Managing Financial Stress in the New Year
Financial stress is a common problem among Americans. In December, a study by Capital One found that finances are the number-one cause of stress (73%) – even higher than politics, work, and family. Financial stress can be especially acute at the start of a new year, when most of us are setting financial goals and trying to get our finances in order.
If you’re hoping to avoid or manage financial stress in 2023, follow these tips to help you feel more confident:
- Create and follow a budget: One of the best ways to avoid financial stress is to create a budget and stick to it. A budget will help you track your spending and make sure you are not overspending in any one area. To make a budget, start by listing your income and all your expenses, including utilities, groceries, and other necessities. Then, see where you can cut back on unnecessary expenses, such as eating out or subscriptions, to free up more money for savings or to pay off debt.
- Set financial goals: Another way to manage financial stress is to set specific financial goals for yourself. These could be short-term goals, like saving for a down payment on a house, or long-term goals, like saving for retirement. Having clear goals will help you stay motivated and on track with your finances. If you already work with a financial advisor, it may make sense to schedule a review and update any goals that have changed.
- Put major “money events” in perspective. The Capital One survey found that major life events, like buying a house or a car, triggered financial stress in more than half (62%) of respondents. If these events also trigger stress for you, consider making a list of pros and cons before a major purchase, and discuss your list with friends, family members, or other loved ones. They may be able to provide perspective and help you better understand the cause of your stress.
- Get organized: Financial stress can be exacerbated by feeling overwhelmed or disorganized. Take some time to get your financial documents in order and set up a system for tracking your spending and paying your bills. This will help you feel more in control of your finances and less overwhelmed.
- Partner with a professional: If you are struggling with financial stress, it can be helpful to seek the advice of a financial professional. A trusted financial advisor can help you create a budget, develop a debt repayment plan, or invest your savings. They can also provide valuable perspective and advice on how to pursue your financial goals.
- Don’t normalize financial stress: Financial stress can take a toll on your physical and mental health. Make sure to take breaks and practice self-care, such as exercise, meditation, or spending time with loved ones. Discuss your worries with your spouse or partner, and try working together to find solutions to stress-inducing problems.
Interestingly, the Capital One study found that even though finances cause stress in most Americans, they continue to remain optimistic about their financial futures. Approximately 42% said they expected to be better off financially in a year. Incorporating some of the tips listed here can help you keep stress at bay while you pursue your financial goals.