Are you one of those people who gets stressed just thinking about money? There are very few of us who ever took a personal finance class when we were growing up. However, we are still expected to know how to set financial goals and work toward achieving them. This is a very common source of stress for many.
What should you do to eliminate money stress? What if I told you that you can manage your money without having to think about it everyday? Let me explain.
Here are 5 tips to eliminate money stress:
1. Set it and forget it
First off, if you have direct deposit, set it up to go in more than one account. For example, have 10% go directly into your 401(k), 10% into your saving account and the rest into your checking account. If you don’t have access to a 401(k) through your employer, you can set up a portion to go directly into your IRA. Automating retirement savings is really critical to having enough saved to enjoy a comfortable retirement when the time comes.
You may even want to set up an account for each of your shorter and longer-term financial goals. For example, have a portion of your check deposited into an emergency fund account, a portion into your college savings, and a portion into your vacation account. If you find yourself limited by the number of accounts that you can set up through your employer’s direct deposit, set up automatic transfers from your checking account. This is also a great way to save for special occasions such as birthdays or holidays.
If you pay regular bills, set them up to automatically pay through your bank’s Bill Pay. You can even coordinate your bill payment schedule with your paycheck schedule.
2. Let technology be your friend
There are some great apps out there to help keep track of your spending and eliminate your money stress. If you work with me, you have probably already started using your personal financial portal. I would be happy to show you how to set up your budget to automatically track how your spending is relative to your budget.
Regardless of whether or not you use the personal financial portal, there are several other apps out there that are useful when it comes to this task. Mint is one that is very popular because it’s easy to use and effective.
3. Stick to a spending plan
Ideally, you have a detailed budget. However, I work with enough people to know that is often not the case. Even if you don’t have a detailed budget, you should have a basic spending plan in place. That way, you will at least know if you are on track and not spending beyond your means. For example, if half of your after-tax income goes to pay your necessary bills such as rent/mortgage, utilities, etc., and about 20% goes to savings (including retirement savings), then you know that you can’t go over 30% of your after-tax income for more discretionary spending.
4. Have a monthly money date
For most of us, our monthly income and expenses are relatively stable. Thus, it’s not necessary to worry too much about your finances on a day-to-day basis, especially if you automate things. That said, you don’t want to be an ostrich with your head in the sand. Once a month, set aside some time (about an hour or so) to review your finances from the prior month and plan for the next month. If you are trying to make some changes to your spending patterns, you may need to check in a little more frequently until you know you are on track.
It does not have to take a long time but it can help you plan for unusual expenses such as birthdays or other special occasions. If you are married or are in a long-term relationship, I would encourage you both to be involved in this “money date.” It creates transparency which can reduce money-related miscommunication and arguments. This is really important when you are trying to eliminate money stress.
5. Hire a financial advisor
If you do have discretionary income and you are serious about reaching your financial goals then a financial advisor should be a key member of your professional team. There are people like me out there who want to see you reach your financial goals. Not only that, a financial advisor can take a look at your overall financial picture and come up with strategies that will help you realize your goals more quickly. While I am based in Ohio, I maintain an active online presence and meet with clients virtually throughout the country. Our specialty is working with clients through life transitions, whether big or small. Let us help you manage your money better. We will partner with you to navigate the financial changes in your life so you can feel confident in your financial future. Schedule your free consultation today and learn how we can help ease your transition.