Financial stress is a serious issue that can affect all of us. Poor financial management can negatively impact your emotional and mental wellbeing, as well as your day-to-day life. Knowing the warning signs of financial stress can help you catch it before it becomes a serious problem. This article covers the warning signs, consequences, root causes, and short-term and long-term strategies for financial stress recovery. We’ll also discuss when it’s best to seek professional help.
Warning Signs of Financial Stress
1. Using Credit Cards Too Often
If you find yourself relying more and more on credit cards to make your purchases, it’s a sign that you’re struggling to make ends meet with your current cash flow. This is a particularly significant warning sign as it can quickly lead to mounting debts and increasing financial strain.
2. Worrying About Money All the Time
Worrying about your finances frequently is a sign that you are experiencing financial stress. It’s important to be mindful of your spending habits, but if money is on your mind constantly, it can take up a lot of your mental energy.
3. Procrastinating with Financial Decisions
Do you find yourself ‘putting off’ decisions related to your finances, such as filing taxes or paying bills? This procrastination is likely a sign of financial stress. It can be helpful to seek outside advice or do more research to find appropriate strategies and solutions.
4. Engaging in Impulsive Buying Sprees
Having uncontrolled spending habits can be one of the major warning signs of financial stress. If money is low, you may find yourself making impulsive purchases in an attempt to make yourself feel better. However, this can leave you with additional financial strain and can contribute to further debt.
5. Averting your Attention from Money Matters
A certain level of money management and financial planning is important but if your mind is deliberately avoiding addressing these issues and you find yourself thinking about anything else but your finances, this is an indication that reality is causing you a lot of stress and worry.
Consequences of Financial Stress
Financial stress can lead to sleepless nights and general unrest. If you’re struggling to make ends meet, you’re likely to be worrying about how to pay the bills and not getting any quality rest.
2. Relationship Problems
Money is a major factor in relationships. If one partner is struggling with financial stress, it can cause tension and lead to arguments. This can place extra strain on the relationship.
3. Poor Eating Habits
When people are stressed about money, they often forget to eat healthily or fill up on unhealthy fast food. This poor eating habit can lead to poorer physical health, which can have further consequences for their mental wellbeing.
4. Lack of Productivity
Financial stress can lead to depression or anxiety and can cause people to lose interest in their hobbies or regular activities. It can also lead to a lack of focus which affects productivity in the workplace.
5. Physical Symptoms
The physical symptoms of financial stress are very real. Stress causes an increase in cortisol which can manifest itself in headaches, chest pains, and nausea. If left unchecked, it can lead to more serious health issues.
Uncovering the Root of Financial Stress
1. Investigate Your Finances
It’s important to take some time to look at your finances before tackling the issue of financial stress. Identify where your money is going and analyse what potential changes you can make. This can help to uncover the exact cause of your financial worries.
2. Track Your Spending
Once you have a handle on your finances, start tracking all your spending. This will give you a clear picture of what and where you are spending your money.
3. Create a Budget
Creating a budget based on your income and expenditures is a key step to better financial management. Set up a system that works for you, a budget that you can stick to in order to ensure a healthier financial life.
4. Identify Your Discretionary Spending
It’s important to identify areas of discretionary spending, like going out for meals, buying clothes or entertainment. Cutting back on these items can help to reduce your financial burden and help to bring the situation under control.
5. Cut Unnecessary Expenses
Once you have pinpointed where your money is going, try to identify unnecessary expenses and find ways to reduce them. Cutting out cable or downgrading your phone plan can be a significant way to reduce financial strain.
Short-term Recovery Strategies for Financial Stress
1. Prioritise Your Debts
If you are in debt, it’s important to prioritise your payments. Make sure you pay your most important bills first and negotiate payment arrangements with debts that can wait. This can help to bring your debt down in the short term and give you peace of mind.
2. Set up an Emergency Fund
Ideally, you should strive to have at least 3-6 months of expenses saved up in an emergency fund. This will help you to manage any future financial shocks, such as job losses or unexpected costs.
3. Utilise Money Management Apps
Money management apps such as Mint or YNAB can be helpful for providing a snapshot of your financial situation and making it easier to analyse your spending. They also provide financial advice and budgeting tips.
4. Sell your Unwanted Stuff
If you have any unused or unwanted items lying around, selling them is an easy way to add an extra bit of cash to your pocket. Online sales websites, like eBay or Amazon, make it easy for you to release these items to the world.
5. Get a Part-time Job
Getting a part-time job can offer a quick fix to your financial worries. It can be a great way to make some extra cash while also giving you skills, experience, and contacts that make finding full-time work easier.
Long-term Financial Management Solutions
1. Automate Your Finances
Set up automated payments for all your bills, rent and other recurring expenses. This will ensure that you’re always on top of your payments and make it easier to budget your money.
2. Make a Financial Plan and Stick to it
Creating a financial plan or ‘spending plan’ and sticking to it is the key to getting your finances under control in the long term. It should include your income and all the financial commitments you need to make each month.
3. Create Long-term Goals
Long-term goals will help to keep you focused and motivated. This could include things such as buying a house, creating an emergency fund, or investing in stocks. Setting these goals and breaking them down into achievable steps will make them easier to achieve.
4. Invest Wisely
Investing in stocks and other financial products can be a great way to expand your income, but it’s important to do your research before committing. Investing intelligently can help you to achieve your long-term financial goals quicker.
5. Develop a Financial Education
Gaining a better understanding of finances will give you more control over your own life and put you in a better financial position. This could include attending seminars, workshops or getting financial advice from an expert.
When to Seek Professional Financial Help
1. When you Have Too Much Debt
If your debt has become too large to manage and you can’t seem to get ahead, it may be time to seek professional help. A financial advisor can help you to create a plan to reduce your debt and get you back on track.
2. When You Don’t Understand Finances
If you are struggling with even simple financial tasks and need guidance, it’s best to get help from a professional. A great financial advisor can provide you with the right tools and advice to improve your financial literacy.
3. When You Are Facing Serious Financial Difficulties
Sometimes managing financial stress can become too much and require the help of an expert. A financial counselor can help you to cope with your stress and develop strategies to reduce your financial burden.
4. When You Need Money Advice
A financial advisor can help you develop effective budgeting strategies and also provide advice on investments, tax, and estate planning. They can also help you create long-term financial goals and break them down into achievable steps.
5. When You Need to Consolidate Debt
It can be overwhelming to have multiple debts and payments, so it might be time to speak to a specialist about consolidating your debt. They can offer debt repayment plans and other solutions to help resolve your financial problems.
Financial stress can have serious implications on your mental and physical wellbeing, so it’s important to address it early. Knowing the warning signs of financial stress and taking the right steps to reduce your financial burden is key to keeping your finances healthy. There are a range of strategies and solutions available to help manage your financial stress, both in the short- and long-term, and it’s important to seek professional help when necessary. With the right knowledge and support, financial stress is something you can easily manage and overcome.