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Can you picture life without financial stress? Many people face money pressure that gives them sleepless nights. Visualize a life where you get to eliminate the stress associated with your finances. Just thinking about it does bring a smile to ones face. But can one really live it?
First of all, what is financial stress? Financial stress is an overwhelming feeling of your financial situation. In most cases this occurs when your expenses or financial responsibilities seem to exceed your income or the money at your disposal.
So, if financial stress creates an overpowering feeling of no way out, how can you eliminate it?
There are a number of ways to extract the stressful feeling that is associated with a lack of money or at least the amount of money needed to meet your obligations.
Know your current financial position. Are you in the black or red?
It is quite common to meet people who are oblivious to state of their financial affairs. This is a great error because your life will be filled with assumptions as to how you are doing financially. Based on these assumptions, some believe they don’t have enough money while others believe they do. Yet in many cases both are wrong. Sit down and draw up a list of your income sources, your expenses, your assets and liabilities and before you would be the real picture of your financial standing, telling you whether you are in the black or red.
Draw up a budget and balance sheet
In the previous tip, I spoke about drawing up a list stating your financial affairs. A budget and balance sheet is a more organised way of putting your financial life on paper. A budget is an income and expense statement telling you where your money is coming from and where it is going. While the balance sheet shows you your total assets and liabilities.
With these two tools, you’ll have a black and white picture of your financial life and networth.
Make a list of those you owe and how much?
From your budget and balance sheet, draw up a list of the people or organisations you owe money. Make sure you put in as much detail as possible about those you owe. When do you need to pay it off?Must it be a onetime payment or can you spread it out? Will they give you more time? Are there possibilities of having it written off (Don’t bank on this)? Though in the short run this could aggravate financial stress, it is a necessary evil required to also eliminate financial stress. I remember a friend of mine years ago after carrying out this activity, realised she was not owing as much as she thought;this eliminated the financial stress she had put herself through.
Start saving
Do you have any money left over after your financial obligations have been met? Then set up a savings account and keep your disposable income (money left over after expenses) there. It can quickly become a financial nest, if consistently done. Having a good amount of money in your savings account is a real financial booster. But, the best thing to do is save before you start spending. For some people, at the initial stage this might be a hard task to follow due to the state of their financial affairs but work towards achieving it as a goal.
Emergency Fund
Even though I’ve put an emergency fund here, it is one of the most important ways of eliminating financial stress. When you have funds set aside for any emergency, you automatically eliminate financial stress to a certain degree,as you know you have some money set aside if anything comes up.
Seek financial help, well possible.
Having debt dangling over your head is a real stress trigger. Negotiate your repayments with those you owe, where possible or seek financial advice (approved organisations – free or fees) where necessary.
Temporarily change your financial lifestyle.
Choose an alternative lifestyle, one lower than the current way you live. This will take a huge burden off your shoulders. Some experts will say don’t lower your standard of living but increase your income. This is great advice but sometimes people’s state of mind hinders them from attracting income or business. So, I’ll say get yourself to a place where you are in control of your finances as this will automatically create financial peace of mind.
Go on a Financial Fast
Go on a financial fast. You say what is a financial fast? It is where you decide to live on your bare necessities for a chosen period. When I embark on a financial fast I tend to use it to boost my income, savings or emergency funds. In 2012, I ran two 30 days financial fast programs, for me and my subscribers, many testimonials came from it. People were able to saving up money towards various things. So give it a try, it might do you some good.
The financial fast is like the mountain climber’s pack. Live on the bare essentials each week for a month. Make sure you have a goal in mind before you start, you don’t want any vagueness, give it purpose.
Self-Assessment
Each week, conduct a self-assessment; this will reveal how far you’ve come and it does make you feel better that you are taking charge and changing things.
Have fun
Put a bit of fun into sorting out your finances. Turn it from a task to a quest. See yourself as the knight in shining armour coming to rescue the maiden in financial distress.
Make 2014 a stepping stone adventure to a financially stress free life.
