This 8 Ways Can Help You Stop Worrying About Money
Thursday, 19 January 2017
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This 8 Ways Can Help You Stop Worrying About Money |
When you’re worried about money, you think that your reality is real. You get really invested in the fact that your money troubles are really real. The truth is, everybody worries about financial decisions, indecisions or consequences. However, worrying won’t solve your money problems, though. In fact, it can lead to even more stress and mistakes. Here are eight ways that can help you to stop worrying about money and to get your finances on track.
1. Understand Your Money Situation
You can get a better understanding of your money situation by identifying what your assets, thus house, investments, savings are and what your liabilities, or debts. Once you know what you have and what you owe, you can identify what your biggest problem is, and assess what needs to change. For most, it’s too little savings and too much debt, he said.
Before you can stop worrying, you need to know where you stand financially and the best way to do that is to get a handle on or snapshot of your current situation.
2. Know Where Your Money Is Going
Once you know where you stand financially, you need to know how you got into that position. This means figuring out where your money goes each month. First, identify your necessary expenses which includes mortgage or rent, utilities, transportation and anything else you must pay for each month. Then, look at your bank and credit card statements from the past month to see how much you are spending on discretionary items, thus things you want but in actual fact you don’t need them.
If you’re spending say GHC1,000.00 on discretionary items, ask yourself what else you could do with that money. You might be worried about living paycheck to paycheck or not making ends meet, but tracking your spending might help you realize that you actually have the cash you need to boost savings, pay off debt or get ahead, if only you cut back on unnecessary expenses.
3. Get a Handle on Your Debt
If you have taken the first step to figure out your assets and liabilities, you should have an idea of how much you owe because it is important to see how much this debt is costing you, and draining your cash.
List your debts and the interest rate on each. You should focus on paying off your highest-rate debts first so you will pay less in interest over time. If you have taken the second step to figure out where your money is going, you should know what discretionary expenses can be cut so you can put more money toward your debt.
However, before you start paying down debt, experts advice that you understand why you have accumulated it. Was it because you had a major medical expense or borrowed heavily to cover the cost of education? Or are you simply using debt to cover your spending? If this is your normal way of living, it’s time to take stock and think about why. You might need to work with a counselor to figure out what is triggering your spending, and how to get it under control.
4. Set Financial Goals
To stop worrying about your finances, it’s not enough to know where your money has been going. You need to give it a place to go, which means setting goals. Look at what must happen for you to feel like your finances are on track. It might mean being debt-free, having a certain amount in savings for retirement or building a college fund for a child.
In addition to covering your necessary expenses, your money should be spent on the basis of priority, thus your goals first before your wants. Then evaluate whether your career and other financial choices you have made will help you meet those goals.
Ask yourself this. What are your options if your current income won’t get you where you want to go?You might need to get a second job, go back to school or look for other sources of income to reach your goals.
5. Educate Yourself About Personal Finance
You might be worrying about money because you feel like you don’t know enough about personal finance. However, gaining mastery of your finances does not mean you need a degree in finance. But you do need to know what is creating fear or discomfort for you.
Perhaps you’re worried because you don’t understand how your credit score affects your ability to get credit. You can learn the basics online.
If you’re confused about how much to save for retirement, check with your employer to see if you have access to financial advice through your workplace retirement plan. Or visit one of the numerous personal finance websites to learn money basics.
6. Plan for the Unexpected
You can alleviate some of your financial worries by identifying your worst-case money scenarios, and preparing for them. For example, if you consider losing your job to be the worst thing that can happen financially to you, ask yourself what you should do to prepare for a job loss. Creating an emergency fund to cover expenses while you’re out of work is a good place to start.
If you have people who depend on you financially, you need to have enough life insurance to help support them when you die. If you become disabled, you need to make sure you have enough disability insurance coverage to replace your lost wages. Consider everything that could derail your aspirations, and cover all of your bases, experts say.
7. Stop Trying to Keep Up With Others
You need to be honest with yourself about whether your money woes stem from tying to keep up with what others have, thus whether you are spending to impress others or belong. Ask yourself what you’re working so hard for. Is it a label on a shirt, a certain watch, a vacation? Or are we working for something else?
To avoid falling into the trap of trying to keep up with others and worrying that you cannot, please make sure you write down what you care about. If you’re married or in a relationship, ask your partner to do the same. Then agree on what you both want and let those values guide your spending decisions.
8. Get Help From a Financial Advisor
If you’re worried about your health, you would likely visit a doctor. If it’s your financial health that has you concerned, you can get help from a professional, too. You can hire a financial planner to help you with any of the above steps. That is from understanding where you stand financially, to setting goals, and to creating a plan to reach those goals.
Always look for an advisor who will work in your best interest rather than one who will try to sell you financial products that might not meet your needs.
