When I was a younger man, I was financially illiterate and irresponsible. And I didn’t view money as a financial tool to afford me more options in life, I viewed it as something I was entitled to have. I didn’t know how to cope up with a financial stress.
My point is that having the wrong mindset about money made me spend it as fast as I earned it. And then I would get upset and frustrated at the consequences of my own actions without acknowledging my money mindset caused it.
And the cycle would continue as I put myself in a financial quagmire for over a decade. I am still digging myself out of the financial mess I made of my life ago.
My advice to you is to look in the mirror if you have to cope up with a financial stress. Respectfully, you may unwittingly be the cause of your financial problems through your mindset. You may have a misguided mindset when it comes to money. Or, your financial mindset may have worked before but has become obsolete and impractical to use as financial realities change and evolve.
For example, the way you thought about money and budgeting must adapt and change in a world where inflation is the highest it has been in 40 years. Keeping the same 3% annual inflation rate mindset about money in an 8% annual inflation world isn’t going to help you, your family, or your small business.
7 Ways To Cope Up With a Financial Stress
These are some generalized tips to help you cope up with a financial stress. Use this list as a starting point to create your own customized list of solutions to your financial problems. Consult with a financial advisor if possible.
Learn to Meditate
I am not trying to get you to revert to a Zen lifestyle with this suggestion. One of the best ways to cope up with a financial stress is to learn to stay calm.
We human beings are great at making the worst financial decisions, especially those with long-term consequences, during times of mental stress.
Scientific studies have suggested that experiencing short-term mental stress over financial problems can negate one’s cognitive abilities to make good decisions at the moment or appreciate the financial consequences of choosing badly.
Stressing out and making bad financial decisions will only make you stress out more and then make more bad financial decisions. Desperate people act desperate.
What you must do is become calmer, self-assess, plan, and use long-term financial strategies t approve your situation. And that won’t happen if you stay constantly stressed and panicked.
Learn about meditation on YouTube. Read up on yoga. Spend 20 minutes daily practicing calmness of mind (Or as many minutes as you can spare). Calm minds make more money.
Forgive yourself. You are not the first or last person to find yourself in desperate financial straits. There is no shame in falling into debt. The only shame is in not learning from your mistakes and making the problem worse. Forgive yourself and learn from your mistakes.
Make a Detailed List of Your Financial Problems
Sometimes our financial problems can become so overwhelming that we turn them into one general problem. They become like a monster under the bed or a Marvel supervillain; something so terrifying and unbeatable that the mere thought of dealing with them becomes unbearable and stressful.
A good way to cope up with a financial stress is to confront them, name them, and deal with each financial problem accordingly. Write down every financial problem you have that is keeping you up at night.
Revisit this list every week or month to see how well you are conquering them. Confront your problems so that they don’t seem unconquerable in your mind.
Develop a Customized Debt Reduction Strategy
The first rule of getting out of a hole is to stop digging.
Now that you have a detailed list of your financial problems, you need to develop a customized debt reduction strategy based on that list. Developing a customized debt reduction strategy should help you cope up with a financial stress.
Having a customized debt reduction strategy is the first step in dealing with your financial problems. Your financial problems may not be solved anytime soon, but after developing a debt reduction strategy you can begin envisioning light at the end of the tunnel.
Pick a debt reduction strategy that works for you. The “Snowball Method,” method involves paying off debts individually, usually starting with the smallest debt first. Or you can use the “High Rate Method,” which involves paying individual debts starting with the highest interest rates down to the lowest ones.
After you start a debt reduction strategy don’t assume any new debt. Stick with the strategy and monitor results. Consult with a financial advisor and you may be able to accurately calculate when you will eliminate your debt if you stick with your strategy.
This is a good way to cope up with a financial stress.
Develop a Debt Reduction Budget
Start prioritizing needs over wants. Create a purchase diary for a week. A purchase diary can act like a prototype budget. Make a list of everything you buy for a week and make sure you keep a running tally of how much you spend.
A budget is basically the same thing. Make a daily, weekly, and monthly list of your income, expenses, and debts. Separate anything you don’t need from the list and recalculate.
Right now you need to reduce your debt and stress. Anything you “want,” to buy which isn’t a necessity must be stricken from your budget.
Downsize
Sometimes we believe that we are the sum of our possessions. Our very identities can become inextricably linked to owning a house or a car.
However, compiling debt dramatically reduces your ability to make choices in life. And unmanageable debt can change your identity into “homeless” or “indigent” if you don’t take control of it early enough.
A good way to cope up with a financial stress is to start considering downsizing strategies. Sell your house and move into a smaller one or an apartment. Downsize to a smaller car or start taking public transit. Start buying generic labels only whenever you shop.
Consider how you can downsize your life and you may be surprised how much money you can save.
Save Money
You not be able to start saving money now, but whenever the opportunity arises, save money.
You can automatically transfer money into a savings account every time you get paid.
How much you save is not as important as starting the habit. Saving money will be a positive practice to focus on instead of stressing about debt. And when you start saving money, you can start emergency funds that can keep you from falling in debt again in the future.
Call Your Lenders
Your lenders will have no incentive to be too accommodating if you let your debts balloon out of control, especially if you spend all your time ducking their calls.
Try to contact your lender preemptively if you know you are going to miss payments. Some lenders may give you extra time to pay or help you develop a deferred payment schedule.
Be upfront with your lenders about your ability to pay and keep communications open. They want to get paid and it benefits them to help you find a solution.
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