Think back to high school and that moment when your teacher announced a pop quiz just as you sat down for class. How did you feel?
5 Basic Tips To Make Financial Stress DisappearGetty
If you were studying and doing your homework all semester, you likely felt fine. If you’d been forgoing your studies to watch Buffy the Vampire Slayer or Degrassi High and doing your homework as you walked to class, you likely felt stress.
That stress is how many people feel about their financial lives. A 2011 study showed that 25% of happiness is based on managing stress. The same study also showed that the leading factor in managing stress is planning, doing the opposite of that Buffy-watching procrastinator.
One of the best ways to plan financially and make financial stress disappear is by having and using a budget. We discuss the value of using basic budgeting tips in this Queer Money®.
Hear the easiest ways to make a budget work for you:
5 simple tips for making financial stress disappear
1. Start using basic money products
Prudential’s 2018 Financial Wellness Census showed that only 50% of LGBTQ respondents and 34% of non-LGBTQ respondents said they didn’t have a basic banking product, such as a checking or savings account. It’s impossible to achieve financial success without using the products and services designed to help you reach it.
With the power of the internet, you can open a checking or savings account at a reputable bank or one in your neighborhood as easily as you open a social media account.
2. Put at least $5 from each paycheck into a buffer account tied to your checking account
Overdraft Apps recently found that 12% of the general population has used overdraft between three and nine times in the past year. Eighteen percent, 50% more than the general population, of LGBTQ people admitted to using overdraft with the same frequency.
Therefore, assign the basic savings accounts that you open in step one as your buffer account. Deposit $5 per paycheck into this account until you have an adequate cushion to address anomalies in your spending and income. For most people, a few hundred dollars is enough.
Use this money strictly for covering shortages in your account and not to intentionally increase your spending. When you need to transfer a couple to a couple hundred dollars from this savings account into your checking, do so. Before paying anyone or anything else when you get your next paycheck, refund this money immediately.
This tip will lower your insufficient funds and bounced check fees. It’ll, also, help you stop making one step forward and two steps back with your finances. It’ll help make that financial stress subside.
Note that the Federal Reserve’s Regulation D limits the number of transfers or withdrawals from a savings account to six times per month. The need to transfer from your buffer account to your checking account should be minimal anyway but be especially cautious to not raise a red flag with your bank.
3. Gain the courage to say “no”
The adage “little by little a little becomes a lot” goes both ways with money. Saving $25 a paycheck in an emergency savings account will quickly add up and provide you a cushion to help make your financial stress disappear. However, all those little purchases that you make, whether it’s a late-night date with wine and Amazon or items in your grocery cart that aren’t on your grocery list, add up as quickly if not more so.
It’s thoughtful to give friends and family beautifully quilled or gem-accented birthday, holiday or anniversary cards to celebrate the special occasions of their lives, but $10 greeting cards add to hundreds of dollars a year. Destination weddings have never been more popular, they’ve also never been more expensive due to their increased demand. It’s nice visiting aging family living out of state, but whether you’re driving or flying the travel expenses are killing your budget.
These expenses add up quickly and only pile on top of well-known budget busters, such as never-ending special occasions, happy hours and dining out.
Gaining the courage of saying “no” more often and saying “yes” within reason will live you with more money at the end of your month and less financial stress from day-to-day. Therefore, prioritize what’s most important and say no to the less important.
4. Increase your income streams
With the growing gig economy and supporting services, there’s never been an easier time to increase your income streams. If being a Lyft driver or TaskRabbiter isn’t your thing, try your hand at blogging or other freelancing work in ways that let you be your own pseudo-boss.
If those aren’t your thing, doing overtime at work or taking a part-time job for evenings and weekends, can go a long way to increasing your income and making financial stress disappear.
Finally, using standard personal financial advice, such as reducing or eliminating debt, increasing W-4 allowances and using a grocery list will increase your take-home pay and lower recurring expenses to put more breathing room in your budget.
5. Start a budget
Finally, start using a budget. You’re never earning too little or too much money to not have a budget.
If used properly, a budget will help you never miss or be late on a payment again. Not only will this make your financial stress disappear, but it’s also the most effective way of improving your credit score. A good credit score can save your tens of thousands of dollars over your lifetime. Additionally, a properly used budget will help you find extra money in your current income stream, stop you from overspending in categories you can’t afford to overspend in and help stop you from living paycheck to paycheck.
If your goal is to make all your financial stress disappear, a dynamic budget will help you do just that.
To be sure, none of these five tips for making financial stress disappear is rocket science, but it seems to be that the easiest of financial advice is ignored at the expense of American’s financial health. Put down the remote – Buffy can wait – and start reducing financial stress today.