“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” – Suze Orman
Money is one of the most important necessities in life. You cannot imagine a single day of your life without money. It is so important that its lack can leave you immensely worried and expose you to financial stress.
Financial stress is defined as a condition that results from certain financial and economic events that cause anxiety, worry, and a sense of scarcity and is accompanied by the physiological stress response. You can get exposed to financial stress in situations like when your expenditure is greater than your income or some uncertain event like the pandemic has led you to run out of money.
Further, financial stress can not only impact your mental health by leading to anxiety, but it can also negatively impact your physical health. Prolonged exposure to financial stress can lead to high blood pressure, migraines, and other digestive disorders. Along with this, financial stress can also affect your family’s happiness and peace.
With all the negative impacts financial stress can have on us, it is crucial for us to put in the best efforts to reduce and overcome financial stress completely. Given below are 7 actionable tactics that can help you in this regard.
7 actionable tactics to reduce financial stress and live a happier life
- Create a monthly budget and follow it strictly:
“A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey
Budgeting is one of the most important steps required to reduce financial stress and gain financial freedom. With the help of a proper monthly budget, you can ensure that your monthly expenditure remains below your income. Once this happens, you’ll experience great relief. So, you should try to create a monthly budget for yourself. Following are some simple steps to create a nice monthly budget:
- Calculate your total monthly income:
First of all, you have to calculate your total monthly income.
- Estimate your total fixed monthly expenses on utilities and other things:
Calculate your total fixed monthly expenses like those you make on utilities, phone bills, and other things.
- Estimate the variable expenses:
There are some variable expenses that we make every month. For example, sometimes we have to purchase extra food products because some guests have to come over or make some unexpected medical expenses. These variable expenses significantly impact our budget. So, you should estimate the variable expenses that you make in a month.
- Estimate your discretionary expenses:
Discretionary expenses are the expenses that you make on things you and your family like. For example, going out for dinner once a month or going to a fun city once a month. You should estimate the amount of money that you have to spend on such discretionary expenses.
- Calculate your total expenditure:
Now, add up all the expenses to calculate your total monthly expenditure.
- Do some simple calculations to reduce your expenses and take them below your income:
If your monthly expenditure is greater than your monthly income, you have to do some simple calculations to reduce your expenses and take them below your income. For example, you can think of ways to reduce your utility bills, discretionary expenses and then, try to stay within limits and not run out of budget.
- Buy comprehensive insurance coverage:
Car repair and maintenance is an expensive affair. If your car requires frequent repairs and maintenance due to whatever reasons, it can take a toll on your financial health and expose you to financial stress. After all, collision insurance doesn’t cover your car against damages that occur without human involvement and you have to make these expenses from your monthly income only. But, there is one way out to deal with these expenses. It is to buy comprehensive insurance coverage.
Comprehensive insurance coverage is also known as ‘other than collision coverage’ as it insures you during events when your car isn’t damaged by a collision. For example, when you find your car vandalized or it has got some damages because of some natural calamity. Under such circumstances, comprehensive insurance can get you covered. As a result, you won’t have to spend your precious money on the repair and maintenance of your car when the damages haven’t been caused by a collision.
- Build an emergency fund:
Building an emergency fund is extremely important. By doing so, you ensure that you have the financial power to deal with the uncertainties of life. Take the case of the pandemic. No one knew that our life would take such a sudden turn. Millions of people were suddenly out of their jobs across the globe. Such things can expose us to massive amounts of financial stress.
But, if we know that we already have an emergency fund to safeguard us during such challenging times, we don’t get exposed to excessive amounts of financial stress. We know that before the emergency fund gets exhausted, we’ll be able to do something to replenish our finances.
So, to reduce and eliminate financial stress from your life, it is crucial to build an emergency fund. Every month, you should try to put a fixed amount of money in your emergency savings account. But, along with this, you should also pledge not to use your emergency savings for any other purposes. Believe me, if you succeed in building an emergency fund, you’ll experience great relief from financial stress.
