Right now, financial stress is causing a lot of turmoil for individuals and families around the globe. Actually, 87% of Americans are stressed about ever rising prices.1)Stress in America 2022 https://www.stress.org/daily-life While many in the media might downplay it and tell consumers things might not be as bad as they seem, the truth is many are fearful about the economic outlook. Do you know how to navigate your finances in the midst of a financial crisis? This can be an important tool to control your stress in this difficult times.
It started with an influx of rising prices for groceries, which were blamed on supply chain shortages. Then gas prices skyrocketed, and blame was put on a distant war. Rent and mortgages are tripling and displacing many people from their homes.
It’s hard to remain calm when you’re finding that your dollar doesn’t stretch as far as it once did. Inflation and recessions are something we’ve been through before, but that doesn’t mean you have to sit idly by watching as your money struggles increase.
Instead, you can be an action-taker who doesn’t succumb to the stress of economic hardships and implement a plan that not only sustains your way of life, but allows you to thrive under poor financial conditions nationwide.
Don’t Be Afraid to Know the Truth About Where You Stand
You can’t stay stress-free if you don’t know the truth about what state your finances are in. Some people actively avoid looking into this because they feel it’s a dire situation and it’s easier to turn a blind eye than to face the reality of it.
There’s a level of guilt and shame knowing you’ve let your finances spiral out of control, but in this situation, you have to set that aside and handle your money so that things don’t get worse and put you in danger of a financial catastrophe.
Start with the roof over your head and the utilities that you need, such as water, electricity, phone and Internet. If you’re spending money on things like cable or streaming plans, jot those down, too.
Next, figure out how much you currently spend on food and gas as well as medical needs, clothing, and other bills. Once you’ve compiled those numbers, go through other debt you make regular payments on – such as retail and credit cards, loans, etc.
Don’t get overwhelmed. This is a starting point for you to begin gaining control over the health of your bank account. You can’t do anything if you’re ignorant to the ruth of the matter.
Make sure you know the total amount due, the date it’s due, the minimum amount you need to pay each month, and the interest rate (if applicable). You’re going to want to meet your monthly needs first then plan for the repayment and pay off of the loans and debt that is weighing you down.
By the end of this exercise, you might feel like this burden is a lot to handle, but now you get to attack the money situation in a way that lets you breathe easy once again, so look to the immediate future from this day forward and don’t harp on what you’ve done in the past.
Know Your Necessities Versus Wants
For many, it’s hard to differentiate between needs and wants. Sometimes, you get so used to having something in your life that you feel as if it’s a necessity, when it’s really not.
You can chalk some things up as necessities easily, like food, electricity, gas, mortgage (or rent), and so on. You might easily be able to mark off a Starbucks or fast food as a want that you don’t really need.
The key will be for you to get tough on yourself and truly identify what’s necessary and what you can do without (at least for the time being). This doesn’t mean you have to always go without something, but you’re tightening up for a temporary pause while you get your financial worries cleaned up.
With the needs versus wants, you’re going to have to make some important decisions. Some things will be defined as a necessity, but the way in which you handle it financially is detrimental to you.
For example, you need clothes. But you don’t need designer clothes from an expensive store. You could get away with cheaper shops, hand-me-downs or even thrifting if necessary, depending on your current financial state.
The same goes with food. You need food – but you don’t need to order Door Dash three times a week from your favorite restaurants. You can plan and cook meals at home on a budget.
You might find working out to be a necessity for good health, but it doesn’t mean you have to keep your expensive gym membership. Instead, you can work out at home or outdoors.
These are decisions that might be difficult for you to explain to the rest of your family. But if you’re in charge of the financial health of your household, it may be a discussion you have to have.
Your kids may feel like they need Netflix, but the truth is, it’s a luxury that not everyone can afford. They may say they need their phone, but they don’t need unlimited text and minutes if you can’t afford a plan like that.
Go through your list to identify what’s necessary and what’s simply a desire to have, and if something is in the necessity column, look for ways you can alter spending to save you money.
Start Operating on a Budget That Works
Budgets are the self-control you need to get yourself on the right track financially. Most people don’t live on a budget, instead spending whatever comes in and hoping they can make it until the next payday.
You have to have willpower and control over what you allow to be spent out of your income. In normal times you should have a three-pronged system where you have money going toward necessities, some toward an emergency fund and a tiny bit toward things you don’t need, but want. If you have debts, you of course pay them back before creating an emergency fund.
Your budget has to fit within your income. So that may mean that instead of spending $250 a week at the grocery store, you only allow yourself $200 or even $175. To achieve these budgetary goals, you’ll need to spend some times planning.
You may need to create an affordable meal plan with rice and beans or pasta dishes that stretch far, fruits that are in season selling for a cheaper price, and store brands instead of brand name products.
If, to date, you’ve allowed everyone to pretty much place an order from the store for whatever meals they want, you might need to start preparing one meal for the entire family that everyone has to eat.
Instead of using fresh broccoli crowns, you might use a bag of frozen ones and save money that way. Do the same with every expense you have when you’re preparing a budget.
