you out. Is it your credit card that you struggle to pay off every month? Are your monthly bills piling up, leaving you with very little money for the rest of the month?
Is it a temporary or chronic situation?
Taking the time to think these questions through will help you pinpoint the real source of your financial stress and find a relevant strategy to remedy it.
2. Have an emergency fund
Having an emergency fund may sound easier said than done, but it’s a great way to reduce your financial stress. By having this fund, you know that if the need arises, you’ll be able to afford to have your fridge repaired or your cat operated without going into debt. So it’s a cushion that ensures you’re not caught flat-footed when the unexpected happens.
The amount varies according to your standard of living. Ideally, you should have the equivalent of three to six months’ income in an emergency fund. Of course, this is an amount to be built up gradually, starting with realistic savings amounts.
3. Draw up a realistic budget
Drawing up a budget is an excellent way of finding out where your money is going and assessing your standard of living. Your budget should correspond to your current income, taking into account the debts you have to repay and the savings you want to make.
At all costs, avoid projecting yourself into the future, thinking you’ll soon have a better salary or an end-of-year bonus. Also, be honest with yourself and avoid underestimating what you spend on restaurants or alcohol, for example.
By adjusting your actual expenses to your income, you’ll avoid constant financial stress.
4. Have a strategy to reduce your debts
If debt’s causing you a lot of stress, think about creating an effective repayment strategy. Every situation is unique and deserves personalized attention. After all, if you have two cars, a mortgage on your home and another on a cottage, plus a line of credit and several credit cards, you’re in a different situation from a young person who has just graduated and is struggling to pay off his student loan.
You could work with a financial advisor to identify the best strategy for you. Several tools are available, such as debt consolidation. An expert can also help you see things more clearly, so you can prioritize the debts you need to pay off as quickly as possible.
5. Find additional sources of income
If you can’t reduce your expenses at the moment, supplementing your income at the end of the month could be an avenue to explore. It could also be an exercise in saving money and building up your emergency fund.
There are many platforms for performing freelance tasks, ranging from translation and text editing to basic administrative tasks and data entry.
You can also sell objects or clothes you no longer use, rent out a room in your house or even get into Uber.
6. Avoid temptation
Society sometimes pushes us to make choices that don’t really correspond to our values. Whether we’re talking about a car, electronics, clothes or a vacation abroad, there are tons of things that seem necessary but aren’t. These expenses add up quickly, especially if they’re very common. Beware of compulsive buying too!
7. Take care of yourself
Living under constant stress puts you at greater risk of getting sick, making mistakes and making bad decisions that can harm your personal finances! It’s a vicious circle. So it’s extremely important to take care of yourself, especially in times of stress.
Even if you’ve decided to work a few extra hours to pay off debts faster, take the time to rest too. Go for a walk, do yoga in your living room or take up meditation! The important thing is to do something that allows you to relax.
Make sure you eat a healthy diet, drink plenty of water and get enough sleep.
Finally, if you feel that financial stress is overwhelming you and you’re feeling distressed, don’t hesitate to seek help from a mental health professional. There are free or low-cost emergency resources that can help. Also, consider talking to someone you trust about your situation. The simple act of talking about your financial stress is sure to bring you relief!