In this week’s blog, Financial Planner Kate Welker, CFP® shares her “money stress” story and provides some suggestions on how to plan for those unexpected moments so that when they happen, you can take a deep breathe and relax instead of react.
By: Kate Welker, CFP®
Relaxation. The word sounds so happy and peaceful. I recently saw that it was Relaxation Day on August 15th, and the thought of a day set aside for relaxation sounded great. Quiet, a good book, a comfy armchair, sunshine in a hammock, a massage; whatever your variety of relaxation, the thought is sure to bring a smile to your face. I am a huge proponent of taking down time to recharge, but sometimes if you are dealing with stress it can be almost impossible to relax.
A 2017 report by the American Psychological Association lists money as the number two cause of stress in America. This means more people are stressed over money than they are over work, relationships, or their health. Financial stress can begin to go deeper and lead to problems with your health and relationships. I am sure many of you reading can relate to this - if not currently, you remember a time in the past. You may have experienced that moment when you try to relax and feel the panic rising thinking about the bills to pay or the tasks to be done.
When the problems are facing you it is easy to just try to avoid it. “Try to not think about it or talk about it and it won’t be real.” Obviously this is not a solution and will only make the situation worse, but it’s how we naturally want to work. It’s not fun to look at problems or talk about them so avoidance happens, but the only way to work through them and find some sense of control is to face your problems and make a plan.
Following are a few suggestions of things you can do to help bring some breathing room and sense of control around your finances:
Face the situation. I mentioned you have to stop hiding from the situation, this means you will look at everything and have it in one place. Write down your bills coming up, the debt you might have to pay, and any long term goals you need to save for. Just seeing this written out and organized in one place should help with staying on track and making a plan going forward.
Missing a payment can be stressful. We all make mistakes and can miss things here or there, but if you find this being a consistent issue establish a system that works or you. Most vendors have online accounts that allow you to set up payments in advance. If it is scheduled you know it will be paid, there just needs to be diligence in leaving the appropriate funds in that account. A method here could be to have a bank account that is only for paying bills. This account gets funded first to cover all the bills to be paid each month and it is not touched for outside spending. Another method is a paper calendar where you write in everything on the due date and refer to that weekly.
One of the things I think helps ease the anxiety around money is building an emergency fund. It is not always easy to do, but by making it a priority to build up those emergency reserves will eliminate a large amount of “what if” stress. Just knowing the funds are available if the car breaks down or your child flushes a toy down the toilet and your entire sewer lines need to be excavated and replaced (speaking from experience there) should help you worry less. Start with a small goal of $500-$1,000 and build towards a larger goal over time. Make it a priority to contribute to this and if an unexpected lump sum of money comes in like a tax refund use this to continue building that cushion.
Building a financial plan with clients, I will often state that one of my goals is to reduce their stress and worry over their financial picture. Choosing to look at your situation and take control can change your mentality around your finances. Sometimes it’s the little steps that are the hardest to take, but a series of them eventually gets you to your destination.