Friday, 24 November 2017

Regardless of your income level, you probably worry about money.

Whether it's getting out of debt, paying for medical expenses, protecting investments, sending kids to college, or saving for retirement, many studies over the years have shown that finances are a major source of stress for many Americans.

In fact, according to the Mind over Money survey by Capital One and The Decision Lab, 77% of Americans report feeling anxious about their financial situation. 

The reasons for this stress vary. Almost half (48 percent) of respondents to the CFSI study said their expenses are equal to or greater than their income, which means they can never get ahead. More than half of millennials say they experience high to moderate anxiety about losing their jobs, according to research from Northwestern Mutual. And with the rise in the number of people who are working freelance or contract jobs, many people can't depend on a steady income. According to a survey from the Pew Charitable Trusts, only 47 percent of U.S. households have “consistent and predictable" bills and income.

Money stress is more than a financial problem: Nearly one quarter of millennials say financial anxiety makes them physically ill weekly or monthly, and another 24 percent say financial anxiety affects their relationship with a spouse or partner hourly, daily or weekly, according to Northwestern Mutual.

If you are one of the millions of Americans stressed about money, here are a few ways to ease the pressure and alleviate some of your anxiety.

1. Build an emergency fund. In many cases, unexpected expenses are a major source of stress. Let's say your car breaks down, you don't have the $600 to fix it, and you're forced to put it on a credit card which you cannot afford to pay off the next month. Then, over time, these emergency expenses add up and you find yourself with more debt than you can handle. Having an emergency fund of even a couple of hundred dollars can help you better manage these unexpected expenses.

What's more, building an emergency fund is easier than you think. Just set up an automatic transfer — even if it's just $25 every payday — from your checking to a savings account. Once you do this for a few pay periods, you won't even miss the money. In just a few months, you could have several hundred dollars socked away — but remember, it's for emergencies only.

2. Create a budget. Many people don't have a clear understanding of where their money is going, so they cannot possibly know how to address their financial problems. Experts often suggest you keep track of every dime you spend for at least one month. Then compare the amount you spend with your income to see if, and how much, you are overspending each month. If you are overspending, identify areas where you can cut back. Use this information to develop a spending plan, also known as a budget, so you can start gaining control of your finances.

If you're not going into the red each month, consider putting some of your extra money into a savings account for an emergency fund or just to build your savings.

3. Keep track of spending and stick to your budget. Developing a budget is just the first step. It's important for you to keep track of how well you're sticking to the plan. There are many free apps and software programs available that make tracking your spending almost effortless. Many online banking platforms come with many tools to help you develop and monitor your personal spending plan. This will not only help you stick to your budget, but you can easily identify areas where you consistently overspend, such as dining or shopping, so you can focus on cutting back in those areas in order to make your budget work. 
 4. Look for additional streams of cash flow. Today, we are experiencing what's being dubbed the "gig economy" in which people do short-term work for a variety of clients or employers. Which means these days there are more opportunities than ever to put your skills to work and earn some extra cash. For example, driving for a car-lift service, doing freelance proofreading, dog sitting, or tutoring. Again, there are numerous apps and websites to help you find "gigs" and connect with employers.

A second job isn't the only way to score some extra cash. Consider one-time income boosts such as holding a garage sale or selling unwanted items online.

5. Plan for the future. If your current financial plan consists of paying your bills each month, chances are you're going to remain in a perpetual state of money-related stress. Because believe it or not, having short- and long-term financial plans can help reduce your anxiety.

Maybe you want to pay off debt, save for college tuition, or be able to retire at 60. Whatever your goals are, put them in writing and create a preliminary plan to reach them. Of course your plans and goals will change as your life and circumstances change, but simply having a starting point and a road map can help give you direction and purpose when it comes to managing your money. 

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