Almost everyone has financial concerns from time to time. But what if you're so scared that you can't sleep, can't concentrate, or can't perform basic tasks? Perhaps you've lost your job du to COVID. Or maybe you were surprised with an unexpected medical bill. No matter how bad your situation is, you can take steps to avoid stressing about bills or stressing through payments.
- Signs of Financial Anxiety
- How to overcome financial anxiety
- How to avoid financial anxiety
- The bottom line
- Things to remember
Signs of Financial Anxiety
Generalized anxiety disorder and financial anxiety share similar symptoms, but you shouldn't confuse the two. Many factors can cause financial anxiety, such as losing your job or worrying about an expensive medical bill. These events are usually traumatic but can be prevented before it becomes post-traumatic stress disorder (PTSD).
Common signs of financial anxiety can include:
- Feeling depressed or worried about your finances
- You are pessimistic about the future
- A need to be frugal
- Anxiety about wealth accumulation
- Putting all of your financial affairs in the hands of others
- Although there are incentives to do so, people are unable to change their financial patterns.
- Giving money to other relatives or adult children regularly
It is very important to pay special attention to this kind of anxiety because it can become chronic. This is called an allostatic load which, over a long period of time, becomes dangerous. Indeed, it can even lead to chronic diseases such as diabetes or heart problems.
On a more positive note, it is possible to completely reduce the symptoms with the tips we will see!
How to overcome financial anxiety
Anxiety is part of everyday life and it is part of being human. It's your brain's natural reaction to potentially harmful situations. Unfortunately, long-term anxiety that interferes with your sleep and mental health can become serious and unhealthy.
Financial stress can cause anxiety. You don't have to feel powerless. Here are 5 actions you can take right now to reclaim control and stop worrying.
1. Have a plan
What part of your finances gives you the most anxiety? Is it a lack of funds? Can you have too much debt? Maybe you're just concerned about the future?
When life gets busy, checklists can help people stay organized and ensure everything is taken care of. A financial plan functions similarly to a checklist. Create a financial game plan by outlining your financial goals and budget. How much room is there for saving in the budget? What percentage of your total income do you want to dedicate to your savings goal? It doesn’t have to be 100%. The Hardbacon app can help with making and tracking your budget. You can also have a list of each expense and objective, both immediate and long-term, which might help you understand the big picture and make the best decisions.
2. Create a budget
You might feel overwhelmed and believe that making a budget would only add to your financial stress. Lucky for you that making a budget is one of the most effective ways to regain control of your money and eliminate financial problems. It doesn’t have to be elaborate or complicated.
A budget allows you to plan when and how you will spend your income. A budget ensures that you have enough money to pay your immediate expenses while also working toward your savings goals. It can also assist you in locating additional funds to contribute to your debt.
It won't be easy to start with your budget, but you will spend less time budgeting once you understand it. Like anything, it takes practice. By reducing the time spent budgeting, you will feel less anxiety and spending will no longer come with this fear effect.
3. Generate extra income in your spare time
If you’re worried about your finances, you’re probably aware that your budget needs additional income. However, figuring out how to enhance your financial holdings without causing yourself undue stress can be difficult. Fortunately, there are several strategies to increase your income while also reducing your stress. The first option would be asking your employer for overtime work or if there's a possibility for a raise.
Alternatively, you can get a second job or a side hustle. Side hustles can be as simple as renting out something that you already own. You can Airbnb your spare room, or rent out your washing machine. You can also sell stuff online that you don't want anymore. Other examples of part-time jobs that you can do in your spare time and over weekends include driving for Uber, delivering takeout, or freelancing. You can turn any hobby into an income-generating side hustle – you just need to get creative and think outside the box when you market yourself.
4. Contribute toward your emergency fund
An emergency fund is a savings account set up to deal with unforeseen expenses and financial emergencies. Although car repairs can be stressful and costly, knowing that you can use your emergency money to pay for them alleviates anxiety. It's also easier to keep to your budget if you know you have enough money in the bank to cover any unforeseen costs.
It’s a general rule of thumb to have $1,000 saved in your emergency fund, as well as 3 to 6 months of your living expenses saved. It may seem challenging to contribute towards an emergency fund, especially if you're struggling financially. You can start by saving small amounts. Whether you save $20 or $200 a month, it will all add up over time, especially if you have a high-interest savings account.
5. Update your financial literacy
When making choices for your future, you might feel overwhelmed and anxious from not being educated enough. You can remain calm by adopting the following strategies to update your financial literacy:
- Look into several retirement savings options on the internet.
- Take a money management and budgeting course through your local continuing education department.
- Enroll in an accounting course at a community college.
- Consider enrolling in a massive online open course (MOOC) for new investors.
- Get assistance from someone familiar with your specific financial situation.
Money stops being a stressful problem and becomes something you can comprehend and handle when you take issues into your own hands and educate yourself.
