Ten steps to take if you’re feeling stressed about money
Posted by siteadmin on Monday 19th of November 2018.
With finances playing an important role in life’s milestones, it should come as no surprise that many of us experience money worries.
Research from Willis Towers Watson (WTW) revealed that money is one of the biggest causes of stress for the millennial generation.
- Almost half (47%) of millennials say their financial circumstance is their number one source of stress
- Finances are stressful for older generations too; 24% of baby boomers agree that money is their biggest concern
- Stress affects mental health and the number of sick days taken too. Highly stressed workers took twice as many sick days as those with low stress
Mike Blake, Well-being Lead at WTW, said: “The younger generation is often regarded as carefree, but this research changes this perception. From job insecurity, pay freezes, mounting student debts, high property prices and the emergence of the gig economy, millennials have had a lot to contend with financially when reaching working age.”
Fortunately, whether you’re a millennial climbing the career ladder or a baby boomer planning for retirement, there are steps you can take to reduce stress about money.
1. Assess your income and outgoings
Without a good understanding of where your finances are now, it’s almost impossible to make improvements. Looking at your budget might sound dull but it’s an essential starting place for improving your financial position. Assessing your income against your monthly outgoings means you can identify the areas where it’s possible to cut back if necessary.
2. Separate your finances
Holding all your money in one account can make it challenging to keep track of whether you’re meeting goals. Plus, you could be missing out on valuable interest. Separate your finances into accounts that match your plans; a current account for day-to-day spending, an easy access savings account for your emergency fund, and an Individual Savings Account (ISA) for long-term goals, for example.
3. Prioritise paying back high-interest debt
If you have high-interest debt, such as credit cards or loans, you should prioritise paying these back as quickly as possible. Overpaying, even if it’s just by £20 a month, can cut down the amount of interest you’ll pay before it’s clear. Make it part of your budget to keep on top of payments. Once it’s cleared and you have extra disposable income, you’ll feel less stressed knowing you have one less financial obligation.
4. Build up an emergency fund
Stress is often fuelled by the uncertainty. If your money worries are centred around ‘what if’, taking steps to build up an emergency fund can help. It’s recommended that you have between three and six-months salary you can draw on when you face unexcepted bills or a lack of income. It will help act as a financial buffer when you need it and give you peace of mind.
5. Understand how to make your money work harder
Reach your goals faster by choosing the right product type. Paying extra into a Workplace Pension if your aim is to boost retirement provisions can be a good choice thanks to tax relief, for example. On the other hand, if your goal is to build up a house deposit, a Help to Buy ISA or Lifetime ISA (LISA) will be a better option. With a LISA account, you can benefit from interest or investment returns as well as a government bonus.
6. Set small steps to a larger goal
If you find that you feel daunted by your ultimate goal, break it down into smaller chunks. It can help your aim seem more manageable. Plus, it’ll be easier to keep track of your progress too, acting as motivation.
7. Think about long-term financial security
If you’re feeling stressed about your future, long-term financial security is important. It could be that saving a deposit to get on the housing ladder can provide you with the certainty you want. Alternatively, putting money away into a pension can help you feel more in control of where your life is heading. Not thinking about the long term means taking a short-sighted view of your finances.
8. Consider protection
If your biggest concern is how you’ll cope if you faced a financial shock, purchasing a protection product may be the right option for you. These can provide you with a lump sum or monthly income if you were to become too ill or injured to work and, in some cases, if you lose your job. There are hundreds of options on the market, covering different areas, allowing you to pick out one that aligns with your worries and situation.
9. Keep on top of your money
Once you’ve started taking steps to improve your financial situation, one of the most important things to do is keep on top of it. Regularly review your outgoings, savings and goals. As your aspirations change, so too should your financial plan.
10. Speak about it
They say a problem shared is a problem halved. And for many struggling with finances, it can be a useful place to start. Chatting to family and friends about your worries can put them into perspective, and they may even have some useful tips too.
In addition to this, seeking the support of a finance professional can help ease stress too. With a better understanding of where your finances are at now and how they might change in the future, you can work together to create a way forward that reflects your goals.
If you feel stressed when you look at your financial plan, we can help provide an insight. Our goal is to help our clients achieve financial security, both in the short and long term, that reflects their aspirations.