If you find yourself worried about finances, you’re not alone — 71 percent of Americans identify money as a significant life stress, according to the American Psychological Association.
As overwhelmed as you may feel, you can ease the pressure without being a financial expert. Here are eight simple ways to relieve stress about money.
1. Know where you stand financially
To understand your financial situation, you need to know where you stand. Take an inventory of your finances, including assets like your home, investments, savings and property or items you own free and clear. Then face your monthly and everyday expenses as well as any debts you have.
By gaining a complete picture of your finances, you can take steps toward improving your situation.
2. Track your spending
Now that you know what you have and what you owe, find out where your money is going by tracking your spending. This can be as simple as having a spreadsheet or a financial tracking app, like Mint. Don't just track your bills and other required expenses. Rather, pay attention to other expenses, too, such as short trips to the convenience store or eating out.
It is likely the small things you don’t notice that cause stress, and you may find you have more money than you thought, once you adjust your spending habits.
3. Understand your debt
You likely know your monthly payments such as your mortgage, car, student loans or credit cards, but do you know your balances or interest rate? Do you know how you accumulated the debt? Was it due to a medical emergency and student loans, or was it due to frivolous spending?
To get a handle on your debt, take a look at what you owe and your interest rates, and be honest with yourself about what put you in your situation. With that knowledge in front of you, you can begin paying off low balances and loans with high interest rates.
4. Set financial goals
Take control of where you want your money to go by setting financial goals. Perhaps you have a goal to pay off debt or put money away in a savings or retirement account.
If your financial situation doesn’t allow you to do that, it might be time to take a second job or look for a job with higher pay. By making a goal and sticking to it, you can work toward what you want.
5. Get educated
Finances can be overwhelming and may make you wish you had paid better attention in all your math classes. However, budgeting is as simple as knowing what you owe, knowing your goals and being able to add and subtract simple numbers. Even understanding compounding interest is easier than you think.
By educating yourself on the basics of finance, you will find being a smart money manager for yourself is not as overwhelming as you once thought.
6. Have an emergency fund
A surefire way to send yourself into a downward spiral is being unprepared for the unexpected. In fact, most Americans lack money to cover even small emergencies, according to bankrate.com.
Whether you need a new washer or car repair, an unexpected illness floods you with medical bills, or you lose your job, your financial situation can change in the blink of an eye, and you need to prepare for that.
Keeping money on hand for emergencies is just as important to your financial wellbeing as paying off debt or saving for retirement.
7. Don’t compare yourself to others
One thing that sends most people into financial turmoil is the constant need to have what others have. In the world of social media, this need has been magnified by the constant posts about lavish vacations, new cars and large homes.
Seeing others having fun can lead to overspending.
What social media and in person interactions don't show is how your friends paid for those things. Perhaps they saved, or perhaps they went into debt. You don’t know their story, but you know your own, so keep it simple: don't buy stuff you cannot afford.
8. Get help from a financial advisor
While you can fix many financial situations with the steps above, some may require the help of a financial advisor to relieve your financial stress. An advisor can help you be accountable with your spending and point you in the right direction for investments and retirement plans.
Follow these eight steps, and you'll be on the path to financial freedom.
