Breaking Free from Financial Anxiety: A 10-Step Guide

23/06/2023
Live Well Diary Team

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financial anxiety

There’s no denying that financial anxiety is capable of causing significant harm to our mental and emotional well-being.

Money problems weigh heavily on our minds and cause considerable stress in our daily lives. 

So, let’s try and break free from financial anxiety. This step-by-step guide to help start the process.

Step 1: Acknowledge Your Financial Anxiety

Let’s face it; money issues can be a significant stress in our lives. The fear of not having enough funds to pay monthly bills, unexpected expenses, or save for the future can be overwhelming.

The initial step towards conquering financial stress is acknowledging it.

Knowing how to manage their finances can be difficult for many people leading them to feel anxious about their situation. Don’t worry if you’re among them! It’s crucial to recognise these feelings as valid and are also shared by others.

By avoiding or neglecting it, the problem could intensify. Financial anxiety won’t go away. It may even get worse.

So, how do you acknowledge your financial anxiety?

Start by acknowledging subtle cues that signal this issue.

Does the mere thought of finances trigger stress and unease within yourself? Are straightforward tasks such as reviewing your bills too burdensome, resulting in you avoiding them instead? Does your debt cause feelings of drowning, and you feel there is no hope? If so, it’s reasonable to assume that financial anxiety plays a role in how you think presently.

It takes humility and a bit of courage to admit when we need support. And taking action to improve our financial situation is a decisive move.

Acknowledging financial anxiety is a critical step towards achieving long-term financial stability.

Step 2: Identify the Root Cause of Your Financial Anxiety

Now that you’ve acknowledged your financial anxiety, we need to look deeper and identify the root cause.

Dealing with financial anxiety can be influenced by several factors, like pending debts and irregular cash flow. Additionally, unpredicted bills might also serve as a leading cause of distress.

Pinpointing the root cause that contributes most significantly to your monetary woes will enable you to adopt an appropriate and sustainable resolution method.

Financial Anxiety - Lack of Income

One common cause of financial anxiety is living paycheck to paycheck. When it is pretty much a struggle to make ends meet, you quickly feel overwhelmed and anxious about your finances.

Another financial worry arises from being in debt. If you have sizeable amounts owed, the sensation of suffocating under its weight can be all-consuming. The mounting pressure can be a significant source of stress.

But ignoring your debt won’t make it go away. Instead, developing a plan to pay off your debt is essential. This might mean consolidating debt, negotiating with creditors, or seeking professional debt counselling.

If you’re experiencing financial strain, examining your income sources becomes crucial. Almost always, you would need to take further action on this. How can you supplement your earnings?

  • by considering possible side hustles
  • or negotiation for higher pay
  • by making sure you are not overspending

Step 3: Develop a Budget

Once you’ve identified the root cause of your financial anxiety, the next step is to develop a budget.

A budget is a crucial step in taking control of your finances. Using a budget can be super helpful in managing your money.

To develop a budget, start by tracking your income and expenses. This includes your monthly bills, such as rent/mortgage, utilities, groceries, debt payments or other costs.

Utilising a budget may offer various benefits – one is the capability to identify opportunities for cutting expenses. Consider this scenario: if you spend excessively on eating out, increasing your home cooking frequency could lead to notable savings. Additionally, cutting down on costly entertainment activities and opting for no-cost or inexpensive alternatives will be better.

Having a structured budget is advantageous in several ways, including regulating one’s spending. A well-formulated budget permits individuals to allocate monetary resources by ensuring the money flows towards essential goals such as paying off debts or accumulating sufficient savings for a future home purchase.

We’ve created another post about this to help you stay budget conscious.

Step 4: Create a Financial Plan

After successfully developing a budget, it is wise to devise a financial plan. Such planning involves formulating a long-term strategy for managing one’s finances, complete with clear goals and actionable steps that will make achieving the objectives possible.

In creating a financial plan, you have to think about what you want in the present and future.

  • Do you want to tackle your debt?
  • Save up for a big purchase?
  • Start an emergency fund?
  • Save for a down payment on a house?

Once you’ve answered questions like the ones above, you can develop a plan.

Financial Anxiety Planning for the future

Your financial plan should include specific, measurable goals and the steps you need to take to achieve them.

For example, you want to pay off debt. In that case, your plan might include:

  • Making +10% extra monthly payments.
  • Negotiating with creditors to lower interest rates.
  • Even taking on a side hustle to earn more money.

Planning for financial success calls for being both ambitious and practical. When you establish objectives that are too lofty, they might be unattainable and demoralising. On the flip side, setting targets that require some effort but are not impossible can help sustain motivation and create gradual progress toward what you want to achieve.

It is vital to recognise that devising an effective financial strategy is long-term. As such, achieving your desired outcomes might take some time. But with steadfast determination and the willingness to persist despite short-term obstacles, you have every chance of progressing steadily towards securing your financial future on solid ground.

Step 5: Take Action

Congratulations! You’ve developed a budget and a financial plan. But now comes the most critical step in breaking free from financial anxiety: taking action.

You need to take action on steps 1 to 4.

If you don’t know how to start or are unsure about how to take action, consider asking for professional financial advice.

