My finances are one of the things in my life that has the potential to stress me out the most. In my quest for a stress-free life (HA!)— enhancing my productivity, furthering my career, creating routines, etc. — I have found that addressing my finances has helped keep my overall stress to a minimum.
After years of denial, I finally decided to identify the financial stressors in my life. For me (and most of my friends) these included: worries about debt, paying bills late, not having a financial security net, not having a budget, and arguments (or differences) with significant others over finances.
Here’s how to address most of these issues:
- Get out of debt. This is often the first necessary step. But how do you do this? First, create a budget to stop the bleeding. Use a debt snowball as a plan to get out of debt. Also see: How to get out of debt, 7 ways to avoid using credit.
- Pay your bills immediately. This is one of the easiest ways to eliminate stress over bills. When you get your power bill, write a check, put it in an envelope, and mail it the next day. Or if you bank online (and you should), go to your computer, log in, and send your electronic payment. Even better, automate all of your finances. To do this, you’ll need to develop a bit of a cushion in your bank account, so you always have enough to pay the bills as they come in.
- Make your savings automatic. I wrote a post about it here.
- Develop an emergency fund. This is something you should also do right away. First, if you are married or have any dependents, you should get life insurance right away. Do your research and make sure you’re getting the right policy for your needs. Don’t get whole life insurance — the fees will eat your investment alive. Second, look at your other insurance to see if it meets your needs, from auto to homeowners to renters and more. Third, make sure you have a will — this might not seem necessary if you are young, but if you have any dependents, this is a must. Fourth, develop an emergency fund — right away. I know, it’s something that everyone advises, but if you don’t have at least a small emergency fund, you will never have financial peace of mind. Build it up to 3-6 months worth of living expenses, or whatever makes you feel good.
- Review your finances at least weekly. Be sure you stare at your budget at least once a week to ensure that you are on the right track to staying under. Even if your bills are automatic, you’ll still want to make sure they’re going out. Take the 10-20 minutes every week that’s necessary to look at your budget, your expenses, your income, and make sure you’ve got everything under control.
- Talk about money with your partner. Money can be a huge stressor on a relationship. It’s important that you talk about money on a regular basis in a non-emotional way, as hard as that may sound. Both people have to be on the same page, or you will eventually argue and have major stress about your finances. You need to talk about your financial dreams and goals, your spending patterns, your budget, your income, your savings, debt, financial security, bills and the like. If you don’t already do this, it will be a very difficult first discussion. Just try to be positive and constructive. It will take 3 months to right the ship, then it will get easier. At the minimum, devote 10-20 minutes each week to reviewing your finances together, reviewing your goals, and making sure that you’re together and seeing eye-to-eye. It will make a major difference in your relationship and in your stress level.