5 Ways to Reduce Financial Stress Right Now
With the current economic situation, many Americans are feeling anxious and worried about their finances. No matter your situation, there are things you can do right now to reduce financial stress.
doxoINSIGHTS COVID-19 Impact Report, published early May 2020, gives us a pretty good idea of the economic impact this virus has taken on Americans.¹
- 69% of households don’t have enough in savings to last 4 months.
- 35% of households cannot make it a month without having a cash shortage.
- 59% of households aren’t sure about their ability to cover upcoming rent or mortgage payments.
And a whopping 82% of those surveyed are worried about making ends meet until the economy starts to recover. Interestingly, younger generations are more worried than older age groups.
It doesn’t matter if you are still receiving a steady paycheck, have been furloughed, had a decrease in salary, or you or your spouse has been let go…
It’s important to protect what you do have and prevent further financial troubles because we don’t know what’s going to happen.
Keep reading for 5 ways to reduce financial stress right now.
#1 Get Engaged with Your Finances
Perhaps the quickest way to reduce financial stress is to get engaged with your money.
This means sitting down and reviewing your finances: your spending habits, household expenses, debt, savings, and investments.
If you know where you are and where you stand, you can make financial decisions from an empowered place.
Once you’ve reviewed your financial situation in its entirety, you can see what steps you need to take.
You’ll also be able to spot any knowledge gaps you have.
Let’s say you have little in savings, your employer cut your paycheck 25%, and you are tight on cash.
If you have a 401(k) with your company, you may be wondering if you should take out a loan or withdraw from your retirement savings.
This is the perfect time to educate yourself on what options are available to you and really understand the downside of doing so.
After all, the last thing you want is to make a financial move now that hurts you later.
#2 Ask for Relief from Creditors
If you aren’t sure how you’re going to pay your mortgage or rent next month, your utilities, car loan, or credit cards, you aren’t alone.
36% of Americans are paying bills late or will have to in the next month.²
One simple way to reduce financial stress is to inquire about what payment options are available to you.
While it’s up to the discretion of each company (or in the case of rent, each landlord), many companies are granting customers leeway in paying their bills.
In some cases, they are allowing customers to pause payments for a period of time or being flexible with payments.
Don’t wait until you can’t pay to reach out.
Be proactive. If you think you’re going to be stretched or unable to pay next month, inquire as soon as possible.
The last thing you want is to assume creditors will automatically waive late fees because of this crisis.
When it comes to rent, many cities have temporarily halted evictions right now. If you aren’t sure how you’re going to be able to pay rent next month, first look into your rights as a tenant before you speak with your landlord.
To provide relief for student loan borrowers, the CARES Act placed all federal student loans in automatic forbearance. Federal student loan payments are automatically stopped from March 13, 2020, through September 30, 2020.
The CARES Act does not apply to private student loans. However, many institutions are providing financial relief and allowing borrowers to pause monthly payments. Should your lender allow you to pause your payments, interest will still accrue on your loan balance.
We recommend contacting your lender and explaining your financial situation. Be honest and see if they will work with you.
#3 Cancel Subscriptions You Don’t Need
I know you hate to hear it, but it’s a good time to review your monthly subscriptions and cut what you don’t need.
If you have a budget, go through it line by line and see what you can cancel. If you don’t have a budget, look at your last 2 bank statements–highlight all the items you can cancel.
Once you have your list of services you can cut, do your research and look into the terms of the agreement. If you have to pay extra to cancel early, do the math and see if it makes sense to do it now or wait.
Make sure you take the money saved and either stash it in savings or pay on upcoming bills. Avoid the temptation to spend it on takeout!
#4 Save Whatever You Can
The situation many Americans find themselves in is party due to lack of savings.
Having a larger savings cushion may have potentially made this crisis less stressful. But what is done is done.
Looking to the future, having cash saved may help greatly reduce financial stress.
If you are still receiving a full paycheck or if you have cut expenses to cover your bills, consider redirecting some of your usual expenses into your emergency savings account.
Save money you would have otherwise spent on…
- Dinner out with friends and family.
- Gas.
- Rideshares or public transportation.
- Lunch during the workweek.
- Morning coffee at the drive-through.
Even if you can only set aside $50 or $100 a month until the economy picks back up, you’ll be glad you did.
#5 Talk to An Expert
Being proactive greatly reduces financial stress. If you’re worried about your financial situation or are unsure about your investments, reach out to a third-party expert.
If you are concerned you don’t have enough money saved or are embarrassed about your current situation, don’t be.
The worst thing you can do right now is stick your head in the sand and do nothing.
Speaking with a third-party expert helps take the emotion out of your situation and helps you make sound financial decisions…not just for now, but for the future.
At 401(k) Maneuver, we exist to help employees grow and protect their 401(k) accounts. We not only strive to be your source for retirement savings education, but also how to be a good steward with your money.
We invite you to check out our no-cost 401(k) Masterclass Videos.
In just 13 minutes, you’ll discover 3 strategies that may…
- Improve Your Account Performance – Have more money, creating a fulfilling retirement.
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We regularly post videos with financial information and updates. Check us out on YouTube.
Sources:
- https://www.doxo.com/insights/doxoinsights-covid-19-impact-report/
- https://www.doxo.com/insights/doxoinsights-covid-19-impact-report/
