What to Do If You’re Stressed About Money

What to do if money stresses you out

Being stressed about money is not cool.

All the thinking and worrying only serves to bring you down. You start to feel paralysed by your situation.

It especially doesn’t help if you believe other people around you are really happy with their money. You can start to feel liked you’ve ‘failed’ in some way.

Money stress isn’t limited to people who are in debt or who earn a certain amount of money. You can have a positive net worth or a great income and still get stressed about money.

When you break it down, there are four factors that to money stress.

1. You’re Over Your Head

If what’s going out of your bank account each week is more than what’s coming in, then you’re on the fast-track to Stressville. You may be relying on credit cards to get you by, or counting on a big (but maybe not realistic) bonus to even out the year. If things get really dire, then you may look to declare bankruptcy or tap into your superannuation. Argh, major stress.

2. You’re Scraping By

If at the end of each month you’re left with a dollar in your bank account and five packets of 2-minute noodles in the cupboard, then I’m guessing you’re not feeling all rainbows and unicorns. Even the slightest bump in your budget – a car repair or broken appliance – could spin you out completely. Just like Aerosmith said, living on the edge is not a fun place to be.

3. Being in the Red

Borrowing is pretty much a fact of adulthood. We borrow for our education, borrow to buy a house, maybe even borrow to fund your investments. But owing a lot of money can be a source of stress – even if you can meet the repayments.

This is especially so if your debt is due to something that has declined in value – like say a car or (sadly) a house. You’ve got no choice but to keep paying the debt, or risk losing a lot of money if you sell.

4. You Don’t Know What’s Going On

Pile of unopened mail on the counter? Haven’t checked a credit card statement since January – last year? You might have a healthy bank account and feel like you’re getting by. But without the full picture of your finances, there’s always that nagging feeling that something is going unpaid/missed/or forgotten about.

(True story – I once dated a guy who had an entire shoebox of unopened mail, which totally stressed ME out.)

How to Deal with Money Stress

Okay, so if you’re stressed about money what can you do? Obviously there’s the standard responses of make more money and spend less money. But if you’re totally overwhelmed by your situation then that advice can seem a little glib.

Get the Full Picture

You know that scene in Shopaholic where Isla Fisher’s character, with the help of tequila, finally opens all her credit card bills and debt notices to figure out exactly what she owes.

Yeah, you’re gonna do that. Seriously. You can choose whether it’s over a glass of wine or a cup of tea.

Sit down, open all those envelopes (or download your statements if you’re online), and just write down those totals. No judging or I wishes. Just write it all down.

Chances are your situation isn’t as bad as you’ve been thinking it is. And if it’s actually worse? Well it’s easier to fight a battle if you know who the enemy is.

Focus on a Quick Money Win

If I’m starting to feel stressed about my money situation, often I’ll just go and upload half a dozen things on Gumtree to sell. Sure, I may only make $40 from the lot. But that quick cash-win can be energising and reminds me that I’m more in control of my earnings than I think.

Your quick win might actually be saving money. Maybe a 10 minute conversation with your phone company to change your plan. Or committing to eating only from what’s already in your cupboard for the week.

Tackling an easy challenge will help you to change your mindset around money and empower you to tackle those bigger money worries.

Speaking of which…

Understand What’s Really Worrying You

Often our stress triggers aren’t actually what’s really bothering us. Maybe you get stressed about your weekly grocery bill, but actually what’s really worrying you is how much money is going towards rent.

Or maybe you get stressed about going out for drinks with the girls, but your major problem is really that you’re not earning enough at work.

If you can figure out what the underlying cause of your money problems are, you’ll be one step closer to reducing your anxiety around money.

Don’t Be Afraid to Get Help

Money stress can feed into all other aspects of our lives, causing you to feel totally overwhelmed.

Getting some outside perspective can help you get back in control. You could speak with a trusted friend or family member or, a financial expert. You speak with a financial counselor in Australia for free, and they can also help you to negotiate with your creditors if you need some more breathing space to pay back your debts.

No matter what you do, remember that your financial situation isn’t a reflection on who you are. By working through your money stress, you can become stronger and better able to face to other problems that come up.

