In today’s economy, financial stress is all too common. Whether it’s rising bills, unexpected expenses, or concerns about the future, money worries can weigh heavily on our minds and impact our mental wellbeing.
When it comes to coping with money worries, there are practical steps we can take to address our finances, and cognitive strategies we can use to manage our worry and limit its impact on our mental health.
Practical Steps to Address Our Finances
The Importance of Savings
Having the ability to save money for any purpose is crucial for financial stability. This includes being prepared for unexpected emergencies that can arise when you least expect them, such as medical expenses, car repairs, or sudden job loss.
By saving money regularly, you can build a financial safety net to handle these situations without being thrown off balance.
Or you might be looking for a savings account for the sake of putting money aside. Check out savings account reviews and choose one that fits your needs and your preferences.
Perhaps you’re looking to save up for a house that you might want to buy within the next 5 to 10 years. Or you might be saving up for a new car. Whatever your goals are, a savings account can make it all possible.
Why Should You Have An Emergency Fund?
While we touched on this in the previous section, let's go more in-depth about emergency funds. It’s highly recommended that you save at least 3 to 6 months of your expenses in a dedicated savings account.
For each paycheck, you can transfer at least 10 to 20% of it to this emergency account in particular. Of course, the only time you could ever access the account is when you're in an emergency.
Such situations could include home or car repairs, medical bills, or even job loss. An emergency fund provides you with a safety net so you don't have to worry about not being able to afford unexpected expenses. An emergency fund could even help you out when you're in between jobs.
What are Some Good Saving Strategies to Consider?
- Obviously, a budget might come into play when it comes to keeping track of your income and expenses. You'll want to identify the areas where you can cut costs and save more money. Be sure to plan your budget wisely and decide which are considered essential expenses and what is considered discretionary. To make things easier for you, there are a variety of budgeting apps you could try.
- Automate your savings. One of the best ways to save money is by automating it. You can make arrangements to have a percentage of your pay taken out every time so that it can go into a designated bank account for saving purposes. For example, let's say you earn at least $2000 a month. You make arrangements to have 10% of it taken out and placed in the emergency savings account. So for every paycheck, you'll tuck away at least $200 into this account in particular. And you don’t have to worry about the uncertainty of life’s unexpected moments.
- Debt management. Managing your debt is something that will play a role in making sure you're financially secure for years to come. Not to mention, the less debt you have, the less stressed you’ll be. Focus on any debts that are considered high-interest. Try paying those off first. You also have options such as refinancing and even consolidating your debts, which you can send a low amount of each month until the debt is paid off. You’ll no longer feel overwhelmed by the bills that will no longer pile up.
Cognitive Strategies to Manage Money Worries
Focus on What You Can Control
Dwelling on factors beyond your control, such as economic conditions or unexpected expenses, only increases your anxiety. Instead, focus your attention on the aspects of your finances that you can control, such as your spending habits, savings rate, and financial goals.
Challenge Unhelpful Thoughts
When faced with financial difficulties, it's common to experience unhelpful thoughts such as "I'll never get out of debt" or "I'll never be able to save enough." Challenge these thoughts by asking yourself if they’re based on facts or simply assumptions.
Replace them with more realistic ones, such as "I'm taking steps to improve my financial situation, and every small step counts."
Practice Self-Compassion
Be kind to yourself when facing financial challenges. Acknowledge that everyone faces financial ups and downs at some point in their lives, and mistakes are opportunities for learning. Treat yourself with the same compassion and understanding you’d offer to a friend in a similar situation.
Cultivate Mindfulness
Mindfulness involves being fully present and aware of your thoughts, feelings, and surroundings.
Apply mindfulness techniques to your finances by staying focused on the present moment rather than dwelling on past mistakes or worrying about the future. When you catch yourself ruminating on financial worries, gently bring your attention back to the present and focus on what you can control right now.
Practice Gratitude
Cultivating gratitude can shift your perspective from scarcity to abundance, even in the face of financial challenges. Take time each day to reflect on what you're grateful for, whether it's the support of loved ones, your health, or the simple pleasures in life.
Recognising the positives in your life can help reduce stress and increase feelings of contentment.
Reframe Financial Goals
Instead of focusing solely on financial outcomes, reframe your goals to emphasise your values. Ask yourself why your financial goals are important to you and how they align with your priorities. For example, saving for a vacation may represent the value of experiencing new cultures and creating memories with loved ones, rather than just accumulating money.
Summary
Incorporating these practical and cognitive strategies into your daily life can help you manage money worries more effectively and build resilience in the face of financial stress. By shifting your mindset and focusing on what you can control, you can cultivate a healthier relationship with money and ultimately achieve greater financial wellbeing.
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