It is normal to feel worried and anxious about your money during this pandemic. Millions of Britons have already cut down on their expenses as the need to stockpile on cash is increasing. What are the best practices to deal with financial anxiety and money worries?
Financial management is not only important for people who do not have money problems. It may occur anytime and given the current situation of the COVID-19 crisis, 8 in 10 Brits are worried about their money as per a new report. From cancelling magazine subscriptions to gym memberships – everyone wants to have a tighter grip on their finances more than ever. The economy had shrunk way before the outbreak accelerated. The declining rate of activities, specifically in the construction industry hindered the growth of the economy. The Office for Budget Responsibility has warned that by June the economy may shrink by 35%, which added to the poor economic climate of the UK.
During such grave times, you need to plan your finances as the future has become unpredictable for the entire world. With such news taking up 80% of your feed every day, it is quite normal to feel anxious about your finances. Most of us also do not feel comfortable about a discussion on money due to a variety of reasons. However, you need to overcome those hurdles to take the money matter under your control.
In this article, we will discuss:
- What is financial stress?
- What are the 4 top signs of financial anxiety?
- 5 ways to deal with financial stress during the pandemic
- 3 tips to tackle the money worries like an expert
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What is Financial Stress?
Before understanding the impact of financial stress, we need to understand what it is. It has the power to disturb every corner of your life. It doesn’t get on you initially, it takes to build up and then it starts affecting different spectrums of your life. The impacts can be catastrophic for your relationship and your health as well. Sudden loss of employment, unexpected expenses, debt management issues lead to financial stress. You should seek help and advice from debt relief organizations to help you get into a better and improved financial position. Some of the debt charities also offer free debt advice to people in the UK.
Here’s a list of organizations that you can reach out:
- Money Advice Service
- National Debtline
- Citizens Advice
- Stepchange
According to a report, the demand for help related to debt has witnessed a significant surge in the UK. The top 3 reasons for the debt reported were redundancy (17%), illness (16%), and reduce income (17%). Contact helplines as they are experts who are trained and will help you to find the root cause of your debt problems to treat them. But how do you know that you have financial stress?
Top 4 Signs of Financial Anxiety
We all carry the weight of finances on our shoulders, but you have to spot it when it becomes heavier than ever. It may pose a problem for those people who do not feel comfortable sharing their financial conditions with their friends and family. However, there are a few telltale signs that may help you in diagnosing your struggle with money.
Overspending
This is one of the most common signs, which is often overlooked by millions of us. Your spending habits and pattern reflects your financial position. If you spend way more than you can afford or need, then possibly you are dealing with financial anxiety. We often live in denial as we do not feel the necessity to discuss our money with someone. Identifying this sign is a tad bit tricky, however, you have to manage it tactfully. A few parameters that you may consider to verify if you are overspending are:
- You spend more than you earn.
- Your credit card is always maxed out.
- You tend to spend more on unnecessary things and you do not use that money to pay off bills and debts.
- You are adamant about changing your overspending habit.
Living Payday to Payday
You know you are in trouble if you are living from payday to payday. Most of the Britons find themselves in such predicament. According to a UK-wide survey conducted by Lloyds Bank in partnership with YouGov, 1 in 5 Brits do not have enough savings to help them sustain for even a month in case of a sudden loss in employment. If you are constantly scrambling for making ends meet, and you wait for the paycheck to arrive every month – then you have financial anxiety.
Avoid Money Talks
You do not indulge in any kind of financial discussion as it triggers you to feel low and depressed. But you still do not open up about your money issues even with your loved ones. People often do not check their expenses as it may depress them. They become secretive even with their self to a great extent when it is about money. A recent study has revealed that 25% of Britons find it easier to talk about mental health and infertility at length as compared to personal finances. This is one of the most crucial signs that you may recognize in the early stage as you will always feel withdrawn when such subjects are raised.
Overdue Bills
Overdue bills are a sign that you are drowning in debt worries. Your bills are not piled up overnight, it takes months, and sometimes, even years for it to become unmanageable. You skip one bill, then you miss another, then you waive off the 3rd one assuming that you will pay them all the next month. And along with a new month comes a new bill. Suddenly you start procrastinating your bills that you are receiving it may start debilitating you. You spend so much money on things and activities that you do not need that you do not have enough savings to pay off your current debt that you have accumulated.
How do you get rid of this situation? What do you need to do get better control of your money and to fight money issues?
5 Ways to Deal with Financial Stress during this Pandemic
Given the uncertainties of the current economic situation in the country, everyone is planning to battle with their financial challenges. 6.3 million people have been furloughed according to data published by the HMRC. With each passing day – issues are mounting up due to COVID-19 pandemic. The entire globe is heading towards a recession that is deeper than the Great Depression. The wealthiest countries are witnessing the collapse of inflation at the fastest pace and consumer demand is evaporating as businesses have been shut down temporarily. These are certainly very difficult times and it may become worse in the coming days. However, if we keep ourselves prepared to face the storm that is heading towards us, we may take it down. Here are 5 ways to deal with your financial stress during this pandemic and how you can cope with a financial crisis.
