5 Steps to Deal with Your Financial Burden
Many of us cannot avoid being stressed with financial burdens at some point in our life. If you can get through these tough economic times and regain control of your finances, you will be able to focus on other important areas of your life and relax. So, how can you deal with your financial burden? Let’s dive in.
A financial burden can result from a loss of work, being in debt or not making enough money to meet your needs such as paying rent, paying the bills, and buying groceries. While stress or anxiety does not solve much, having a plan can reduce your financial burden. Here are 5 steps to deal with your financial burden and make it easier to function each day.
1. Identify top sources of the financial burden
If you want to get rid of the financial burden, start by identifying the specific issues making you stressed or anxious. Whether the problem can stem from credit card debt or upcoming bill payments, pinpointing the source of your financial burden will help you determine your next move.
Instead of bottling everything up or avoiding it, you should look directly at the financial health causing you stress. Trying to talk face-to-face with a trusted friend or loved one can not only relieve your stress but also help you put things in perspective. Maybe the person you talk to is not able to fix your problems or offer financial help, but at least they are willing to talk things out without judging or criticizing.
2. Create a budget
A monthly budget is a financial road map for taking control of and understanding your finances. This powerful tool guides you to make the right spending choices and have a full picture of where your money is going every month. Also, it can help you look for opportunities to redirect some of it to the areas causing your financial burden. Hence, if you do not have a budget with irregular income, create it as soon as possible.
You can start with your net income, the amount you take home every month after taxes. List your expenses from your rent or mortgage to unnecessary purchases, then set up automatic payments for recurring bills and savings.
Have you ever heard that your enneagram core motivations and enneagram types core motivations can affect how you treat money? So, you should categorize your spending into needs and wants, and then make a separate plan for each one.
Modifying your budget to prioritize goals can help reduce your overall financial burden, such as paying off a high-interest credit card. In other ways, a budget ensures you cover your immediate expenses, so review it every three to six months or as your circumstances change.
Planning and sticking to a budget may be so challenging at the beginning. But once you are accustomed to and understand what to do, the amount of time you spend worrying about financial burden is significantly reduced.
3. Get rid of your debt
Debt, especially credit cards, is a top source of the financial burden that deter many people from getting in the way of savings goals. Therefore, taking steps to get out of debt can reduce your financial burden and relieve your anxiety.
You may be able to get rid of your debt more quickly by paying off one account at a time and focusing on your lowest debts or highest interest rate first to avoid paying higher costs over time. Hence, do your research and pay attention to ways to beat the highest interest rates on savings accounts.
Though being debt-free is not easy, picking a payment strategy and sticking with it can help you find your financial burden is reduced, or possibly eliminated. If you have multiple cards, make the minimum payment on each. Also, you have to avoid taking on new credit card debt.
4. Prepare an emergency fund
If anything unexpected happens such as car repairs, job loss or illness, your emergency fund will give you a buffer. Hence, you should have three to six months’ worth of emergency savings set aside before looking at longer-term savings goals.
Having contingency funds for emergencies seems tough in the first few months, especially if you are struggling to make ends meet each month. Do not worry too much! To build up your emergency fund, you can start by putting aside a small amount, whether it’s $10 or $100 each month, but in the ideal world, you should have at least $1,000 in your emergency fund until you are out of debt.
5. Earn more
If you are under pressure for money, it is time to create extra sources of income. Knowing how to increase your income without being stressed can be tricky. You can think of switching careers or jobs or finding side jobs to make more money.
Of course, it’s easier said than done. We’d all like to earn more but if you’re under financial strain, then there are ways to become resourceful and find new revenue streams.
There are different ways you can work from home and earn more money, so you should take time to find or search on the Internet to find the right niche. You may also consider selling any unused items to build up that cash as quickly as you can.
Another way to increase your income is by investing. If you have knowledge and experience in the financial market, investing is a great idea. Otherwise, you can start investing in yourself so that you can not easily fail or lose. Then, take part in this market to reduce your financial burden and grow your financial assets.
You can research three options: Equity, Debt, and Alternative investment to find the best funds to invest in.
For equity, you can choose direct stocks or mutual funds. Investing in direct stocks is very complicated and risky as it requires a lot of financial knowledge. If you are not confident in this market, consider an equity mutual fund for ease of access.
The minimum amount required to invest in debt is pretty high, so you should take consideration carefully before taking action. Also, you can consider investing in a five-year-Debt mutual fund instead which is better to get the overall risk of the portfolio down.
Besides, we recommend alternative investment options such as Gold, cryptocurrency investment, REITs, etc. You can get started with minimal investments and gradually build your portfolio over time, even if you are on a tight budget.
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