Allot a specific amount for gas. If that means you can’t drive somewhere, then that’s what it means. You may need to carpool or take public transportation. You can also plan your errands strategically so that you’re traveling in a logical order and not zigzagging all over town back and forth.
If you come to an item in your necessities list and it looks as if your budget has run out already, look over it again and see what can be cut or transformed in terms of spending that will open up new funds for the necessity in question.
Living on a budget can be uncomfortable in the beginning. But the reality is, once you get used to it, you can feel peace of mind knowing you’ve properly planned for your spending in a way where you know your needs will be met.
Get Everyone in the House to Pitch In
When it comes to tackling a financial crisis, this is not a task you do silently on your own while everyone else lives life as usual. It’s important for your spouse and children to be aware of what you’re working on.
It’s important that you approach it the right way. You don’t want to start crying and talking in a panic about how broke you are or how you worry about losing the roof over your head or not being able to eat.
Kids don’t need to know the intricate details. What they can know is that right now, the nation (and world) is experiencing some high prices and limited income, so everyone has to be onboard to tighten up spending and get through this.
When kids know there’s something happening, they will want to help out. They’ll know not to ask for luxuries like a new gaming system or a big birthday party with their entire class being invited to an expensive place.
You can reward their ability to pitch in with ideas such as inexpensive meals the family may all like or family outings that don’t cost a penny. You might take turns letting them choose from this sort of thing so that they feel like they’re assisting mom and dad in their efforts to get through a financial tough spot.
Your spouse will definitely need to be onboard to help. Sometimes, only one parent or spouse handles all of the finances. No matter what the situation is, in terms of debt you’ve accumulated, now is the time to be honest with them so they can be mindful of their spending, too.
They need to know that lunch will be meal prep and not fast food, that the morning Starbucks is off the budget for now, and that now is not the time to upgrading things that can wait.
Because you might be working longer hours or even just stressed from handling the finances, it’s important that you get everyone to help in other ways, too. They can help with chores to allow you to either work on a side hustle in the evenings or do the other things you need to do to work within your budget, like cooking dinner or fixing lunches for the following day.
You might have teens who are old enough to work. If so, let them get a job so that they can begin earning their own money for extra activities or even new clothes if they want something trendy that you can’t afford in that moment.
Make Your Income Grow Steadily
Taking care of your income and spending based on what you have coming in and going out now is a priority. But when the dust settles and you have a budget and plan working for you, it’ll be time to bump up your earnings to take the pressure off a bit.
You may want to look into getting some extra income. Start with your current career. Have you been there long enough or have any qualifications that will make you eligible for a raise? Is there a different position within the company you could apply for in order to earn more?
What about adding on a second job? Some people work more than one job just during tough financial times so that they can afford their needs and wants better. You could have one fulltime job and a parttime job a few hours per week.
If you want to, you can also add a side hustle. This is similar to a second job, but you’re usually working more for yourself or as a freelancer than being a permanent employee who is assigned work hours.
If you have a car, you might want to sign up for companies like Uber, Uber Eats, Lyft, Door Dash and other delivery services or rideshare programs. Even if the payout is not much, you’ll set your own hours and earn money that includes tips.
You can also start your own online business if you want. There are many options for people who may need to be home with their kids in the evenings, but still want to add to their income streams.
You can teach some classes online for kids, and parents will be willing to pay for getting their kids up to par on subjects that they were falling behind. Sometimes they are even willing to invest in teaching their kids some extracurricular skills.
Freelance workers online can do administrative work for companies or entrepreneurs. You can do administrative tasks, ghostwrite content for brands who need things like blog posts, emails and eBooks, or create graphics if you’re good with programs like Photoshop.
You might want to create your own info products like video or text courses. Or, start a blog where you make recommendations for a niche audience where you earn a commission for every sale that goes through. It will take some time to learn the trade of online marketing, but if you get it right, it can give you a steady income.
There are many different platforms you can use to promote something and earn money – including Amazon, Etsy, ClickBank, Share-a-Sale, Commission Junction, Warrior Plus and JVZoo. Don’t sit idly by trying to survive on your current income when there are endless opportunities at your fingertips that can alleviate the financial stress you currently feel.
Now you need to decide how much time you want to spend on extra jobs. If you are threatened by a mortgage foreclosure, you may want to get some extra money at any price. But if you alleviated your debts, you need to decide between some extra income to sustain your lifestyle, or simplifying your lifestyle and having extra spare time to spend with your family.
As a conclusion, financial planning is essential if your finances are tight, and will help you to overcome even a tough economic crisis like we are passing through right now. That will help you quite a bit to get an important stress factor under control.
Do you need a guide to help you understand how to cope with Stress in an all inclusive approach? Learn how to combat stress, mentally, physically, emotionally and strategically in your life.
Martin Neumann was trained for Lifestyle Interventions in 1998 at Wildwood Lifestyle Center & Hospital. Since then he has lectured in different parts of the world about a healthy lifestyle and natural remedies. He is the founder of the Abundant Health website.
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Ruth Reed-Dorsett says
Great article. Most needed and helpful at this time. Thanks so much!