8 Effective Ways of Handling Financial Anxiety
vemuda.com - Anxiety is something that everyone goes through from time to time. It’s your brain's natural response to potentially dangerous situations. Unfortunately, persistent anxiety that interferes with your sleep and mental health, becomes problematic and unhealthy over time. Anxiety takes a toll on your brain and body if you feel it too frequently or for too long.
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A mental health professional can assist you in developing coping strategies to reduce anxiety and achieve balance in your daily life. However, if your anxiety is caused by financial stress, there are steps you can take right now to regain control and stop worrying.
1. Consider the worst-case scenario
It may appear counterintuitive that one of the best ways to deal with financial anxiety is to imagine the worst-case scenario. After all, worrying about "the worst" is likely to be a source of much of your financial anxiety. But take a few moments to consider what would happen if your worst financial nightmare came true, whatever that it is for you.
This year has been particularly concerning, as the COVID-19 pandemic has resulted in a lot of job losses, political uncertainty, health issues, and increased debt for hundreds of thousands around the world. Some of your worst financial fears may have manifested themselves on a national scale.
But what would you do differently if you had to do it all over again?
After you've identified and acknowledged your fears, devise a strategy to reduce their power over you. The truth is that, bad things do happen, but by anticipating them and anticipating your reaction, you can find yourself in complete control of almost any situation.
2. Educate Yourself
Truth, or in this case information or knowledge, will set you free. We have a tendency to be afraid of things we don't understand. If you're worried about money because you're afraid of the unknown, make those unknowns "knowns."
For example, if you want to save for retirement but don't know where to begin, you may be concerned about your financial future. Or, if you believe you require life insurance but don't understand the distinctions between the various types, you are likely be perplexed.
Money anxiety is caused by a sense of being uneducated and disoriented while attempting to make financial decisions. Ignorance is not bliss in the world of finance.
So solve your anxiety problem by educating yourself, and completing the following tasks:
- On the internet, look into retirement savings options.
- Take a financial management and budgeting course through your community's continuing education department.
- Enrol in an accounting class at a local college.
- Consider taking a massive open online course (MOOC) for new investors.
- Discuss your options with a financial counsellor.
- Seek the advice of someone who is knowledgeable about your specific financial issue. If you take matters into your own hands, and educate yourself on the subject, money will no longer be a stressful enigma.
3. Stop Making Comparisons with Yourself
Pictures of vacations, cars, and other obvious signs of wealth, abound on social media.
Regardless of how accurate your perception of your friends' or social media influencers' wealth is, comparing yourself and your finances to others, increases your stress level.
Trying to measure up frequently makes you feel as if you are not where you should be, or that your efforts to save money are hopeless.
But when you find yourself falling into the comparison trap, keep these things in mind:
- You're Missing the Big Picture. You have no idea what their bank balance is. Although a friend may appear to be successful, this could be due to credit card debt or the depletion of an emergency savings account.
- You're Missing Out on the Effort. Social media doesn't always emphasize the hard work and sacrifice that comes with perceived financial success. Your financial life is private and personal to you. Your friends' journeys aren't the same as yours; your experiences are one-of-a-kind. Keep in mind that you have personal financial goals based on your lifestyle, family, and previous experiences.
- Social Media Is a Reel-to-Reel Video. Because most people only share the best parts of their lives on social media, perceptions can be skewed. Consider the images of vacations, cars, homes, and other large purchases as part of a highlight reel, without the financial issues that most people face.
- Financial seclusion is beneficial. Make a decision to keep some aspects of your life private, so that you don't feel compelled to show off your wealth to your friends. Although it is acceptable to share photos from your most recent vacation, braggadocio online is unhealthy and can lead to you spending more money in order to maintain the facade.
- Only you have the ability to change yourself. Instead of measuring your success by the success of others, establish a metric to control and track your own financial health, such as a savings account and an accurate monthly budget.
If everything else fails, and you still can't stop yourself from feeling stressed and depressed because your friend recently travelled to the Maldives, it may be time to suspend your social media accounts until you can regain control of your emotions.
4. Adopt an emergency fund
The thought that even the best-laid financial plans can be derailed by unforeseeable events such as job loss, illness, death, or natural disasters can be paralyzing.
If you're second-guessing your financial plans because you're afraid of the unknown, now is a good time to assess your emergency fund. An emergency fund is a stash of cash, that's kept untouched except for emergencies.