- Engage in a side hustle:
Engaging in a side hustle, earning more, and saving judiciously are three things which when done together, can save you from financial stress. By engaging in a side hustle, you can be certain that in case any situation like the pandemic impacts your employment, you’ll still have your side hustle to help you keep earning. Moreover, by engaging in a side hustle, you can also earn more money, which will help you move towards financial freedom.
So, it is time for you to start a side hustle of your choice. To prevent your side hustle from acting as an additional source of stress in your life, you should try to choose one that you are passionate about. For example, if you love photography, you can sell stock photos on stock photography websites or create a photo studio at home. This will help you make additional income, put more money in your savings account, reduce financial stress and embrace financial freedom.
- Practice self-awareness to eliminate impulse spending:
Impulse spending is one of those things that often make us land into financial upheavals. We are humans and we all find it hard to resist temptations that lead us into impulse buying. But, to bid adieu to financial stress and attain financial freedom, it is crucial for us to eliminate impulse buying. For this, the most effective thing that you can do is to practice self-awareness.
Whenever you go shopping, be aware of your buying decisions. As you pick things up from different shelves, question your decision of buying them and see if you actually need them or are you engaging in impulsive buying. This simple practice will help you save a good amount of money and help reduce financial stress in your life.
- Discuss financial matters with your family:
Do you discuss financial matters with your family? If yes, great! If no, then it’s time to start involving your family in financial matters. No doubt, you want to keep financial matters to yourself to ensure that your family doesn’t feel bothered by them but it is important to realize that by involving your family, you’ll only be doing good to them. If you wonder how? The answer is that if your family knows how much you can afford, they’ll keep their additional demands within the limits and ensure you achieve financial stability. If your family doesn’t know the exact financial situation, how can they help you attain financial freedom?
Moreover, financial stability is not only for you, it is for your entire family. When everyone knows that there are no financial burdens to get bothered by, they feel happy and free from financial stress, which is good for their overall well-being and happiness. So, you should try to involve your family in financial matters. Let them know about your monthly budget, tell them how much they can spend on additional things apart from necessities and all such things. Believe me, it will only add to the happiness of your family.
- Practice simple stress management techniques to keep your stress levels managed:
You cannot attain financial freedom immediately as you start implementing the above-mentioned tactics. It is a process that takes time. As you keep undertaking the journey, you’ll slowly begin to experience a reduction in financial stress. But, for the duration of time, before you begin to experience the joy of reducing financial stress, it is important to practice some simple stress management techniques. This is because financial stress can impact your mental peace, well-being, and physical health as well.
However, if you practice stress management techniques, you can maintain your physical health, mental clarity, and well-being and confidently keep paving your way towards financial freedom. Now, the following are some effective stress management techniques that will be of great help to you.
Meditation is a scientifically proven technique for stress management and attaining inner peace. You can try to meditate for 10 to 15 minutes a day with the help of guided meditation videos. Art of Living, Jason Stephenson, and Calm are some YouTube channels where you can easily find different guided meditation videos.
- Belly Breathing:
Belly Breathing is one of the best techniques to relax your nervous system and reduce your stress levels. When you practice belly breathing, you activate your parasympathetic nervous system which is associated with rest and relaxation. As your parasympathetic nervous system gets activated, your stress levels drop and you feel relaxed. If you want to learn belly breathing, you can watch YouTube videos and practice along. Just 10 deep breaths through your belly in a day can change your life.
- Do something that you love:
This is one of the best ways to keep your stress levels managed and attain mental clarity. When you do something you love, your mind begins to slow down. You experience a reduction in the intensity of your thoughts and your worries begin to the dropdown. As a result, you feel relaxed. No doubt, you may feel that you don’t have time to engage in such things because of your busy schedule but try to take out at least 10 minutes from your busy life. Do something that you love, sing, dance, paint! Believe me, these 10 minutes will change your life.
Financial stress can snatch joy from your life and expose you to physical as well as mental health troubles. This makes it crucial for you to work on reducing financial stress and attaining financial freedom. The above-mentioned tactics can help you with the same. Now, wishing you All the best, and may you achieve financial freedom in your life.