According to the National Bureau of Economic Research, 30% of Americans have experienced an unexpected and significant decrease in income.
Almost 50% are having trouble keeping up with their monthly bills and expenses.
The global recession has hit people hard and the consequences continue to linger. This chronic stress can negatively impact your health.
Long-term exposure to unchecked stress from financial issues like credit card debts, personal loans, mortgages, utility bills, and budget woes cause continuous anxiety that may result in widespread damaging effects on your health.
These are the areas of your body that can be disrupted by long-term financial stress:
The Negative Effects of Financial Stress
- Psychological: Stress can have psychological effects like anxiety, depression, sleep disorders and eating disorders. It may also lead to vices like smoking, alcoholism, and drug addiction.
- Cardiovascular: Stress can cause hypertension and may increase the risk of a heart attack and stroke.
- Digestive: Stress may cause digestive problems like diarrhea, constipation, or ulcers.
- Immune: Stress may depress your immune system increasing susceptibility to multiple diseases including cancer.
- Reproductive: Stress may cause loss of sex drive and infertility.
- Integumentary: Stress may trigger skin problems like eczema, and it may cause hair loss.
When you’re in a financial crunch, the last thing you need to do is add insult to injury by developing health problems. Below are five essential steps to solving your financial problems so that you reduce your financial stress…
5 Steps to Get Rid of Financial Stress
1. Determine your true financial status
Many of us don’t realize our true financial status and live beyond our means because of the illusion credit cards give. Credit cards are very potential instigators to financial stress because they allow you to buy things you can’t actually afford. To rid yourself of financial stress, the first step is to limit your spending to what you can afford to pay.
Run a reality check on yourself, and determine the lifestyle that you can afford based on your income. When you limit spending to current income you won’t have to worry about increasing debt.
2. Create a budget
Having a budget may sound restrictive and restraining but most wealthy people achieved their financial goals by strictly and consistently limiting spending. It is short-term restraint in exchange for long-term peace of mind.
A budget is like a road map – it will reveal to you the direction you are going financially. It will show your expected expenditures thus giving you a sense of control over your personal finances thus avoiding unexpected surprises.
3. Get out of debt
You can’t build wealth while you are growing debt. They are mirror opposite financial patterns. Getting rid of debt reduces stress. The starting point to turning the tide on debt is to stop creating new debts with step 1 and 2 above.
The next step is to pick your highest cost debt and focus all available resources to paying that first debt off. Then you apply the money saved from that debt to the next highest cost debt creating a debt snowball where each successive debt you pay down accelerates the process of eliminating all debt. Never pay the minimum on credit cards because it’s financial suicide on the installment plan: you will end up paying double or triple the amount you actually charged.
Lastly, set aside money for emergency each month. This will save you from needing to use your credit cards again when emergencies happen.
4. Learn ways to cut costs and save money
When you are on a tight budget with no money left to spare then it is necessary to learn ways to cut costs from your everyday expenses and save. It is simple math – you either increase income or reduce expenses. When income is limited then expense reduction is your only other choice.
The advantage is this will provide additional resources to pay off your debts faster. One great way to save money (and improve health at the same time) is to become a “perimeter shopper” in the grocery market where the unprocessed foods are located. You can also plan your menu around seasonal and sale foods.
Your entertainment budget can be reduced by renting movies instead of watching them in theaters, borrow books from libraries instead of buying them, watch free concerts, go on a picnic rather than eat out. There are so many ways to cut costs and save money without reducing lifestyle. The only limitation is your ingenuity. Less can be more.
5. Increase your financial intelligence
Most people get into stressful situations around money because of bad decisions. Debt is the mirror opposite of wealth not just from a financial standpoint, but also from a psychological standpoint. The life patterns that result in financial stress are the mirror opposite of the life patterns that create wealth.
Read books and follow trusted educational sources on the internet to grow your financial intelligence every day. It is the best way to assure you don’t repeat the mistakes of the past that created the financial stress in the first place thus jeopardizing your health.
Chronic financial stress can be harmful to your health. It can lead to a variety of issues including psychological, cardiovascular, digestive, reproductive, integumentary, and immunity problems.
To avoid the harmful effects of financial stress take action to eliminate the source:
- Determine your true financial status – Don’t be fooled by the illusion credit cards may give you. Set a lifestyle that can be supported by current income so you don’t have to worry about paying your bills.
- Create a budget – Make a road map for your expenses by creating a budget so that you will know if you’re going in the right direction financially. When you have a budget you’ll increase your sense of control and reduce the frequency of unexpected expenses.
- Get out of debt – You can’t build wealth when you’re growing debts. Not having a savings cushion increases stress. Therefore, pay off your debts now so that you can transition into wealth building
- Discover ways to save money by cost cutting – Cost cutting increases resources available to pay off debts or build savings for emergencies. Saving money doesn’t have to mean sacrifice when you focus on getting more value from the money you already earn.
- Grow your financial intelligence – Debt is usually the result of daily habits that are the mirror opposite to what produces wealth. You must retrain you brain by growing your financial intelligence. It is the most affordable solution to financial stress, and the only solution that is permanent.
When you put this 5 step action plan into practice you will notice a significant reduction in the stressors that negatively impact your physical health. It will also put you on the path to financial fitness and fiscal health as well.
Todd Tresidder is the founder and financial coach at FinancialMentor.com. He’s published numerous books on Amazon that are changing how people view retirement planning including How Much Money Do I Need To Retire? and The 4% Rule & Safe Withdrawal Rates In Retirement. His writing has been featured in the Wall Street Journal, Investor’s Business Daily, Smart Money magazine, Yahoo Finance, MSN Money, and more. He lives the outdoor recreation lifestyle with his family in Reno, Nevada.
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