Uncertainty and anxiety about anything in life are generally caused by a lack of knowledge. The same holds true about money stress. When you don’t have all the information it’s easy to feel out of control, overwhelmed, and terrified. That’s where a budget can make all the difference.
When you have a budget, as ugly as your budget may be, at least you have all of the information in front of you. It provides you with the data you need to make the difficult decisions about your finances. And it puts you in control of your money. When you feel more in control, you’re able to relax a bit and take actions that support your financial success.
Your Financial Picture
The first step to creating a budget that reduces anxiety is to take an honest look at your present financial picture. Document your cash flow, your earnings, and your assets. It’s also a good time to get a credit report and credit score.
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Where Does Your Money Go?
The next step is to take a look at your expenses and spending habits. Take a look at last month’s statements. What did you spend your money on? What expenses are regular expenses? For example, your phone bill is a regular monthly expense. Start assigning categories to your expenses and itemizing how much you spend each month. Don’t forget to look at savings, debt, and discretionary spending.
Examining the Ins and Outs
You now have all the information in front of you. You know what your assets are and your monthly income. You also have a nice list of your expenses. This information gives you the power to start making changes and taking positive action.
These steps may not be without anxiety so please don’t forget your self-care and stress reduction tactics. It can feel overwhelming for example if you look at your budget and realize that serious changes need to be made. Breathe deeply and let’s talk about taking action and leveraging technology to help you relax a little and feel better about your financial situation.
Feeling Empowered – Investing, Saving, and Paying off Debt
Let’s first admit that actions aren’t without risk and often require courage. For some it may take great courage to honestly look at your finances and create a budget. It means you’re facing your fears and that’s commendable. When you start facing your fears and managing your anxiety with positive action, you’ll begin to realize that you’re capable of anything you set your mind to and that includes feeling in control of your money.
What are your financial priorities? Earlier, when you took a look at what specifically was stressing you out you may have identified a priority without realizing it. For example, if you’re dealing with creditors calling you and you want to get them off your back, then your priority would be to pay off or eliminate that debt.
Once you’ve identified your finical priorities, and try to limit it to three to five at the moment, then it’s time to create what’s called a SMART goal. That is to stay that your goal is specific, measurable, attainable, relevant, and time bound. Essentially, what exactly do you want to achieve and when do you want to achieve it by?
For example, if your goal is to get rid of your $8,000 in credit card debt then you might decide that paying it off in 24 months is a realistic goal. This is where your budget comes in handy. You can look at where you can cut back and how you can reallocate your money to achieve your goal.
Goal setting is only the beginning. The next step is to create a plan of action and to follow through. There are many tools at your disposal including automatic transfers, bill paying, financial planning tools and advisors and more. Remember, you have assets and resources. You can have a garage sale, get a second job, and offer freelance services online to make more cash or start your own business.
Leverage your resources so that achieving your financial goals is as automatic as possible. Use your bank’s automatic bill pay to take care of your monthly expenses. Use an automatic savings plan to save for retirement and for your emergency fund.
Finally, keep in mind that if you restrict your money too much and don’t set a little aside for fun you may feel a different type of stress. Create a realistic and attainable plan to achieve your financial goals and to manage your money wisely.
Remember that managing your stress and managing your money go hand in hand and require a balance of both mental and physical control. Become aware of your thoughts and habits as they relate to money.
Take good care of yourself and pay attention to how you’re feeling, thinking, and spending. You can’t change the financial situation of the world that you live in but you can change your financial situation one dollar, one action, and one thought at a time.