Have you ever stressed about money? Me too. I think we all have stressed over money at one time or another. Many of us stress over money constantly. It can be horrible and lead to health problems if not kept in check. So in this little post, I want to review five effective actions to take that not only help achieve financial freedom, my favorite topic, but alleviate stress that sometimes comes with managing our money. With no further ado:
Stress Reliever #1: Have A Budget
A budget is simply the most effective way to allocate your money instead of wondering where it all went. In our budget, we must allocate money each month to cover all our needs, like housing, food, utilities, savings, debt payments, etc, and then allocate the rest for our wants like entertainment and recreation. There are just a couple finite rules that each budget must follow:
- The budget must balance: Spend only what you have.
- The budget must account for savings and investments too
- The budget must cover all NEEDS completely. Can’t skip the house payment to pay for fun!
To reduce stress even more, the budget should take into account seasonal and infrequent costs as well, like Christmas presents and vacations. Wouldn’t Christmas be even sweeter when you have no credit card debt after the holiday?
The role of the budget is to allocate money according to your goals and priorities and ensure there is enough money to meet all needs throughout the entire budget period.
Stress Reliever #2: Have An Emergency Fund
An emergency fund is money put aside and available for any emergencies in your life. A lost job, an accident, medical issues and legal issues all qualify as emergencies that an emergency fund can provide for. The emergency fund alleviates stress by being self-insurance for life challenges and eliminate the need to use debt to cover immediate needs.
Some people can an emergency fund “Sleep At Night Money”, because knowing you have that cushion available allows you to sleep better at night knowing you have money available at a moment’s notice.
Stress Reliever #3: Eliminate Debt. All Debt Really But Credit Card Debt For Sure!
Owing money to others causes major stress in our lives. Sometimes, the debt hangs over our heads like an anvil ready to crush us. Others have described debt as bondage or slavery. The bible says “The borrower is slave to the lender” Proverbs 22:7. And debt is very expensive too. That $2,000 couch you bought on your credit card with a 14.99% interest rate and paid back using minimum payments will cost you $2,925 in total and take over five years to pay off. Another way to look at that is that it cost you $925 to use the credit card company’s $2,000. That’s a 46% premium. Now that is stressful! Eliminate stress by retiring all your credit card debt. And don’t stop there. Keep going. Eliminate all your debt and watch the stress due to debt just melt away.
Stress Reliever #4: Automate Savings and Bill Pay
Why worry about on time bill payment and making sure you put money away for savings when you can automate it to ensure consistency and on time delivery? Go one step more and pay yourself first (save) BEFORE you see you paycheck so you get used to not living with that money. Some people have money immediately moved to savings at the instant their paycheck reaches their bank account. They also set up autopay for regular bills to ensure on time payment. Fixed cost items like car payments, rent and cable TV are prime candidates for autopay. If handling money stresses you out, use bank automation to handle savings and payments automatically and lessen your stress.
Stress Reliever #5: Build A Retirement Savings
People today live an average of 24 years in retirement and yet the average American has less than $50,000 saved for retirement at the time of retirement. Now that is stressful! How can a person live two plus decades on only $50,000? Not very well. Relieve that stress by starting a retirement account early, contribute to it regularly and use a tax preferred account and company match to build up a retirement savings that provides for all your needs.
Bonus: Stress Reliever #6: Be Generous
Ok, I am going to add one more. A great way to reduce stress regarding money is to be generous. Generosity, helping others meet their needs, does a number of things to reduce money stress:
- Helping others takes the focus off ourselves and onto others
- Generosity breaks the bondage of selfishness and entitlement
- Helping others gives a sense of purpose and achievement
Stress Free Money Management Is Financial Freedom
All of these benefits of being generous alleviate the stress of managing money and assist in obtaining and maintaining financial freedom. Freedom from worry and anxiety and freedom to pursue our goals and objectives. Managing money is hard enough by itself. There is no room for dealing with constant financial stress. Hopefully, these five, no six, actions will reduce your stress and help you to live in financial freedom!