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Top Ways to Lower Your Financial Stress

If there is one common thing that can keep people up at night, it is financial stress. Regardless of your age or income level, you may worry about if you have enough money to pay certain bills, how you will afford to send the kids to school, or if you are saving enough for retirement. These are just a few of the common concerns that people face about their finances.
While some may think that the answer to their financial woes is to increase their income level, the fact is that financial stress is common across all income brackets. Before you start stressing that you will never be able to enjoy a life free of financial stress, you may consider following a few key tips that can help you to ease your mind and sleep better at night. 

Create an Emergency Savings Account 

Many people stress out about those “what if” scenarios. What if the car breaks down, and you need to pay for emergency vehicle repairs? What if your child breaks an arm, and you have to pay for medical bills? What if a natural weather event strikes the house, and you have to pay your large home insurance deductible?
These are just a few of the many “what if” situations that unfortunately become a reality for many people every day. The fact is that cars do break down, people do get injured or sick and natural weather events can cause property damage. These are not necessarily “what if” situations after all. In fact, you should view them as unavoidable factors that you need to properly prepare for.
By planning for these events that almost certainly will occur at some point, you will be able to ease your mind. One of the best steps that you can take to plan for them is to create an emergency savings account. Whether you only have $20 per paycheck to contribute toward savings or several hundred dollars, think about slowly but steadily building your account balance. Ideally, you want to have a savings account balance that will pay for your insurance deductibles if needed and that will cover your bills for several months or longer if you are unable to work for a period of time. 

Pay Down Your Credit Card Balances

If you are stressed about your finances, you may be one of the millions of people who are carrying high balances on your credit cards. Credit cards themselves are not bad, and in fact, if you have a credit card with a decent available limit, it may help you to sleep better at night. After all, that available limit can be used as an added cushion on top of your savings account balance.
While you do not want to rely on credit cards as your only form of emergency funds, the fact is that having a few thousand extra dollars in available funds to use in a time of crisis can benefit you. Your general goal, however, should be to keep account balances low. This keeps your available balance high and your payments low. Keep in mind that by reducing your credit card balances, you also reduce your monthly payments. Reducing your expenses can free up extra cash each month that you can use at your discretion.

Live Beneath Your Means

The unfortunate truth is that many people who earn very high salaries are living paycheck to paycheck, and this is because they are living up to or even exceeding their financial means. Living paycheck to paycheck essentially means that you must bring home your next paycheck to cover the next set of bills that are due, and this can create a stressful situation.
After all, it puts you in a position where you are forced to work and earn a living. It means that any unforeseen circumstance can create a burdensome amount of financial stress. Illness, job loss and other events can easily throw you off track with your financial planning and management efforts. However, when you live beneath your means, you are able to save more money, reduce your debts, and pay your bills with far less money than you bring home. It may not be glamorous to live in a smaller home than you can actually afford or to drive an older vehicle when you realistically could afford a larger car payment. However, the ability to increase your savings and to sleep peacefully at night free of financial worries is a benefit that you cannot put a price tag on. 

Plan For the Future 

If your financial stress is related to future expenses, planning is the answer. The fact is that you will not have money magically available to you to make a down payment on a car, to pay for that memorable family vacation you want or to remodel the house if you do not actually start planning and saving for it. It can take months or even years to save up enough money to accomplish some of the plans you may have.
If you are planning for retirement, it likely will take decades of planning and saving. Therefore, you should get started preparing for the future today. A good idea is to make a list of all of the things that you want to save up for in the near future as well as for your long-term plans. Think about the next vacation you want to take, repairs you need to make to the house, when you plan to trade in your vehicle, how you are going to pay for the kids’ college, and even retirement. For each item, assign a target amount that you want to save and a target date. You can easily calculate how much money you will need to save per month to achieve your goals. If you do not have enough money available to save for all of your plans, you can then adjust your regular expenses so that you have more funds available. For example, you may opt to cancel your cable TV service so that you can save an extra $100 per month toward your next vehicle purchase. 
You can lay awake at night stressing about your finances and all of the things that may happen to you in the future, or you can take action and do something about your current financial situation and prepare for the future. The only way to ease your mind is to reduce debts, build your savings and plan for tomorrow. By following these important tips about your finances, you can rest easier at night knowing that you are making a regular effort to improve your financial situation.
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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