Reduce Your Financial Stress

AdminBy AdminOct 29, 20170

With the global recession worsening, many people are feeling the burden of financial stress. Financial problems can affect your health, and can destroy relationships, as people struggle to cope with the added problems of paying the bills. Here are six steps you can take to immediately reduce your financial stress and build a secure financial future.

Decide On A Family Budget

Decide On A Family Budget

Planning a family budget helps you to see what you are spending your income on. If your circumstances have changed, due to a redundancy, or lower income coming in, you will need to revise your budget to the lower income.

Make a list of all the essential living expenses, such as electricity, gas, rent or mortgage payments, and insurance, credit card payments, and how much and when the payments need to be made. Then factor in the grocery money, and other daily living expenses.

At the bottom of the list put the lower priority items you spend money on, such as books, sports, hobbies, entertainment, holidays, and dining out. Allocate your current spending to each item, working from the top of the list – the essentials, first.

Once you have created your budget, discuss every item on the list and see where cuts or savings could be made. Make sure that you do not spend all of your income. Put aside a proportion of your income into savings.

Create A Separate Savings Account

Create A Separate Savings Account

If you do not already have a separate savings account, it is a good idea to talk to your banking institution to find out if the bank or credit union offers a high interest savings account. Most of the savings accounts offer a higher rate or interest, if you make regular deposits without withdrawing any money in the month.

Arrange with your pay office to pay an amount of your pay straight into your savings account, if you can. This way you will automatically save, and won’t inadvertently spend the money. Even saving just $20 a week will build a savings account of more than $1000 in a year. Once you have enough savings, you may look at investment options or high interest accounts like term deposits to increase your savings even further.

Build An Emergency Fund

Build An Emergency Fund

As well as building a dedicated savings account, siphon some money into a separate account that you can access very quickly in the case of emergencies. You may like to use a jar or a piggy bank at home to capture the spare change from your pockets each day, which you will find can quickly build up.

Deposit this money every month or so into your emergency fund account. Every week, put at least some money into the emergency fund. Ideally, your emergency fund should be able to cover at least four week’s wages. It may take a while to build up the fund, but added to this account regularly gives you a peace of mind and will reduce the possibility of running into problems.

An emergency fund is to cover the bills that are unexpected, such as your car breaking down, or your pet suddenly needing an operation from the vet. Do not use your emergency fund to buy something you don’t really need, like shoes on a sale.

Building an emergency fund allows you to cope financially, without relying on short term loans which carry extremely high interest, or putting emergency costs onto a high interest credit card.

Reduce Credit Card Debt

Reduce Credit Card Debt

Credit cards can add to financial strain, because of the high interest that accrues on the debt. Use your credit card as little as possible, and try to pay the whole amount on the credit card every month. If this is not possible, ensure you have the lowest interest credit card available and pay off as much as you can afford every month. Make additional payments above the minimum monthly payment recommended by the bank as this will reduce your debt much faster.

Consolidate Loans Where Possible

Consolidate Loans Where Possible

If you are paying many different small loans, such as a car loan, credit cards, etc, you may find it is worthwhile combining all the loans into one debt consolidation loan with lower interest. You can then make one single payment, rather than many payments, and you may even be able to reduce the total monthly payment to reduce the financial strain in your life at present.

If you have equity in a property, you may be able to redraw a small amount to pay off the higher interest loans and then pay off the lower interest rate mortgage with the same payments you were making to the higher interest rate loans and credit cards.

Sell Items You Don’t Need

Sell Items You Don’t Need

An easy way to make ends meet in difficult financial times is to look for items you have around the house that you don’t really need anymore. If you have not used the item in three years or so, the chances of you using it again in the future are minute. You may have skis, snowboards, knee boards, or other grown up “toys” lying around in your garage that you have not used for years.

Now could be the ideal time to clear out these household items and make enough to cover the bills. E-bay and other online selling sites make it easy to sell items you don’t need. Go through your bookshelf and put some in a box to take to second hand book store, as many stores will pay you a few dollars per book. Sell 50 books, and you could pay a large electricity or telephone bill.

Conclusion

With some careful planning and budgeting, you can reduce your financial stress, and can make your future one without such financial strain by adding to your savings and investments. Consolidate your loans and reduce the interest you need to pay. Selling what you don’t need may help to build your emergency fund, and help pay bills in those difficult days.

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