ljubaphoto / iStock.com
If you have unlimited amounts of money, finances aren’t likely something you will ever worry about. However, for most people, financial stress is a real thing that can drain your energy and keep you up at night. A 2023 survey by MoneyGeek found that of 1,200 respondents, 89% said that finances added to their stress. Finding ways to deal with financial stress is crucial for your mental, physical and financial health.
Find Out: How Much Money Do Americans Have in Their Bank Accounts in 2024?
Try This: 7 Reasons a Financial Advisor Can Grow Your Wealth in 2024
Rachel Cruze, personal finance expert and co-host of “The Ramsey Show,” said financial stress is a money problem she hears about a lot. She also has some tips and strategies for not letting it get the best of you. In a recent YouTube video, she talked about financial stress and how to deal with it.
Know Your Finances
For anyone feeling lost and unsure of where they stand financially, Cruze suggested taking a deep breath and taking inventory of what you have. Take into account your income, savings, investments, debt and any other assets you own. “Some anxiety and fear with money [creeps] up just in our heads because you don’t even know really what’s going on,” she said.
Once you know what you have, you can determine what you’re missing and where to focus. Maybe you don’t have an emergency fund or you need to put more into it to relieve some of your stress. Opening an IRA can help you feel more secure about your future. Knowing your finances lets you see the areas you can bolster and simultaneously reduce unneeded financial pressure.
Read Next: Dave Ramsey’s Best Passive Income Ideas for 2024 — 15 ‘Steady, Profitable’ Ways To Build Wealth Fast
Track Your Expenses
Knowing where you are financially can help ease some of the fear you’re feeling, and you can take it a step further by budgeting. Creating a budget and tracking your expenses offers you an efficient way to realize where your money is going and channel it to areas that will improve your well-being.
When your paycheck comes in, every single dollar should have a plan, Cruze explained. Being this exact when it comes to spending gives you power and control over your financial health. This also sets you up for a more secure financial future because you can divert specific amounts of money to your emergency fund, retirement accounts, investments and debts.
Get Out of Debt
According to Debt.org, American households in 2022 had an average debt of $101,915, mortgages included. So it’s no surprise that debts significantly contribute to financial stress. To combat this, you should find ways to pay off your debt. “When you don’t owe anyone anything, you have a lot of options and freedom on what to do with your income and your life,” Cruze said.
You could consider a debt payment strategy, like the debt snowball or avalanche method, to pay it off. Both methods work when you pay more toward the principal of certain debts. With the debt snowball method, which Cruze recommended, you pay off the smallest debt amounts first. As you completely eliminate debts, you’ll gain momentum and have fewer debts to worry about.
Similarly, the debt avalanche method requires you to pay off the debts with the highest interest rate first and then pay the debt with the next highest rate. Doing this reduces the overall amount you have to pay each month and allows you to put more money toward paying off the debts.
Earn Extra Money
One proven way to reduce your stress levels is to make more money. Increasing your income will give you more funds to add to emergency funds, add to retirement savings accounts or pay off your debts. There are various ways to improve your income potential. Working hard and asking for a raise can greatly reduce your financial stress if you have a career and no extra time.
Finding a part-time job or side hustle is another great way to generate extra cash. Cruze explained that earning money from a local retail job, teaching guitar lessons or tutoring are all great ways to make a few bucks on the side. It’s important to remember that getting extra work doesn’t have to be forever. Using it as an opportunity to get your income up and reach a better place financially will relieve a lot of financial stress.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: 4 Ways To Beat Financial Stress, According to Money Expert Rachel Cruze
