OK – real talk here. We’re in the middle of a pandemic that came out of nowhere and economic uncertainty abounds. If you haven’t had some money anxiety or worry about your money situation this year, let’s have a chat because I’m convinced you’re superhuman and have discovered the key to life.
BUT if you’re a mere mortal like me, you’ve looked at your bank accounts and worried about the what-ifs. What if I lose my job? Or I get sick? What if my husband/spouse/partner/kid gets sick?
Let’s brainstorm some ways to minimize some of that money anxiety! Less anxiety = better life, right?
Pay Off Your High-Interest Debts
Things like credit cards, store credit cards, medical debt, car loans have high interest rates that result in us paying WAY MORE THAN WE SHOULD over a long-term period.
Listen closely. The truth about debt is that it doesn’t define your character and doesn’t necessarily mean you’ve made bad decisions. A large majority of us will all carry debt at some point in our lives, but it IS important to pay it off. Make a plan to tackle those debts now. Even waiting a few months can cause the total you owe to increase.
Debt takes an emotional toll on us – it’s a dark cloud hovering over our heads all the time. Wouldn’t it feel so good to enjoy some sunshine instead?
Related post: Guide to Paying Off Debt
Build an Emergency Fund
Here’s the thing. Rule of thumb says you need 3-6 months of living expenses saved up in case of emergency. That is a rule of someone else’s thumb, so you’ve got to figure out what makes the most sense for your own thumb.
An emergency fund is a lifeline. It’s a cushion of cash to fall back on in case of an emergency. If you lose your job, have an unexpected medical expense or need to pay for a sudden car repair, your emergency fund can help you cover the gap. Your emergency fund is NOT the same as your vacation fund or your shopping fund. Emergency fund = emergencies only.
Remember, if you have to tap into your emergency cash, you need to immediately work toward building it back up to your desired amount. An emergency fund is our baseline and until it’s at the appropriate level, we’re not pursuing any other money goals. You never know when an emergency could pop up, and the worst thing that could happen is being caught with a half-funded emergency fund.
OK, but now you may be thinking, “This is all well and good, but I’m in the middle of a crisis NOW and don’t have enough in my emergency fund. What now?”
Buckle Up Buttercup!
You must examine every single dollar that goes out the door and decide what is essential and what is not. Anything that is not, has got to go. TBH, this may hurt a little. You will not be able to keep that Pure Barre membership or the high-speed internet. Delete or down-grade anything that isn’t absolutely essential.
Even more importantly, look closely at your largest expense categories. For most people, those are your food, housing and transportation expenses. Because these categories make up a significant portion of your expenses, you can have the highest impact on your finances by focusing your efforts here.
Related post: How to Find Immediate Money Savings
Don’t Touch That 401(k)!
This one is so tempting, but also incredibly damaging if you do withdraw money. You’re guaranteed to miss out on earnings AND you’ll be hit with a withdrawal penalty. You could miss out on compound interest to the tune of THOUSANDS OF DOLLARS. Speaking of money anxiety, am I right?
The market always goes up, long-term.
This means a better strategy is “set it and forget it”. An EVEN BETTER strategy, if you are able, is to take advantage of times when the market is down and shovel MORE money in. Bargain shopping at its best!
Don’t Miss A Payment
If you need to call your lenders or service providers and get an extension, or negotiate a lower amount for a few months, go for it. But do not – and I repeat – DO NOT under any circumstances miss a payment. This is not a survival technique. Missing a payment is the opposite of a survival technique. It’s a good way to dig further into debt and it also damages your credit score, which you need to protect especially if you’re considering refinancing any of your debt.
Missing payments now will simply kick the can of money anxiety down the road, and when you meet that anxiety again, it will have doubled in size.
Pay Yourself First
Paying yourself first is one of the BEST TECHNIQUES to begin to build up a savings account, or to make progress toward a particular financial goal. This means you immediately transfer a set amount over to bills or savings or debt the MINUTE your paycheck hits your account. Now, you have to figure out how to live on what’s left. It’s a mindset switch.
If the money stays in your checking account, it’s all too easy to allow your expenses grow to gobble up every cent, and at the end of the month, you haven’t paid any bills or grown your savings or paid down your debt at all.
Related post: Pay Yourself First: The Ultimate Payday Hack
Track Your Expenses
Knowing where your money is going immediately lifts that shroud of mystery that can be a source of anxiety. YOU get to sit in the driver’s seat and enjoy control over your spending. It’s also a great way to help you identify those little subscriptions or payments that you don’t need any more.
In most cases, someone who begins tracking their expenses will actually LOWER their expenses because of cases like that. Also, taking time out a couple times each month to think specifically about your financial position and plan is SUCH A GOOD practice. It’s a good way to avoid ‘ostriching’ — basically, ignoring the topic altogether, which is guaranteed to create anxiety.
Related post: Easy Steps to Track Your Money
Adopt an abundance mentality
Money becomes infinite through the abundance mentality. We are not locked into our same jobs or our same path – we can try new things, and explore new careers or side hustles. There will always be ways to make money. You have ENOUGH – whether that’s in money or time or ability, and even when you’re feeling anxiety, coming back to abundance as a default mindset can be helpful.
Focus on gratitude for what you have. Spend time helping others around you. Reconnect with your friends and family. Go on a new adventure. These things can help remind us of ALL the things available to us – we are not limited to our present circumstances only!
Related post: Building a Health Money Mindset
Here’s a bonus tip: when you’re feeling anxious, don’t skip your self care! Self care doesn’t have to be expensive.
Remember, there IS HOPE HERE. Times of economic uncertainty are temporary, and are traditionally followed by times of economic stability. Make good decisions now to help you secure your financial future. Let me know how you’re feeling today!