Money can cause us to experience a large number of unnecessary anxieties. A number of things can help alleviate a majority of worries when it comes to money and finances. Here are five ways to reduce financial stress that would make anyone feel more powerful, confident, and in control:
Have $5,000 in the bank
What kind of worries would disappear knowing that you had $5K stashed in the bank? You would be able to concentrate more at work, which translates to more productivity, a better performance review, and possibly a raise! Maybe it would give you the courage to voice an idea in a big meeting because you aren't as worried about consequences.
I would also venture a guess that your spouse would be more relaxed at home knowing that he/she has a $5,000 security blanket.
Automatically save money into a retirement plan
The number one concern of Baby Boomers is they won't have enough money to retire. Their anxiety levels run high when hitting the big 5-0, they are running out of time, but having a slice of every paycheck shoveled into a tax-favored account will help check that of your to-do list immediately. Young adults would benefit from automating their retirement savings as well.
You won’t realize how much you have truly saved until the quarterly statements hit your mailbox. That’s a wonderful feeling that is guaranteed to reduce stress.
Have a Will
The common misconception about Wills is “If I do a Will then I will die”. There’s good news and bad news about getting your Will in order:
The bad news is that none of us get out of here alive.
The good news is that having a completed Will greatly reduces stress for you and your entire family. You feel the comfort of knowing your affairs are in order and your heirs won't be fighting over your bottle-cap collection when you are gone. This is just one more step in having a fully functioning financial plan.
Create your own State-specific will for only $19.00 (links to a good deal for Dave Ramsey listeners)
Rent or live in a paid-for house
Who wouldn't be able to take on the world if they didn't have a mortgage to pay every month? Owning a home out-right is a huge relief: You have more money for play, more money for investing, and more opportunities to get up and move for a new job offer. There are so many benefits to having a paid-for house that I can't list them all.
Many people can’t even imagine what I’m talking about because they are 2 years into a 30 year mortgage. However, you have options. You could choose to sell your house and move to a cheaper paid-for home, provided you can clear the mortgage with the proceeds of the sale. I agree that interest rates are low but mortgages are obligations.
You could also choose to simply rent for a while. Some other benefits of renting vs owning are the absence of paying real estate taxes and not having to do home repairs yourself. You also don’t have to spend 2 hours of your Saturdays mowing the lawn in the heat of summer.
Watch “Is Renting Throwing Money Away?” (3-minute video)
Don’t get me wrong, I believe there are a number of non-financial benefits to owning a home like quality of life and security, but renting does reduce financial stress when compared to many years of having to pay a mortgage.
Carry a $100 bill in your wallet
Want an inexpensive way to feel richer? Put a crisp, new $100 bill in your wallet and don't spend it!
This is a quick way to trick yourself into believing your net worth has increased. You will be better prepared to handle a real emergency (like having your car towed after a breakdown) and by keeping the money in your wallet (not spending it) shows you have control over your spending habits. That’s a huge win!
Less stress = more life
Life is too short to worry about money, but financial decisions effect how we feel and act and relate with others. My family has enjoyed being debt free, except for our mortgage, for over 6 years and I have experienced much lower stress levels than many of those whom I coach.
Your challenge is to do one of these stress-reducing suggestions before the end of the month and try a second next month. Leave a reminder on your phone to tackle one every month and you will reduce financial stress. I guarantee it.