Remember, taking action is the most critical step in breaking free from financial anxiety. It may not be easy, but you can progress towards a brighter financial future with persistence and dedication.

Financial Anxiety Professional Advice

Step 6: Seek Professional Financial Advice

A financial advisor can help you establish a plan customised for your specific needs and ambitions. In addition, their knowledge and assistance offer added understanding, advice, and encouragement so that you may feel more confident managing your monetary affairs.

One of the benefits of seeking professional financial advice is that you can get a personalised plan tailored to your unique financial situation.

A financial advisor can also help you

  • create a budget
  • create a plan to pay off debt
  • or even help you invest your money

Another benefit of seeking professional financial advice is getting expert guidance and support. They are best placed to:

  • answer your questions
  • provide information about financial products and services
  • help you make informed decisions about your money.

Seeking professional financial advice can provide you with that peace of mind.

Step 7: Stay Informed About Your Finances

The next step is monitoring. It’s essential to stay informed about your finances to maintain your financial stability.

Being attentive to your financial status is necessary, and one uncomplicated strategy to achieve this is by routinely examining your bank statements. You need to check for potential issues or errors, or fraudulent activity and track your spending and ensure you’re staying within your budget.

Stay up-to-date with your credit report status. Frequently review your credit reports. These essential documents contain details regarding past borrowings and debts, providing creditors with insight into the borrower’s repayment capacity. You can also identify any errors or fraudulent activity on your report.

You can maintain your financial stability and avoid financial anxiety by staying informed about your finances.

Step 8: Practice Self-Care

Dealing with financial anxiety can be stressful and overwhelming. Taking care of yourself mentally and physically is essential to manage your anxiety effectively.

Taking care of yourself is so important. Here are some tips:

Get enough sleep.

Most of the time to lie awake at night, ruminating about financial issues, but it doesn’t help.
You need to have sufficient rest. Allowing yourself enough time to recharge each night can boost mental and physical resilience while reducing susceptibility to anxiety and negative stressors. Prioritise getting a total of 7-8 hours of sound sleep every evening – suggested by research.

You can think straight, and it can help you feel refreshed and rejuvenated, ready to take on whatever the day throws your way.

Eat well.

Opting for a balanced diet may result in heightened energy levels and an improved outlook on life.

Regular exercise is another excellent way to practice self-care.

Get moving. When you do exercise, it helps you as your brain releases endorphins. Endorphins help you feel more relaxed and content. Aim for at least 25-30 minutes of exercise daily, whether walking, doing HIIT exercises, power walking, or practising yoga.

If you are still struggling with financial anxiety, maybe talking to a therapist or counsellor may help. They can provide different kinds of support and guidance to help you manage your anxiety and develop coping strategies.

Remember, practising self-care is essential to managing financial anxiety.

Step 9: Stay Positive and Focus on Your Progress

Managing financial anxiety can be challenging, but staying positive and focusing on your progress is essential. Even the smallest accomplishments are significant. As they represent progress in the right direction.

Example: celebrate even the smallest of victories, such as sticking to your budget or paying off a small debt.

It’s important not to overlook how far you’ve already come. Taking the time to reflect on your progress and celebrate your achievements can help with motivation and maintain momentum.

Financial Anxiety - Support

Overthinking and dwelling excessively on past incidents can act as an obstacle, preventing us from responding effectively in current situations. Instead of stressing about what you can’t change, consider placing your energy on improving your current financial standing.

An excellent approach to retaining a positive mindset is to associate yourself with dependable and supportive individuals who can uplift you in times of need.

Having someone dependable in our lives is undoubtedly one of the most precious treasures. It could be our dearest friend, a family member whom we hold close to our hearts, or even a trusted confidante. The presence of a compassionate listener can make all the difference.

So don’t be afraid to reach out and ask for encouragement or a listening ear – sometimes, just having someone to vent to can be a huge relief.

For those coping with similar challenges, consider joining a supportive community nearby. A support group can offer an opportunity for connection, understanding, and compassion during difficult times.

Step 10: Celebrate Your Successes and Be Patient with Yourself

Managing financial anxiety and achieving your goals can be long and challenging. Celebrating your successes and being patient with yourself as you work towards your goals is essential.

Celebrating each victory, small or big, can significantly make your journey towards success enjoyable and motivating. Setting up milestones is one approach. Suppose you’re aiming at clearing credit card debts; reaching the halfway point could be an opportunity worth celebrating with rewards.

We all require patience to transform our financial behaviour and achieve our desired outcomes. There would be setbacks or complications encountered along the way. Stay determined at all times. Rather than dwelling on setbacks or barriers, redirect your focus toward evaluating how to overcome them.

Being kind to yourself. This holds true, especially when you’re going through a tough time. Think about how you would treat a friend who was struggling financially. You do so with compassion, patience, and understanding.

Conclusion

Though breaking free from the financial worry may appear arduous initially, it is an attainable feat. You can take control of your finances and life by acknowledging your anxiety, identifying the root cause, developing a budget and financial plan, taking action, and practising self-care.

Don’t let fear paralyse you into inaction – instead, take the first step towards your goals today. Each action brings you closer to creating a brighter financial outlook.

Images Used
Photo by Mikhail Nilov: https://www.pexels.com/photo/couple-people-woman-coffee-6963857/

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