As we age, more and more expenses end up on our plate. From mortgages to car repairs to Nikes for your kids (or yourself), it can feel like there are endless bills to pay, and with more expenses, comes more pressure, anxiety, and stress. In fact, the American Psychological Association found that money is Americans’ number one stressor.1 Finances have remained at the top of the list since the survey began in 2007.2
When it comes to stress, the numbers don’t lie. The Proceedings of the National Academy of Sciences conducted a study that evaluated heart health changes before, during, and after a recent financial crisis and found that during the recession, both blood pressure and blood glucose levels increased in respondents, signaling a worsening in heart health.3
While many of us strive to be financially secure, I think we can agree that traditional education in our public schools does not properly equip us with the knowledge or resources necessary to be effective financial decision-makers. There seems to be a growing gap between financial literacy and our population, causing many to lose hope and get trapped in a deeper hole of debt. However, when it comes to money, there are four ways you can more effectively manage your finances, so you remain in control of your spending habits.
Tip #1: Automate Your Savings
It can be difficult to set aside money every month, especially after you’ve been anxiously awaiting your paycheck. If you struggle with putting money away, consider setting up an automatic transfer from your checking account to your savings account each month to make sure that no matter what, you’re continuously growing your savings aka cash reserves. Whether you want to be prepared for emergencies that may come up or have a dream of buying a house one day, adding money to your savings account every month — even if it’s only $100 — can get you closer to the financial stability you need to feel confident about your future. Automating your savings also goes to the cliché of paying yourself first.
Tip #2: Avoid Impulse Purchases
With so many products out there — from new gadgets to the latest fashion — it can be difficult to cap your spending habits. Instead of putting yourself right in front of your guilty pleasures, consider spending on experiences rather than material items. If your favorite past-time is browsing the mall or online, swap window shopping with a picnic in the park or a day at your local museum (some museums offer discounted prices over the weekend). While retail therapy may provide a quick hit of dopamine, you may end up feeling worse than if you had spent your time making memories instead. With these memories, your craving for consumerism may gradually die down, leaving you with more time to enjoy the simple pleasures in life. At the very least, considering your purchases is a good exercise in being mentally present.
Tip #3: Focus on What You Can Control
While it’s difficult to effectively plan for every single expense, at least have an initial plan for where your money is going to go aka directing traffic. Theoretically, every month, you know you’re going to have to pay rent or a mortgage, buy groceries, pay other utility bills, and possibly fill up on gas a few times. So, after you get your paycheck, subtract these expenses from your total amount. This will give you a clear idea of how much “fun” money you have to spend each month. If you plan to put some money into your savings account (Tip #1), you’ll want to make a note of that too. The purpose of this exercise is to make yourself more mindful of the money you’re spending each month. When you know — without a doubt — certain specific expenses are going to come up, you can start planning to make sure you’re not spending more money than you have.
Tip #4: Be More Goal-Oriented
For some people, the thought of having a goal can be terrifying as it means there is a chance they might fail. However, if you never set goals for yourself, you’ll never have complete control over your financial life. To get started, begin with a realistic goal that can ideally be achieved in less than five years, such as paying off your credit card debt or student loans. Once you’ve identified what you want to accomplish, write it down.
The simple act of writing down your goals can make it feel more real, therefore making you more accountable. Next, create a rough timetable of how you are going to achieve your objectives. This timetable could include information such as how much money you’re going to save every month, as well as milestones for each payment you’re going to make. Over time, you’ll begin to gain more confidence about your finances, in turn leaving you feeling more in control — and capable — of managing your money on your own.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.