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Six tips on how to cope with financial stress

January 28, 2015

By Paul Brucker

This is Part Two of a two-part series for National Financial Wellness Month. 

Do you have a pervasive feeling of panic about your financial situation? Then you may be suffering from what Oprah magazine calls “Money Anxiety Disorder” (MAD). Money, or rather lack of it, is a chief cause of this complaint. But often that’s only part of the problem. Here are six steps to help you develop a back-in-control feeling with your finances.

  1. Pinpoint what’s causing your financial stress and make a plan. What exactly is the problem you’re facing? Do your expenses regularly surpass your income? Have you maxed out your credit card? Do you have enough money for retirement? Try evaluating your situation objectively and dispassionately – as if you were an outsider to your personal state of affairs. Then, write down the sources of your stress and commit to a budget or plan that will handle them. About 80% of non-retirees and 88% of retirees with a financial plan of action are confident that they can achieve their goals, according to recent Gallup survey.
  2. Avail yourself of available resources. A lot of people believe that thinking harder and trying harder is all that’s needed to succeed. Focus, determination and willpower are important, but sometimes a helping hand from experts can give you the extra boost you need. To help develop your financial plan, don’t be shy about using the resources available to you. If your company offers a financial wellness program as a benefit, take part in it. If you are deep in debt and need to pay off hefty bills to rebuild your credit, get in touch with a debt management company. (Alliant members can use the services of GreenPath Debt Solutions for free). If you need to develop a retirement and investment plan, consult with a financial advisor. If you need to broaden your knowledge of financial matters and want tips on how to handle various financial issues, read financial books or articles, such as those in the Alliant Credit Union blog. If you need help to get an ongoing clear sense of your income and expenses, use a personal financial management (PFM) tool such as the one available in Alliant Online Banking. Our PFM application enables you to create and manage your budget, track your spending and identify ways to save and meet your financial goals. Learn about PFM and other financial wellness resources available to Alliant members.
  3. Earn extra income. Perhaps you can make money with another source of income while you keep your day job. You may get a second job, do freelance work or sell big-ticket items – such as a spare car – that you have but no longer need.
  4. Create an emergency fund. The best move you can make to feel more financially secure is to build up an emergency fund that you can live off for three to six months if you face a serious financial setback, such as a job loss or major medical problem. In fact, having an emergency fund in your savings is a better predictor of financial well-being than paying off all your debt, according to experts, such as University of California-Berkeley Finance Professor Terrance Odean.
  5. Get an attitude tune-up. While you’re planning for tomorrow, enjoy the benefits of living in the now. Rather than obsessing about the doom and gloom of financial problems, take some time out for yourself. If you feel fear, shame and anger about your financial situation, acknowledge that. But then take steps to be gentle on yourself. Think of any positive financial indicators, such as your home going back up in value or that you’re contributing to your 401(k) retirement fund at work. Remember, for what it’s worth, that many highly successful people had their share of financial hard times along the way. Remember that your net worth does not equal your personal worth. Steer clear of negative coping habits, such as alcohol abuse, gambling, overeating and impulse buying. Instead, try activities such as working out at a gym, yoga, meditation and journaling. While these activities won’t make you richer, they can help you handle and feel better about the money you do have, says Dwight Damon, president of the National Guild of Hypnotists.
  6. Keep your guard up. If you take steps to achieve and maintain your financial well-being, such as paying down debt and saving more, congratulations. But it’s also important to keep on keeping on with them. The Great Recession of 2009 made a lot of people feel how financially vulnerable they are. The touchstone of once having Money Anxiety Disorder is not such a bad thing. If anxiety motivates you to make positive financial changes and continue to save more, you don’t want to relieve yourself of all money anxiety, says Professor Odean.

Read Part 1 of this two-part series: The impact of financial stress
 

Need help with your retirement plan? Visit our website or call 800-328-1935 to set up a no-cost, no-obligation financial planning session with a financial consultant with Alliant Retirement and Investment Services.