Financially Stressed? Join the club! 3 Tips to Help Reduce Money Worries | Money

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Understandably, a perfect storm of world events is causing financial stress for the vast majority of Americans. In a recent poll for him American Psychological AssociationMore than 80 percent of American adults said they felt increased financial stress due to:

  • Higher inflation (87 percent).
  • Ongoing supply chain issues caused by the pandemic (81 percent).
  • Global uncertainty about the war in Ukraine (81 percent).

In addition, the difficulties related to the coronavirus pandemic, including health problems, loss of loved ones, difficult work and family situations, isolation and inconvenience, have affected the entire nation and the world. In the US, 63 percent of those surveyed said that COVID-19 has changed their lives forever.

The financial toll of stressed employees has hit businesses, too. A poll conducted by PwC reported that 34 percent of employees in various industries said that money worries in the past year have had a major to severe impact on their mental health; 18 percent said it hurt their productivity at work; 38 percent of financially stressed employees said they were looking for a new job; and 37 percent of them had used payday loans in the past year.

The obvious question in the wake of all this accelerating financial stress is, how can you reduce it?


1. Structure and stick to a budget

This is an alarming figure: at the beginning of 2022, nearly two-thirds of the US population lived paycheck to paycheck. Skyrocketing inflation is certainly a factor, but the bottom line for many individuals and families experiencing financial stress is that:

  • I don’t have a budget.
  • If they do, don’t stick to it.

Financial stress is often caused by a disconnect between the money you spend and the money you earn.

Set a budget that fits your monthly income and expenses, the latter including all monthly bills and debts, then use a spending log to learn your spending habits. All of that information will help you identify ways to reduce your spending, starting by cutting out more non-essential expenses.


2. Be strategic and create a debt payment plan

Piling up debt or barely making a dent in paying it off each month is financially strangling us, reducing disposable income and the amount of money you can save. So develop a workable plan to get rid of your debt.

Rank your debts in the order you want to pay them off. Paying off the credit card or loan with the smallest amount first gives you the satisfaction of crossing one off your list and building momentum. Or you could pay off debts with the highest interest rates first, like credit cards. Paying off high-interest debt as soon as possible saves you the most money in the long run.

Focus on paying off one debt at a time, putting the extra money you saved from restructuring your budget toward the first debt you’re trying to eliminate. When you focus on paying down one debt at a time, you can pay off debt more quickly, because more of the money will go directly to the principal balance and less will be spent paying interest.


3. Prioritize saving money

Things we can’t control tend to worry us. Knowing what you can control and taking the right steps can reduce your stress. A good example of leveraging what you can control is sticking to a consistent savings plan. The act of saving will give you a sense of accomplishment and comfort. As you accumulate savings, you’ll know the money is there in case you need it.

This is important to understand: Paying off your debt and eventually eliminating it will have a direct impact on how much and how well you can save in the short and long term. Everyone needs an emergency fund. Ideally, if you have the money and the discipline, you’ll develop a two-pronged savings approach that puts money into an emergency savings account every two weeks and into a long-term savings account, such as an IRA, 401(k) or high yield savings account.

Once you’ve substantially built up your emergency fund, you might consider placing some of it in a certificate of deposit, which earns a guaranteed rate of return that’s typically higher than traditional savings accounts.

Financial stress can seem overwhelming and unmanageable if you don’t have steps in place. Keep it simple, be honest about what’s causing the stress, and stay positive knowing that making small changes here and there can lead to big differences over time.


The content on 30Seconds.com is for informational and entertainment purposes only and should not be considered financial advice. Opinions or views expressed on 30Seconds.com do not necessarily represent those of 30Seconds or any of its employees, corporate partners, or affiliates.


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