Do you feel overwhelmed by your financial struggles? You are not the only one. The COVID-19 pandemic and recent years’ high inflation rate have put most people under financial stress. It has had a detrimental effect on mental health as well. In fact, a recent survey found that 42% of respondents believe their financial struggles have a negative impact on their mental health.
But, there’s always a solution to every problem. And to help you cope with your financial struggles, we have decided to do some research and find out what you can do in a situation like this.
5 best ways to tackle your financial stress
Here are some of the tips for tackling your money-related stress and giving some rest to your mind.
#1. Find out the cause of your financial difficulties
Financial hardships often indicate a larger issue because they are actually just symptoms. You should therefore pinpoint the root cause of your financial problems. Common underlying reasons for financial troubles include the following:
- Income reduction or unemployment.
- Unexpected health concerns, injuries, or accidents in the family.
- Addiction to drugs and alcohol
- Transferring to a new city.
- Death, divorce, or break up with your spouse.
You can create an effective long-term solution if you pinpoint the cause of your financial problems. For example, let’s say that your spending is out of control because you are abusing drugs or alcohol. And therefore, you need the money to feed your addiction. In that scenario, you might think about going to therapy to help you get over your addiction and improve your financial circumstances.
#2. Make a budget
If you don’t currently have a monthly budget but are struggling financially, you should think about setting one up. On the other hand, you may have a budget, but you created using your former financial capacity. In this case, it’s important to change it to fit your current needs.
Start by keeping track of your expenses to find out where and how much you are spending money to create a realistic budget. The next step is to consider where you can make some savings. For example, you might lower insurance deductibles or cancel memberships to reduce costs. Then, make a budget that covers basic necessities. It includes clothing, housing, healthcare, transportation, and essential utilities.
Alternatively, you can apply for Ontario Works benefits if you don’t have a job. It’ll help you to get money to help you pay for basic necessities until finding another job. However, keep in mind that budgeting your spending will limit the amount of loan credit you can accept.
#3. Increase your income
You can get through tough times financially by reducing your spending. With the present high cost of living and inflation, this might not be enough. So, to prevent your tight budget from becoming a source of further worry and anxiety, think about getting an additional source of income. The following are some of the strategies to get extra income:
- Requesting weekly extra time to work
- Find a side business
- Offer your unused household items for sale
- Request a raise
#4. Debt consolidation
Keeping track of various unpaid debts can be difficult. It may also lead to missed bill payments. On the other hand, the hefty interest rates that come with having many loans will only make your condition worse. So, consolidate your outstanding obligations to make repayment more manageable.
Through debt consolidation, you can pay off multiple creditors with just one monthly payment by using one loan source to pay off multiple creditors. This decreases stress while lowering interest rates and raising your credit score.
#5. Create an emergency fund
You can reduce your financial worries significantly by having money set up for emergencies like auto repairs, job loss, or illness. However, building an emergency fund, especially one large enough to cover three to six months’ worth of costs, might seem intimidating. Don’t worry about the exact amount; what matters is that you continuously save money.
- After deducting the costs from your needs list, use your budget to calculate how much you can put aside each month.
- Prioritize saving for three to six months’ worth of costs before considering longer-term savings objectives.
- Put your savings account on auto-transfer from your checking account.
Regardless of how diligent you are with money, a sudden sickness, retirement, or job loss could cause financial problems. To get out of financial trouble, determine what is causing it, make a budget, consolidate your debt, and increase your income.