One of the best ways to educate yourself about your financial situation is to know your credit score. This is the 3 digit number on your credit file that tells lenders how reliable you are. You can get this from Equifax, Transunion, Borrowell, or many Canadian banks that now offer access to your credit file.
Your credit file can show you how many credit cards, loans, and inquiries were made on you. Maybe your situation is better than you think. If not, you now have the best place to start a plan to fix your situation. Knowing where you stand now is important to getting where you want to be. It also educates you and makes evaluating advice easier.
If your credit usage is a problem, there are prepaid credit cards to help you!
6. Get advice from a financial advisor
Making an appointment with a financial advisor can help soothe your anxieties and verify you're on the right track for your financial goals. An advisor can help you define your goals, whether you want to start investing, save more for retirement, or need help determining your goals. Many financial advisors provide a no-obligation consultation to get to know each other and discuss the fundamentals of your money. Bring a list of objectives and questions to the first meeting. Make it a long-term relationship if you're happy with it.
7. Consult a therapist
There are two ways you can address financial anxiety, namely:
- Exterior actions: Taking measures to construct a budget or reduce debt and engaging financial advisors.
- Interior actions: More difficult to identify, so you might benefit from seeing a financial therapist or counselor to help you figure out what's causing your financial problems. You can also make a money date to examine your financial connection.
A counselor or therapist will teach you coping mechanisms to deal with financial anxiety and keep in control of your life and financial situation. They will also provide you with techniques to reduce your stress, such as breathing exercises and daily meditation. Stress management will become an everyday part of your life and create a low-stress lifestyle.
How to avoid financial anxiety
Stressing about money can quickly spin out of control, preventing you from progressing to a better financial position and even affecting your everyday activities. Finances are something that you can control. Here are some tips on how to set up some processes to make your financial worries less stressful.
Don't let money overrun your thoughts
This is the time to take a step back and let go of the past if money occupies your everyday thoughts. If you're physically or emotionally exhausted, you won't be able to achieve your financial goals, pay off your debts, or earn additional income. Make an effort not to look at your financial account for a week, and avoid the impulse to divert your newfound energy or time.
Automate your payments
Why not set up monthly auto payments if you haven't already? Remove the guesswork from your monthly payments so you'll never be short on cash or afraid about missing a payment. Stay on top of upcoming payments in your financial app, in a spreadsheet or a dedicated notebook, so you know what's coming in and out of your account every week. Setting up automated bill payments helps relieve the stress of remembering to pay bills while also avoiding hefty penalties for late payments.
Apply the same logic to your savings strategy. Make your savings automatic, so it comes out of your account simultaneously as your monthly expenses. You'll have a higher chance of keeping to your budget this way. Then, double-check your bank statements to ensure your payments were successful at the end of each month.
Try to keep a positive mindset
The first step in overcoming anything is to believe that you can. Negative thoughts and words only serve to deepen and trigger nervous feelings. It is a vicious cycle.
Focusing on the positive parts of your finances rather than the negative ones is a superpower. Positive thinking won't suddenly pay your bills or improve your budget, but it can help you relax. It can also provide the right clarity of mind for you to recognize and appreciate the financial strengths you already have.
Your mindset might assist you in staying motivated to address your money issues. Rather than being caught down by ideas of never being able to get out of debt, visualize the amount of stress you'll experience as your debt reduces. It's critical that you believe in yourself.
The bottom line
We all experience financial anxiety from time to time, but doing any of these basic steps might help you feel more in control. Take time to consider how you might improve your money management. Then put everything you've learned into practice!
You may discover that the uneasy feeling that comes with viewing your bank balance diminishes in favor of control and confidence as you.
- For Canadians who are aiming to build their credit history to access more credit offers at lower interest rates.
- Payment status are reported to Equifax Canada.
- Build your credit while saving money!
Things to remember
- Financial anxiety is something that you can control
- Budgeting is a good first step and there are tools available online to help
- You can get professional help for your finances from a financial advisor
- You can get psychological help from a therapist
- There are 7 simple actions you can do right now to deal with financial anxiety
- There are ways that you can earn more money online
- You can avoid financial anxiety by automating your payments and keeping a positive mindset.
About The Author: Arthur Dubois
Passionate about personal finance and financial technology, Arthur Dubois is a writer and SEO specialist at Hardbacon. Since his arrival in Canada, he’s built his credit score from nothing.
Arthur invests in the stock market but doesn’t pay any fees because he uses National Bank Direct Brokerage online broker and Wealthsimple’s robo-advisor. He pays for his subscriptions online with his KOHO prepaid card, and uses his Tangerine credit card for most of his in-store purchases. When he buys bitcoins, it’s with the BitBuy online platform. Of course it goes without saying that he uses the Hardbacon app so that he can manage all of his finances from one convenient place.
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