According to a 2020 survey, only 41% of people will be able to cover unexpected expenses with their own money. The fear of being unable to pay for an emergency adds to the anxiety of being ill, in an accident, losing a job, or needing car repairs.
If you haven't started an emergency fund yet, start small and save as much as you can. Then, as you continue to contribute, aim for at least six months' worth of living expenses.
The best part is, knowing you have money set aside for emergencies can make it much easier to sleep at night.
5. Consult a Financial Planner or a Financial Advisor
Don't think that financial advisors are only for the wealthy: Making an appointment with a financial advisor can help calm your fears and ensure you're on the right track towards your financial objectives.
An advisor can be of great help if you want to save more for retirement, start investing, or simply define your goals. Many financial advisors provide a no-obligation, no-pressure initial consultation to get to know each other and discuss the fundamentals of your finances.
It's similar to going to a therapist, but for a fee. Simply bring a list of objectives and questions to the first meeting. Or make it a long-term relationship if you are comfortable.
6. Budget Restructuring
When I am panicking and worried about my finances, it’s usually because my personal budget is out of balance. Regular budget checks are necessary because life, and all of its expenses, are rarely consistent. If you're worried about money, taking stock and seeing how your finances look on paper can help you identify problematic areas to address, which can alleviate your fears.
When your budget is causing you stress, cross these four items off your to-do list:
- Review. Examine your bills and expenditures to ensure that your figures are correct by ensuring that your receipts and bills correspond to your budget. Expenses frequently vary from month to month due to car repairs, medical emergencies, travel, and other unforeseeable events.
- Boost your earnings. Check to see if you're in the red every month, because being in debt is one of the most common sources of stress. If you're losing money more than you're making, it's time to rethink your money-making strategy. To make more money, consider getting a second job or starting a side hustle. Or look for ways to supplement your monthly income by selling items you no longer need, taking on odd jobs such as babysitting, dog walking, general landscaping, or using a site such as Fiverr to find freelance work or offer your services.
- Expenses should be cut. Going over budget will undoubtedly cause stress for both you and your bank account. Look for areas where you can cut your spending while performing your budget check-up. Call your service providers to discuss your options for lowering your phone bill or reducing your television package. Look for ways to eliminate small daily expenses, such as making your daily coffee at home rather than purchasing it every day. Reduced expenses help restore budget balance and put you in control of your spending. Check out a bill negotiation service like Truebill, if you need help cutting back on some of your expenses.
- Make a repayment. Make a debt-paying plan and stick to it so you know when your credit card balances, student loans, or car payments will be paid off — just knowing this information can help you breathe a sigh of relief. If credit card or student loan debts are causing you stress, review your debt repayment plan to see if you can increase your payments and accelerate your progress.
7. Positive Thinking
There's a lot to be said for concentrating on the positive aspects of your finances rather than the negative. Of course, thinking positively will not magically pay your bills or stretch your budget, but it will help to alleviate your anxiety. It can also assist you in recognizing and appreciating your financial assets, which may lead to solutions to some of your problems.
Take out a piece of paper and begin writing down the positive aspects of your money management abilities. Perhaps you have a great job, you’re regularly saving money in a retirement account, or have a sizable emergency fund.
Even if money is a source of concern for you, taking a moment to focus on where you're going right now can help you stay calm and clear your mind.
8. Banish financial shame
Financial mismanagement in the past can cause you to feel ashamed or embarrassed about your financial situation.
Whether it's due to a lack of funds, poor budgeting, or a lack of knowledge about proper financial practices, feeling bad about your money can quickly escalate into anxiety and concern about how your past mistakes will affect your future plans.
Unfortunately, shame can perpetuate a cycle of anxiety and future full of poor decision-making.
When you're embarrassed about money, remember that taking the time to educate yourself and organize your finances (even if the numbers make you cringe) sets you on a healthier path for the future and helps reduce financial shame.
There is no shame in wanting to be better with money, so don't be embarrassed if you need to discuss it with your partner, consult with an advisor, or seek assistance. This demonstrates your ability to take charge of your finances and ensure that your past habits do not define your future.
The bottom line is that, worrying about money at night will not magically replenish a depleted bank account, or assist you in determining how to save for retirement. Instead, it’s a matter of education, action, and respect to learn how to calm your fears and feel confident in your financial decisions.
As you find proactive ways to manage your finances, you may discover that the anxious feeling that comes with checking your bank balance fades in favour of control and confidence.
Thank you so much for watching guys. Have a good one, and see you in the next post.