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Money: we never seem to have enough of it and it doesn’t come with instructions. No wonder why it causes stress for so many!
If you’re feeling overwhelmed about managing your finances, you’re not alone. Take a deep breath and consider these simple action items to limit the stress associated with your personal finances.
When life gets hectic, checklists help people stay organized so everything is accounted for. A financial plan acts a lot like your checklist.
Outline your financial goals and budget to develop your financial game plan. How much room is there in the budget for saving? How much do you want to contribute to each savings goal? Having each expense and goal (short and long term) outlined can help you see the full picture and make the appropriate conclusions.
Having a plan also helps you evaluate your savings potential. You can calculate yours by taking your monthly income (after taxes) and subtracting your monthly expenses. Whatever is left over is your savings potential. This helps you gauge your money management success. For example, if you’ve set a savings goal of $1,000 per month but your savings potential is only $800 per month, you’re setting yourself up for failure. Create a plan that works for you and your budget, and stick with it.
For some couples, money management is taboo. It doesn’t have to be.
If you’re co-managing your finances with another person (a spouse, partner, or other family member), set up regular touch points to go over your collective wins and losses. Maybe the spender in the relationship should be heralded for cutting back on his or her credit card bill. Or the saver wants to add a new financial goal to the plan. Having these discussions can cut back on stress since small problems can be addressed early before they escalate into larger problems that lead to arguments.
There’s no avoiding the curveballs life throws at you, whether it’s the loss of a job, unexpected medical expense, or car repair.
These expenses can set your financial plan back if you’re not prepared. Having an emergency fund can give you peace of mind that if an unexpected expense occurs, you’re better prepared to cover it. (Tip: A good rule of thumb is to have three to six months of regular expenses allotted in your emergency fund.)
Depending on the magnitude, being in debt can take a toll on your mental state. Prioritize debt repayment in your financial plan, not only to feel better about yourself, but also to avoid racking up interest charges and paying more in the long run.
Are you juggling multiple debt payments? Consolidating your debt could help simplify your repayment so you only have one payment to track each month rather than keep up with multiple bills. For example, a personal loan or home equity line of credit (HELOC) could help consolidate credit card debt; for student loans, you could consider a refinance loan to bundle multiple debt sources. In some cases, consolidating could even help you lock in a lower interest rate.
Let’s face it — life can get hectic. This causes you to forget things from time to time, whether it’s your cousin’s birthday gift or paying your cable bill. Setting up automatic bill pay can help alleviate the stress of remembering to pay bills and avoid costly penalties for missed payments.
Treat your savings plan the same way. Automate your savings so that it comes out of your account just like your monthly bills. That way, you’ll have a better chance of sticking to your savings plan. Remember: save first, spend second!
However, automating these payments doesn’t allow you to forget about your bills entirely. You still need to have enough funds in your account to cover the expense. That’s where your budgeting and planning comes into play (see “1. Have a plan”).
Sometimes, planning for the future can be cast to the side, something that you’ll tackle another day. However, “another day” has a tendency to get put off again and again. Then, you risk waking up one day panicking that you’ve waited too long, frantically trying to make up for lost time.
To avoid this, take charge of tomorrow, today! That might involve ramping up or starting retirement contributions, saving for a house, or building your credit score to better position yourself for a big purchase. These achievements don’t happen overnight, so get started now and make time your ally, not your enemy.
When it comes to financial planning, there’s no shame in asking for help. A trusted advisor or financial planner can offer suggestions and insights to help put you on the path to success. Having a professional in your corner can provide the guidance and reassurance you need along the way. Nobody said you needed to go in alone!
We all stress about money from time to time, but implementing any of these simple action items can help you feel more in control of the situation. Take the time to see what positive changes you can make to your money management. Then turn that discussion into action!
Money is a common stressor. However, getting the necessary guidance can help alleviate a lot of that uneasiness. Our dedicated colleagues can put you on the right path to make positive changes to your finances and help you reach your potential. To learn more, please call 1-877-360-2472, visit us online, or schedule a Citizens Checkup at your nearest Citizens Bank branch.
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