Be Realistic
- Being reasonable is the need of the hour. Determine your grey areas and start working on it. Now is the right time when you can easily cut down on unnecessary expenses as the entire nation is under lockdown. Start with a budget and note down every expense that you make each month. Rate them according to their priority and necessity. Once you are done with an exhaustive list, screen it and calculate how much you spend on things that you never need. Start paying attention to your money and be regular in checking your account balance at least every week.
- Most of the people make budgets and they forget them within 3 days and start their old routine of overspending. You need to master your spending habits to overcome your financial problem. A budget is an extremely important financial tool as it allows you to know how much money you can spend on a particular thing and exactly when. When you become consistent in making and sticking to the budget, you may find some extra money every month. Use that money judiciously by putting them in an emergency fund or towards debt repayment.
Take Small Steps
- Always start small. Remember the old phrase? “Take care of the small things and the bigger things will take care of themselves.” You need to implement this in your lifestyle. Find the little areas of concern and start working towards mending them. Rome was not built in a day. Similarly, you cannot get rid of the debt in a single day. Be patient and consistent with your healthy financial practices. If you have multiple debts that you find it difficult to handle, talk to some experts and take a debt consolidation loan. If you do not think that consolidating your debt is a great idea right now, there are other alternatives for help. Explore every option that is available to you as it will ease the process.
- Start meeting your financial goals to keep up with the budget that you have made. And be honest to yourself. It sounds easy when we say just stick to the budget. But we fail most of the times. If you find yourself spending more money that is out of your budget, put that in the planner and see how you can compensate that.
Build a Safety Net
- Do you have an emergency fund? If not, then you may never get out of the vicious debt cycle. People who take out personal loans during emergencies and repay it on time are good with their money management. That means they are responsible for the borrower. If you are already in financial anxiety and you take out a loan that you cannot afford to repay – your credit score will be damaged. Start small and create an emergency fund that you can rely upon during dark financial times. Having some extra money for help during a crisis can prove to be beneficial. Only consider borrowing if you are confident you can meet the repayments in full and on time. Always explore other options, such as financial advice, before taking out a loan.”
- You can set aside a particular amount of money everything towards your safety net and use the rest of the money for other essential expenses. You will have to strict with yourself while differentiating between essential and non-essential services. You can also sell things that are lying unused around your home to find some extra money.
Track your Progress
Tracking your progress is one of the best steps that will accelerate your growth towards achieving financial independence. We are often surprised by the progress that we have made. Such achievements encourage us to strive further and to make improvements. Celebrate each milestone that you reach and plan out what other things that you may do to make your life financially stable and secured. The major task is to constantly remind yourself that you are doing it for yourself and your loved ones. Financial goals influence your behaviour around money. And achieving them one by one is a result of your dedication and determination. Financial goals may vary according to an individual, however, we have listed a few common ones:
- Improving credit score
- Create an emergency fund
- Cutting back on non-essential things
- Spend less money than the last month
- Save money for wedding/education/vacation
- Pay off credit card debts
Talk to Someone
- Talking to your loved ones can always help you find a solution. Even though you do not feel the need to open up about your finances to your partner, muster up the courage and talk. Not discussing your financial worries with your partners may create a dent in the relationship. Apart from that, it may also disturb your mental peace. Discussing money matters doesn’t necessarily mean that you are seeking for help from them financially. You must be missing out the emotional support they have to offer you.
- Sometimes, we sink deeper into our problems so much that it seems almost impossible to get a solution. We get a different perspective of our problem when we talk about it. Everybody is going through a rough phase right now. All we can do is become a support system for one another. There is nothing wrong when you talk about your money worries rather it magnifies your issues. That certainly leads us to find the perfect solution for it.
3 Tips to Tackle Money Worries like an Expert
Money stress can affect you, but you need to spot the positive areas of your finances. That is going to make a big impact on the way you see your personal finance. Here are 3 tips to help you tackle money worries like a pro:
Dave Ramsey’s 7 Baby Steps
From paying off your debt to building wealth – these 7 baby steps are used by thousands of people across the globe. The Financial Guru, Dave Ramsey has defined different steps (financial goals) that may help you. Take control of your money and remember that debt management is not a “one size fits all” tool. Everybody has different issues and you need to make customizations accordingly.
Define your Financial Priorities
We all have some money issues in one or the other way. To become financially independent, you need to delve deeper. Define your financial priorities and map them with your attitude towards money. Saving for your retirement is important or saving for a luxurious handbag is important? You have to decide such things basis on your income, expenses and savings.
Save for your Future
This will be the most common advice that you may come across on the internet. Plan for your retirement and move in the right direction. The earlier you start, the better it gets. You will not have to rely on anyone to help you live your life. You can also choose to invest some portion of your money to multiply it.
Creating a priority-based budget planner is quintessential in coping up financial stress during COVID-19. If you have mortgages or personal loans, then talk to your creditors. The Financial Conduct Authority (FCA) has announced for payment holidays that you can opt. However, pausing your repayments may impact your credit score. Before opting for a payment holiday, talk to your lenders and find out a solution. These are unprecedented times and everyone has been affected by this pandemic. Be emotionally, physically and financially strong. If you have a lot of debt, manage it smartly and take a measured approach. Your financial planning will take you through this.
