7 Tips for a Healthier Financial Outlook

In the face of inflation, a growing number of Americans find themselves grappling with constant financial stress, hindering their ability to lead the life they aspire to. The first step to getting out of the mess of financial obligations is developing a comprehensive plan to navigate the obstacles you will likely encounter on your journey to freedom. To that end, this article outlines seven effective tips to help you reduce financial stress and achieve lasting peace of mind.

Financial stress is a particularly crippling form of emotional burden

Financial stress is characterized by a persistent concern about one's financial situation, exerting a profound impact on both mental and physical health. A study by researchers at George Washington University revealed that a significant proportion of adults aged 21 to 62 experienced stress and anxiety related to personal finances even before the onset of the pandemic. The Census Bureau's household pulse survey revealed that over a third of all Americans still currently grapple with financial stress. It may stem from both short-term challenges, such as sudden job loss or unexpected expenses, and long-term worries about retirement savings. Regardless of the specific cause, financial stress can take a significant toll on the body. Elevated stress triggers the release of adrenaline and cortisol, initiating the body's "flight or fight" response. Prolonged exposure to financial stress can lead to increased blood pressure, sleep disturbances, elevated heart rate, weight gain, and other health issues. Addressing financial stress is not just about financial stability; it's about safeguarding overall well-being. If you're experiencing side effects as a result of financial stress, seeking advice from a medical professional is important.

That aside, if you’re looking for financial and personal strategies to get your financial life back in order, here are seven tips to guide you:

1. Track your spending habits

Are you aware of exactly where your income disappears month after month? It’s important to make a habit of tracking your spending regularly. This allows you to pinpoint expenses, identify essentials, cut unnecessary costs, and save money. It's empowering to see exactly how money goes in and out of your accounts, enabling you to make informed decisions, such as cutting daily luxuries like Starbucks or unused subscriptions.

2. Establish and Adhere to a Monthly Budget

By tracking spending, you can seamlessly transition into creating a monthly budget. You can use apps like YNAB or Mint or more traditional methods like a spreadsheet, but no matter how you do it, DO IT! A budget reduces the risk of overspending. While initially it can cause you some stress, having a budget puts you in the driver’s seat, providing a sense of accomplishment as you adhere to your financial plan.

3. Develop an Emergency Fund

Creating an emergency fund is a key component of financial security. This fund acts as a safety net for unexpected expenses, such as job loss or significant medical bills. It shields you from piling financial stress on an already challenging life, offering peace of mind and stability during uncertain times.

If you currently have debt, begin by building a modest emergency fund. Allocate $100 monthly from your budget to contribute to this fund, as this sum will accumulate significantly throughout a year. Over time, once you've successfully eliminated consumer debt, we generally recommend establishing an emergency fund equivalent to 4-7 months of basic expenses. The specific savings target is at your discretion, with the primary aim being to alleviate financial stress.

4. Use automation to your advantage

Automating transactions can go a long way in facilitating the growth of your savings. This method serves as a proactive approach, diminishing the probability of frivolous spending and ensuring a steady increase in savings month after month. Likewise, streamline your bill payments by setting up automatic transactions. While this minimizes the stress associated with missed payments, it's crucial to monitor bills to verify they align with your budgeted amounts.

5. Add another income source

Expanding your income sources can be pivotal in easing financial strain. Explore possibilities such as negotiating a raise with your employer, increasing your working hours if you are hourly, taking on a side consulting gig, or delving into activities like creating YouTube content. However, it's essential to be realistic about your time commitments and prioritize self-care.

6. Spend time in nature

A brief 20-minute outdoor activity, such as a walk, hike, or visit to the beach, can significantly reduce stress, anxiety, and enhance your overall well-being. This remedy comes at no cost and provides a refreshing escape.

7. Get professional help

Consider seeking professional guidance by consulting a financial advisor if your financial challenges seem overwhelming. A financial planner can assess your specific situation, identify challenges you’re currently facing, and formulate a comprehensive savings and investment strategy. This proactive approach not only addresses present financial needs but also lays the groundwork for a secure financial future. The assurance that a financial expert is overseeing your situation can instill a sense of control.

In conclusion, managing your finances effectively is crucial for reducing financial stress. Gain a clear understanding of your current situation, establish a budget, and make steady improvements to address your primary concerns.

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Views expressed by Paladin Retirement Planning & Brion T. Walters are theirs alone and not affiliated with Portfolio Medics. This summary is for informational purposes only and shall not constitute advice and are not an offer to buy or sell, or a solicitation of any offer to buy or sell investment products. Different type of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either by suitable or profitable for your portfolio. All investment strategies have the potential for profit or loss and past performance is not guarantee of future success. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there is no assurances that it will match or outperform any particular benchmark. Past performance is no guarantee of future performance or profitability. The types of investments discussed also do not represent all the securities purchased, sold or recommended for clients. Stated information is derived from proprietary and non-proprietary sources that have not been verified for accuracy or completeness. While the firm believes this information to be correct, we do not claim or have responsibility for its completeness, accuracy or reliability.