According to the Federal Reserve, 40% of Americans are unable to pay cash for a $400 emergency expense. That can be a stressful way to live. You can help reduce financial stress by bringing your finances into focus. We have five tips to help you get there.
- Create a Realistic Budget: Take a close look at everything you pay for and buy. This should include your mortgage or rent, car expenses (including gas and insurance), food, medical, entertainment, and more. Once you know how much you spend, compare it to your total income. Are you spending more than you make? The goal is to spend less than you make, allowing you to build your emergency savings and enjoy some disposable income.
- Build Your Emergency Savings: Having enough in savings to cover 3-6 months of your expenses can help alleviate a lot of financial stress. Set up automatic savings to a special “emergency only” savings account with monthly deposits. Then use the money only for emergencies such as medical expenses, car repairs, or to cover your bills if you are out of work for a period of time.
- Evaluate Your Expenses: Find ways to trim spending. Places to start include eating out, convenience store stops, and expenses related to hobbies. Once you find places to save, put those savings away into your emergency savings or use them to pay down debt.
- Overthink Every Purchase: Yes, you read that correctly. You want to overthink your purchases. That means asking yourself if you need to attend that concert, buy that new television, or can afford to upgrade to first class on your next flight. If the answer is “no,” then skip the purchase. For some bonus financial stress relief, set that money aside and add it to your emergency savings.
- Set Clear Financial Goals: Financial stress can leave you feeling overwhelmed by your monthly expenses and debt. By setting clear goals, such as paying off a credit card within six months or building your emergency savings within a year, you can work toward achieving them. Start small. Chances are, you’ll find peace in the process and the end result.
Boost Your Financial Wellness
More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon. Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.