Financial Stress - How to Keep Finances From Causing You Stress

© Michelle Howard Smith - All Rights Reserved

A high rate of marriages dissolve as a result of financial stress caused by money management problems. Finances or the lack thereof can cause more stress than any other marital problems. Often people are quick to blame others or the economy for their mismanagement of finances. The financial stress that mismanagement of finances causes can lead to abusive behavior and even suicide. People will even compromise their values (lying, stealing, and even murder) for the sake of the dollar when they are experiencing financial stress. If there are children in the home, the stress that financial problems cause affects them as well.

In order to prevent financial stress, it’s critical to employ practical life practices and behaviors. Managing money is not inherent. The microwave society we live in is full of glitz and glamour and people have been conditioned to function with a “get it now” mentality. Personal debt is at an all time high. Here are some practical actions (notice I didn’t say tips. These are serious things you can DO to manage your finances more effectively) to take to combat stress as a result of financial problems and mismanagement of finances:

1. Create a budget and stick to it. Prioritize your expenses by order of importance as follows:

• Tithe (10% of your gross pay) to your church. I realize this may be controversial for some, especially for those who don’t even believe in God. However, for me, this is not optional because God is the Source of all things. I’ve experienced God’s blessings and provision in my life too many times to argue the point. When you tithe, you are giving to God, not to a person. Some people use the excuse that they can’t afford it or that the preacher is stealing their money. Well for one, when you trust God and are giving with a pure heart, He will make sure you are taken care of. When you honor Him, He honors you.
• Again, this is controversial for some but since this is my website and my article, I’m going to write what I believe to be true based on my personal experiences. You can take it or leave it. I’ve lived as a tither and a non-tither. Life is so much better as a tither. My life has substantial proof of how important this issue is.  I'm able to avoid the financial stress that others are experiencing by obeying God.
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• Rent/Mortgage – Having a roof over your head is more important than paying your car note! Where would you prefer to sleep?
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• Groceries – You gotta eat! After paying the rent/mortgage, you need to make sure you have food to live. Use wisdom in this area. Write out your grocery list when going shopping. Don’t shop walking through the supermarket unprepared. You’ll buy unnecessary food like cookies and you’ll wind up spending more money than you may have budgeted.
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• Transportation (car note, parking and gas or public transportation) You need to earn a living and you can’t do that if you can’t get to the job………unless you work from home
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• Utilities – Electricity, Gas, Water, Telephone, Cell Phone, Cable, Internet (Note: Telephone, Cell Phone, Cable and Internet are optional luxuries. If you don’t have enough money in your budget, you may need to do without these until you either increase your income or reduce your expenses (bills)
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• Clothing – Get versatile and coordinate sets that you can mix and match
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• Credit Cards – Pay your bills on time each month even if it’s just the minimum payment but try to pay a little more
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2. Reduce your Credit Card Debt – Strategies:

• Take your credit card with the lowest balance on it. Pay any extra money toward it, not just the minimum. If you don’t have any extra money, get creative and begin looking for miscellaneous purchases you can eliminate (ex: daily snacks and soda from the vending machine). Once you’re done paying off the card, start paying off the next card with the lowest balance in the same fashion and apply all that you were paying on the first card to the 2nd in addition to it’s minimum payment. Do this for every credit card until you are debt free. It will produce a domino effect.

*IMPORTANT: Before beginning this debt reduction strategy, make sure you save at least $1,000 that you don’t spend except in the case of an emergency. Don’t get caught in an emergency (ex: a large car repair bill) and then have to use your credit cards. You’ll undo the progress you’ve made toward becoming debt free. Check out Dave Ramsey’s Total Money Makeover for more details on the complete strategy to become debt free.

3. Make it a habit to only pay for your purchases with cash or check (make sure you keep track of your checking account balances so you don’t get into trouble over-drawing

4. Seek the advice of a qualified and certified financial planner.

Be careful. A word of caution – Not everyone with the title of Financial Planner or Financial Advisor is qualified to manage your finances. Many of these so called money experts are nothing more than salespeople. If you find that a financial planner/advisor is trying to sell you a suite of products that you get from their company, that’s a good sign they are just trying to make a commission. Also, don’t be afraid to interview your financial planner/advisor. After all, they will be managing YOUR money. You have every right to investigate them. 

5. Save & Invest regularly.  Pay yourself first.  If you don't have a residual savings account, you will find yourself using your credit cards to get out of emergencies.  Also, before you invest, make sure you investigate. You don’t want to incur more financial stress by investing in a company you haven’t qualified and then you lose money. 

6. Get a separate Disability policy from what your employer offers. Many people have disability insurance on their job but ask yourself, “Am I able to maintain the same lifestyle I have right now with the percentage of my salary I’ll receive if I were to become disabled and unable to work?” Chances are you won’t be able to do so if you are in debt or living off of a single income.

7. Life Insurance – This should not be optional if you have children. Any good parent wants to ensure the welfare of their child(ren) in the event of their untimely passing. An individual with children or dependents should carry enough life insurance to replace any income lost as a result of death. This income combined with other sources should be able to care for your dependent(s) until they are able to care for themselves. If you have no dependents or you have enough money to pay for your funeral and final expenses, life insurance is not required. Additionally, there’s no need to have huge amounts of life insurance when your kids are all grown up. Life insurance should not be used as an investment (would you invest your auto or home insurance at the risk of losing some or all of its value?). Consider Term Life Insurance, 20 years. Here’s a good read by Suze Orman: http://biz.yahoo.com/pfg/e12baby/art011.html