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If we were to conduct an informal poll on the street today and ask people what they are most stressed about, money would be one of the most common responses. It is easy to assume that financial stress exists only for low income families or those dealing with some sort of unusual crisis, but the truth is that everyone, rich or not, deals with financial stress on a regular basis. In fact, many people literally become ill because of their money worries.
A 2015 study by the American Psychological Association revealed that money is the leading cause of stress among adults under age 49. Respondents reported losing sleep over their worries, experiencing elevated blood pressure, and the compulsion to check their account balances, among other side effects.
I can attest to the cold fact that financial stress is scary, even crippling. I’ve experienced a wide gamut of money-related worries myself, including health concerns, job loss, and student loan debt. Each time, the burdens I experienced impacted my ability to function normally.
When we experience financial stress, the psychological weight of our worries not only impacts our abilities to perform usual day to day functions; it also makes it much more difficult to form and act on a plan to wipe out the cause of the financial stress.
If you’re feeling overwhelmed or burdened by your financial situation, whether it involves job loss, enormous debt, feeling stuck in your job, or lack of a long-term game plan for your money, your situation is not hopeless. Set aside a block of time, grab a pad of paper, and follow the steps below to create an action plan to crush your financial stress.
Where to Start? Write Down the Causes of Your Financial Stress
When you are stressed about money, it can sometimes be difficult to pinpoint the exact causes. You may be dealing with immediate, time sensitive stress, like debt collectors and their annoying phone calls or late payment notices in the mail. You may be overwhelmed by long-term tasks that you’ve been putting off for years, such as getting life insurance, forming a will and trust, or refinancing your mortgage.
The best way to start to eliminate your financial stress is to do a brain dump. Grab a pad of paper and create a specific numbered list of everything money-related which is currently causing you to experience stress.
It can include things like regular bills, insurance matters, car registrations, taxes, mortgage refinancing, life insurance needs, scheduling medical appointments, and grocery shopping. It may also include far-off future events to plan for, such as weddings, college, retirement goals, long-term care plans, estate plans, and more.
When you create this list, remember: nothing is off limits! If it involves money and it is bothering you, write it down!
Scan Your List for Quick Wins
Once you’ve finished your list, scan through it several times to look for quick wins, i.e. items that you can tackle right away to reduce your stress. For example, if you have a stack of unpaid bills sitting on your desk, pay them right away and set-up auto pay with your bank to avoid future stress.
From here on out, make it a habit to take care of future quick win items as soon as they arise. The following guidelines should help:
- When bills arrive in the mail, pay them right away.
- Handle all mail items only once. When you open it, decide right away what action is necessary based on the nature of the mail, i.e. pay the bill, file the document for later use, or shred it.
- Schedule reminders in your calendar or mobile device for any time-sensitive financial events.
Rank Remaining Items
Now that your list of items causing financial stress is smaller, it is time to rank remaining items according to their priority. The most effective way to do so is by ranking items according to their urgency and overall importance.
To rank the remaining items by urgency, or time sensitivity, use a scale of 1-5. Rank items which are not time sensitive as a “1” and urgent items as a “5.”
Next, rank your items according to their overall importance in terms of financial weight. This extra step will serve as added protection to make sure that expensive and potentially costly items don’t slip through the cracks (i.e. missing a mortgage payment, failure to pay your federal tax obligations, etc.).
At this stage, it is easier to rate and sort the remaining sources of financial stress according to the four quadrants below.
Transferring the items on your list to the chart above will provide a visual action plan and reduce your financial stress because you will be able to clearly see what action is needed. Start by addressing the Urgent/Important quadrant, then Urgent/Not Important, followed by Not Urgent/Important and Not Urgent/Not Important.
The Best Way to Reduce Financial Stress
The method described above is not a magic bullet to prevent financial stress, but it does represent a simple and effective plan to reduce it in a manner of minutes.
No matter what obstacles your present situation has placed in your way, the presence of an action plan can provide the hope that you need to channel your emotions into action. Grab a pad of paper and pen and create your plan today!