7 steps to managing financial stress

Financial stress can be the result of rising debt, a job loss, insufficient earnings, high living costs or even money troubles in your relationship. Whatever the circumstances, being worried about money takes a mental and physical toll, plus it can strain relations with your significant other, family, workmates and friends.

While everyone handles stress differently, everyone deserves the chance to live a comfortable and happy life, free from unnecessary financial worries. Here are seven ways to relieve your financial stress, take control of your finances and feel more at peace.

Symptoms of financial stress

Here are some questions to help you evaluate your financial stress levels:

  • Do you control your money, or does it control you?
  • Are you feeling uneasy when you think or talk about money?
  • Do you often think negatively about your current and future finances?
  • Have you woken up lately with money on your mind? Or struggled to sleep because of money-related thoughts?
  • Is there a chance you’re ignoring issues, or are in denial about your finances?
  • Are you gaining or losing weight?
  • Have things you love to do stopped being of interest?
  • Are you having panic attacks or feeling depressed?

These are just a few of the signs and your stress indicators may differ from the next person.

How do you relieve financial stress?

  1. Find the source of your financial worries

There may be many reasons you are having money worries. You need to find what bothers you the most about your finances.

For example, many times we turn to activities that can be doing harm and we think those are the problem. We might be spending a lot shopping, smoking, gambling, drinking or on other ways to feel some relief. Often these things aren’t the problem at all, they’re just a symptom of another issue causing trouble beneath the surface. Dig deeper to find what the real issue or concern is.

What change would make you more at ease and less worried? Maybe it’s eliminating all your debt or earning more money so you can start saving or investing. Maybe it’s only one major thing, or maybe you have a list:

  • A job loss or uncertainty about a job.
  • Credit card or consumer debt.
  • Low income level and ability to save and invest.
  • Low interest rates – especially for retirees relying on savings.
  • Volatile sharemarkets, which can make KiwiSaver and other investment values drop.
  • Relationship trouble.
  • Lack of financial literacy.
  • Bills, such as for dental work or to fix a car.
  • Increased living expenses – overspending and shopping.
  • Unexpected emergencies.

Some of these examples can be financially devastating. Whatever the case, think about “what” and then “why” these areas trigger your financial stress. This can be the first step to getting on top of things.

  1. Tackle one issue at a time

If you have a few money problems, your finances can certainly feel overwhelming. This can snowball and create a situation where you might feel like you have no control or even know where to start.

It’s important to prioritise matters. So, after you’ve identified your biggest issue (or issues), you can start to focus on the main source of the problem.

Be realistic when you determine what you can achieve, and then dedicate yourself to following through each month. For example, this might be promising yourself: “Each month I will spend less and put the difference toward my debt so my balance declines by at least $100.”

  1. Learn how to handle money stress

How you handle such situations will differ depending on who you are and the preparation you’ve been able to put in. Even financially stable people can still stress about money and worry about their financial future.

During these tough economic times (the recession that New Zealand is entering), it’s OK to accept and acknowledge a little stress. Be brutally honest with yourself about how you might handle that, and also with how a worsening economy could affect you further.

Look for healthy ways to manage your stress, like working out, taking a walk, listening to music, creating something or learning a new skill — anything that helps you relax and think more logically.

If you need more help, reach out to someone you trust or seek professional mental health advice.

  1. Declutter your budget, then stick with it

Take control of your finances by scheduling, organising and decluttering all the money coming in and out of your bank account. The more control you have, the less stress you will feel.

There are a heap of great tools to help you do this. You can use this online budgeting tool or download a budgeting app to your smartphone or tablet — there are plenty to choose from.

  1. Set realistic goals

Financial goals will make a world of difference. They give you something to strive for and can help you stay motivated.

Yes, it’s cool to have long-term and maybe more challenging goals. But if you’re financially stressed, it’s usually best to keep your goals simple, short-term and achievable. This might be:

  • Find three ways to save $xxx this month.
  • Put xx% of extra money towards debt repayments this year.
  • Put $xxxx from each pay towards savings.

When you can cross a goal off your list, it will lift your spirits and keep you motivated towards achieving another.

  1. Build an emergency fund

An emergency fund is a savings account meant to cover unexpected expenses and financial emergencies. Building an emergency fund may seem tough at first, especially if you are struggling to make ends meet. Start to build it up by putting aside a small amount, maybe $10 or $100. You might consider selling any unused items around the house to build up that cash even faster.

If you’re starting from scratch, try working towards amassing $1,000. Once you’ve achieved that, as a guideline you should aim to have three to six months’ living expenses set aside.

  1. Ask for help – from the right people

Sometimes, financial stress is not something you can handle on your own. There is no shame in looking for support or help. There are plenty of free services available to people who are struggling financially; for example, there are nationwide government-funded charities with budgeting mentors who offer free and confidential sessions. They’ll often visit your home to do so, and many can visit outside usual work hours. If you’d like to learn more, the Milestone Direct team can put you in touch with someone in this field.

Be wary when friends or family offer such assistance. Although these people may have the best intentions, they might not be experts in financial matters and may in fact be in a worse situation than you! Even if they are well-organised financially, they may be in a very different situation, and so you risk getting irrelevant tips.

None of the above will be easy, regardless of where you might be financially. Some of your goals will take time and require plenty of effort to achieve, and even then you might not get everything you want. Stay patient, celebrate the small wins and look for the positives as your situation progresses.

About Milestone Direct Ltd

Milestone Direct Ltd
Milestone Direct Ltd is a full-service financial advice firm with a focus on retirement planning, wealth management, and ensuring your funds don't run out before you do. Milestone Direct is unique, with; no product provider ownership, no quotas, and all financial advisers are paid a salary instead of commission. Milestone Direct Ltd are already trusted as the official financial advice provider to organisations such as the NZ Defence Force, so you can trust them too. Call now for a free and no obligation initial consultation, toll-free 0508 645 378 or learn more at: www.milestonedirect.co.nz.