Effective strategies to face your financial fears

Financial worries take a toll on mental health. Every year, after welcoming the new year, when people start coming back down to earth, they realise that they are in the red. Studies have revealed that more than 50% of borrowers remain clueless about how to deal with the problem, while 46% come up with some strategies that do not help them make headway.

Some studies have also reported that January is the month that gives people the hardest time, but indebtedness continues to remain a problem throughout the year. Experts say that people spend more than their budget allows, and one of the reasons for this is the easy availability of loans from online lenders. Eventually, they could fall into the ongoing cycle of robbing Peter to pay Paul.

Money problems should be taken seriously as they could affect your mental health. Many people failing to keep their bodies and souls together spend sleepless nights. They feel an irrational fear of being sued and its adverse consequences. Undoubtedly, when you are in the red, it could be challenging to deal with your finances. Acknowledge your financial condition and then implement an effective strategy.

Strategies to face financial fears

Here is how you can get your act together:

• Understand your situation

If you are worried about your finances, you might have been avoiding checking your bills, your bank statements, etc. At the thought of checking your finances, you will have a sick feeling in the pit of your stomach, but you cannot gain control of your money unless you know where you stand.

• Create a list of things that are making you the most anxious. It may feel uncomfortable, but it is the only way to take the bull by the horns. Maybe you are living from paycheque to paycheque, or perhaps you are worried due to long-term loans with poor credit.
• Grab your bank statement to see how much money you spend every month. Your outgoings are likely greater than your incomings. It might be due to the fact that you buy impulsively or you have taken on debt beyond your affordability. Create a list of all your expenses and see which category exhausts most of your money. Use a budgeting app to keep tabs on your costs.

By taking stock of your financial condition, you will be able to come up with an effective strategy to deal with your money worries.

• Create a budget

Believe it or not, the paramountcy of budgeting cannot be underestimated. It patently reveals how much money you spend every month and where. Use a budgeting app and link it to your bank account to have all transactions in one place. Yet, you will need to record cash transactions manually.

However, budgeting does not solve the purpose of recording all expenses. You will have to categorise them and check where you spend most of the money. Once you identify what causes overspending or what weakens your budget, you should fine-tune your spending strategy.

Make sure that your budget is realistic. A budget helps achieve financial goals, which could be, for instance, setting aside for a rainy day and cutting back on discretionary expenses such as eating out, nights out, and the like.

Budgeting does not insinuate that you deprive yourself of doing things that please you. It is aimed at stopping frivolous purchases.

• Make small adjustments to save money

Savings are highly crucial. Not only do you need them to meet small unexpected expenses, but they are vital to qualify for some loans. For instance, you would need at least a 10% deposit to get approved for guaranteed car finance for bad credit in the UK.

In order to grow some savings, you will have to make little adjustments in your budget. Of course, the first step is to cut back on your discretionary expenses. The money you cut back on inessential expenses could be transferred to your savings account.

• Automate your savings. Link your savings account and opt for automation. Make sure you choose a limit that does not affect your ability to meet other regular expenses.
• Use banking apps that round up every purchase to the nearest value and transfer that amount to your savings account. However, it is an exiguous value. Over time, it becomes a significant amount of money.
• Try other savings methods, such as a 30-day no-spend challenge. This will help you grow your savings faster. There are some other hacks as well, such as stashing away 100 bucks whenever you feel like doing so.
• You should also save money on groceries by buying things that you need. Avoid stockpiling of perishable merchandise.  

Budgeting will only work in your favour if you spend money cautiously.

• Discuss your money worries

It could be difficult to handle money worries. You might be ashamed of your own money-handling methods, but you need to address the concern sooner rather than later. You likely have no clue how to tackle your financial problems. You must strike up a conversation with someone you trust.

Having an honest conversation will help you understand where you are slipping up. Debt is a grey area. Most people do not realize they have taken on more than their repaying capacity unless it is too late, and the reason for borrowing money is not the rising cost of living.

Expressing your worries will let you know how you can tackle debt payments and control your spending. Discussing your concerns with someone who can bail you out helps you identify problems and their solutions. They will likely motivate you even in difficult times.

• Seek professional support

You are probably not comfortable discussing your financial worries with your friends and family. Further, they may not have the solution to all your problems. You should seek professional support. There are several debt management companies to advise you about ways to deal with insurmountable debt. If you are highly stressed or worried about your financial condition, mental health support is also available. Take counselling and act upon the advice.

If you are struggling with bill payments, financial aid from the government is also available. Whether it is rent or energy bills, you will receive the optimal support to get by. Those who are single parents and bearing the responsibility of a child or children could also exclusively access some aid and financial support from the government.

Benefits are also available to some people regardless of their employment status. Check your eligibility before applying for those benefits.

The final word

At times, you might be worried about your financial condition. That is normal, but if it is taking a toll on your mental health, you should immediately understand that now is the high time you address concerns.

First off, you need to take stock of your financial condition. Not until you know where you stand will you be able to have control of your spending. Discuss your worries and financial condition with someone you can trust. Take help from debt advisors if the problem is too serious. Understand where you are slipping up, and do not repeat those mistakes.