PS 6 Money Mindsets That Are Keeping You Poor | How To Make Money at a Second Hand Market

Four Top Tips to Spring Clean Your Finances

Spring Clean FinancesSpring is upon us here in Australia and that means you should be getting down-and-dirty with some spring-cleaning action.  But before you bring out the mop and bucket, first grab yourself a pen and paper and get started on spring cleaning your finances.

Money, or a lack of it, can be a major cause of stress and worry. In fact 40% of Australians admit to being “stressed out” over money, with women more likely to be worried than men. So because I’d rather spend my summer holidays worrying about whether the weekend weather is going to be beach perfect, I’m getting my finances in order now.

It’s Time to Start Probing

You know those bank statements you’ve been tossing onto your desk in a big pile all Winter. Go get them out and open them. Yep, all of them. You’re going to go through each statement line by line with a view to working out where all your money is going.

Paying for a gym membership whilst your gym bag has spent the last six months hanging out in the bottom of your wardrobe? Have a Quikflix subscription but never have time to watch the movies they send you? Stacking up your magazine subscription next to the couch for that mystical day when you’ll have time to read them?

It’s time to make some cuts. Get on the phone and start cancelling all those things you are paying for but aren’t using. I’m sure they were a great idea at the time, but now you’re just throwing money away.

Pro Tip: Need motivation to start exercising outside of a gym. I use Runkeeper combined with Pact to track my runs and get paid for it!

Screw Down Your Suppliers

Alright, you’ve been through and cut out all those unnecessary expenses coming out of your account. Now that you’re left with your essential items, like utilities, phone and internet, and cable (insert argument about cable being essential/non-essential here), you’re going to start screwing down your suppliers. Mind out of the gutter please, I’m talking about getting the cost down.

Get on the internet and start shopping around. If you find a better deal on something you’re paying for, call your supplier to match or better yet beat it. If they’re offering enticement deals to new customers, ask for the same thing or tell them you’re walking. Financial belt tightening hasn’t just affected households, and businesses know it’s easier to keep an existing customer than find a new one.

Pro Tip: You can use online comparison services to compare prices on a range of products, but remember they often don’t represent all providers in the market. If you can, find a government-backed comparison service to get the full picture.

Get Yourself an Insurance Policy

What would happen if you were unable to work for six months or more? How long could you last before you couldn’t pay the bills? Of course having an emergency fund can save you from minor stress, but if you’re injured or sick and can’t work for a long time then you’ll need a bit more money to tide you over.

Insurance is a great way to get some peace of mind and reduce stresses about money. Go through all your insurance policies and make yourself aware of what you are covered for. Most people think about insuring their house and contents, car and expensive items, but often forget about or under-insure for the more important things like Life insurance and Income Protection cover.

If you’re young and don’t have kids you can probably get away with not having Life insurance right now. But at the very least you should get some Income Protection insurance to cover your basic living expenses. And in Australia, this insurance can be funded from your superannuation so it won’t have an impact on your take home pay.

Pro tip: You can do the research yourself, or find an independent financial advisor to do the leg-work for you. Make sure your adviser works with a range of insurance providers and is certified by the FPA.

Start Planning Your Retirement

When you’re young, retirement seems so far away. But unless you enjoy spending all day watching Days of Our Lives and eating HomeBrand groceries, you are going to need more money to live on than the pension. Start thinking about your retirement when you’re young and when the time comes you can live it up on the Senior Princess Cruise instead.

First thing is to make sure that all your superannuation is in the one place. If you’ve changed jobs a lot then chances are that your money is scattered across a few accounts. Thankfully it’s easy to search for and bring all your super into the one place.

You should also review your current super fund to see how it is performing and what the fees are. You should make sure that you’re not paying too much in fees – even a 1% difference in fees can have a massive impact to your retirement balance.

Also use this time to review the investment option that you are in and decide if it’s right for you. Most funds default to a Balanced option which is around 50% growth assets. But if you’re young you’ll want to take advantage of more aggressive options. A good general rule is that the percentage of growth assets should be 110 minus your age. So someone in their 20s or 30s should be invested in a 80% to 90% growth option.

Pro Tip: Look at whether you can get tax breaks for contributing more to your or your partner’s superannuation. 

Whew, that seems like a long To Do list. But imagine the satisfaction you’ll feel once you’ve saved yourself a bit of cash and sorted out your financial future. That’s even better than finding $2 behind the couch cushions.

This post was first published on 5 September 2013.