Today’s post is contributed by Amy Nickson, a passionate writer on finance. Amy is a professional blogger whom has started her own blog Working Moms Word. Please share your opinions by commenting below.
3 Major causes of financial stress and how to get out of it
One of the most unwanted things in life in financial stress. It can destroy your mental peace, relationship, and motivation to live the life. Well, it is also true that financial stress can arise in anyone’s life. Though it is dangerous but can be avoided. So, instead of worrying, you need to find out the causes and remedies to mitigate your financial stress as soon as possible.
The causes of financial stress
To solve a problem, you need to find out the cause of the problem first. If you are dealing with monumental financial stress, then you have to find out the reason of it.
Here you go:
Most of the people in our nation struggle when it comes to managing money properly.
According to a new report by the Center for Financial Services Innovation, or CFSI, 48% of people agree that their income is not sufficient. Their expenses are increasing and becoming greater than their income. Thus, they are struggling to meet their expenditure.
The situation is causing tremendous financial stress.
The SunTrust Bank has reported that nearly half, or 46% of employed Americans are running out of money between paychecks.
They have to use their credit cards or take out loans to manage their lifestyle. Thus, they are accumulating debts and struggling to get out of it.
Not only the income volatility, the pile of debt is also causing financial stress for many Americans.
The Urban Institute has reported that 77 million Americans are in credit card debt due to using credit cards to maintain their lifestyle and ignoring their credit card bills.
There are also many people who are struggling to pay off their student loan debt.
Higher education cost is rising at an alarming rate. Due to skyrocketing tuition cost, students who want to pursue a higher degree have to take out a student loan. But, after completing their studies, they are unable to pay off the loan due to low income or no job.
The Forbes.com has reported that one-third of millennials regret their choice of pursuing a higher degree due to their student loan debt burden.
Our nation owes over $1.48 trillion in student loan debt, spread out among about 44 million students.
Unfortunately, most of the students had very little time to save during their college years. Thus they have no savings to pay for their basic expenses. They are struggling to pay off their student loan debt and manage basic expenses.
Unemployment or low wage job
People who have a higher degree and who have no degree are earning same in our nation. Many students who have a degree are unable to find a good salaried job due to rising unemployment issue. They are accepting low salaried job to manage their basic expenses.
According to the survey conducted by The New York Times, “Americans aged 25 to 34 with a four-year college degree have a startling low unemployment rate of just 2.1 percent, compared to 7 percent for those without a degree.”
Thus, a majority of students are unable to start their family. They can’t afford the cost of buying or rent a house.
They have started to come back to their parent’s place after completing their studies. The whole scenario is creating stress.
How can you tackle your financial problems and get out of the stress?
You should understand the fact that worrying about the stress doesn’t help you to feel better.
You have to find out ways to get out of debt. Once you start solving your financial problem, your financial health will improve and you can start enjoying your life.
To tackle your financial stress you have to follow some tips:
Here you go:
Identify the problem that is causing financial stress
You need to find out the problem first so that you can work on it. Financial stress is usually the symptom of a bigger issue. You should identify that issue.
Some sources of financial stress are also mentioned above. Some other sources of financial stress can be illness, job loss, an accident, divorce, excessive shopping, and an addiction.
Once you find out the source of your financial problem, you can focus on it and resolve it.
Create a spending plan (Budget)
It is true that income volatility makes difficulties to create a spending plan. But to get rid of the financial stress, you have to create a spending plan (Budget). Well, creating a budget is not taxing. Go online to find a good budgeting app to create your spending plan.
Budgeting is actually an amazing way to mitigate money stress. It helps you to understand where your money is going and how you can stop spending unnecessarily. Your budget will force you to cut down unnecessary expenses which will help you to save more and reduce stress.
Make sure you revisit your spending plan time to time to make necessary changes.
Ditch your debts
Debt is dangerous, but it is avoidable. To reduce your financial stress, you have to pay off your existing credit card debt first. Follow a solid debt relief strategy to get out of your debt trouble. Following a budget, saving more, and increasing earning can help you to make larger payments on your debts, which help to get out of them.
You can also take out a consolidation loan to pay off your student loan debt. Make sure you make payments on time toward your new loan.
Try to get rid of your highest interest rate debts as soon as possible. You can also set up an autopay that helps to strategize the best way to pay down debts to reduce the amount of interest owed.
Once you pay off your current debts, you need to try to avoid accumulating further debts. To do so, you need to use your credit cards responsibly. Make sure you make payments of your credit card bills within time.
Use money management apps, which helps to schedule the best time to pay monthly bills.
Also, save at least 3-6 months of saving in an emergency fund to avoid accumulating debt to overcome an emergency.
Consider a frugal lifestyle
A lot of people agree that the pressure of maintaining a good lifestyle creates additional financial stress for them. This is true, these days people started believing that they have to possess every means to luxuries to live a happy life.
But the truth is, these are all marketing tactics, to sell a product more. To increase the profit, many companies try to influence you by showing the advertisements. They only influence you to spend more for their own benefit.
Thus, it is recommended to decide your own terms of happiness.
Instead of blowing your hard-earned money on luxury, find out the true means of happiness on simple things.
It will help you to live a better and stress-free life.
Maintain a balanced work life
Well, a good earning is important, but you shouldn’t take too much workload to earn more. It can make you overly stressed and demotivated. Try to work hard to perform well so that you can ask for a good raise. Also, as I said earlier, consider a lifestyle changes to manage your life with your income.
Don’t try to be crazy about managing multiple jobs. It will create health issue and stress. Remember, wanting a nicer life is fine, but you shouldn’t take too much stress to achieve it.
You can live a happy life by not participating in the race as well. You don’t need so much thing to be happy. Plan things wisely to live a happy life staying within your means.
Lastly, it is rare for someone to never experience money problems. It happens; your job can disappear, health issues can appear, and bills can pile up. You should take all the troubles positively. Stay positive and handle the issues wisely.
Don’t go crazy; talk to your loved ones, discuss the strategy you are following with your partner, share your feelings, and keep patience. You will get out of every problems.