Financial strain is no stranger to the American household.
According to Forbes, there are 44% of Americans at this current moment that DON’T have the cash to cover a $400 emergency. In the same survey, 33% of American adults currently have $0 stashed away for retirement –with 56% that have less than $10,000 saved in total.
It’s a glaring, ugly fact. After reading this guide, you’ll have learned the best ways to overcome the stress of financial strain…
The Cause Of Financial Strain
So does anyone know why our money management skills are at record lows?Experts conclude that it has to do with the average American’s poor understanding of personal finance overall. Financial literacy in the United States extremely low compared to what it should be:
It doesn’t matter what stage of life you’re at:
These issues can stand to affect absolutely anyone.
Does Financial Stress & Strain Affect Everyone?
Even if you don’t think it’s going to concern you in the long run.
Here’s some surefire ways that you’re bound to be affected by financial strain in the future:
Your Paycheck Barely Makes It
Find yourself putting off necessary groceries till the end of the month?
It’s cool and all that you can budget yourself till that salary rolls in.
But when it starts feeling like you’re living off crumbs till payday, it’s a telltale sign of bad money management!
Dipping Into Emergency/Retirement Funds Too Often
Yes, yes –we understand being pushed in a corner sometimes.
However, making one too many excuses will have you rapidly running out of your stash and on a slippery slope to financial disaster.
Lack Of Budget And Comprehensible Plan
There’s no such thing as playing by ear when it comes to managing your cash flow.
It’s important to be on top of your finances – and stay organised.
Yikes. We’re not here to scare you or anything – but there’s definitely work to be done if you fall under these categories.
So given these red flags:
How do you even begin to tackle your financial strain?
Well here’s 4 proven ways to overcome the stress of financial strain…
4 Proven Ways To Overcome The Stress Of Financial Strain
1. Create Your Budget Right NOW
Conceptualizing your budget plan might seem like an obvious no-brainer, but it’s still so underrated!
Nearly 3/5 of Americans go about their day-to-day without a proper budget in place, which almost always sets you up for failure.
Doesn’t even matter if you’re making 5 figures a month!
If you have absolutely no idea where that money is going –you’re likely going to find yourself in a rut.
It takes zero effort to boot open an Excel sheet, get your notepad or literally scribble your estimated budget on a piece of paper.
Better yet, you could start documenting your finances on a more automated, interactive basis of bookkeeping.
We’re talking about personal finance management apps that do the bulk of the work for you.
These apps are one download away from keeping track of your income, day-to-day expenses, recording bills in need of paying, setting cash milestones and tons more.
Most of them even come equipped with the feature of syncing with your bank account!
So all of your expenses through your cards are documented, neatly organized and presented through a beautiful interface that you can access easily.
The basic plans for most of these apps are 100% free –so there’s no excuse to not have at least one of them downloaded on your smartphone.
If you need a shorter summary, we’re big on using:
· Wally. Easy to understand, no-frills method of keeping track of expenses.
· Quickbooks. Works best in the favor of freelancers, solopreneurs and those who need a more in-depth record of cash flow.
· Money Lover. Vast bank syncing options that make your life 10x easier by skipping the manual entry of expenses and cash outflow.
2. Pick Up A Lucrative Side Hustle
There’s nothing like the security of having a cushy, 9-5 position:
But you might want to think about dipping your toes in more than one income stream.
Entrepreneurial spirits aside – having a side hustle is an amazing way to turn your excess free time into much-needed cash for the future!
The cash earned through your side hustle can be used to focus on other things that are draining funds from your main income.
For instance, the extra $500 bucks earned from your side job can be used to cover ALL of your electricity, subscription, debt and miscellaneous bills.
Without touching your main income. Which can be used for a number of things like investing, saving in an emergency fund, etc.
Picking up on a side hustle is a fantastic option in the sense it also allows you to work on your time. On a schedule that benefits you above all!
You can take a look at this checklist of high-paying, flexible side hustles.
Examples Of Side Hustles
Whatever you choose, make sure it’s something that fits the skills that you have as well; or ones that can be easily picked up on.
A good example of profitable skills that would make you big bucks are:
· Blogging. Driving more traffic to your blog or website can get you paid thousands per month. Or even week! You can do this by creating a simple website blogging about what you love, optimizing it for ads through Google AdSense and even getting paid through affiliate marketing.
Read here about best affiliate programs that help you earn money.
· Starting an e-commerce store. Dropshipping has become possibly one of the most viral money-making techniques online throughout the decade. If you’ve got a keen eye for e-commerce fads and decent digital marketing skills –it’s a good chance you can make a fair amount of money this way.
· Becoming an online freelancer. Platforms like Upwork, Fiverr and Guru will pay you cold, hard cash for doing literally anything you’re good at. Writing articles, coding, running social media, becoming a customer service agent. You name it!
Side hustles are great to reduce your financial strain.
Plus, you’ll go to bed easy knowing that you’ve got a backup in the works.
You know, just in case you wake up one morning and your company decides to lay off 30 of their employees.
Who can really see these things coming?
3. Cutting Debt Where You Can
It takes minutes to get into staggering debt, and years to be rid of it.
The average American consumer owes $6,506 in credit card debt alone.
If that’s not enough to sound the alarm – try the average outstanding student debt.
The current average is at $37,172!
On a monthly basis, repaying your debts (loans, credit, mortgage) can range anywhere from $500 upwards.
Plus, we’re sure you’ve also got added bills to think off.
Total that all up together –and it’s not shocking that you come up with $0 in savings or for retirement funds.
Sounds all too familiar?
If it does, it’s a sign to switch things up a little bit.
Starting off with debt repayment.
Most debt structures work on a pricing basis that allows you to make the minimum payment each month. However, this isn’t designed in your favor AT ALL.
This is largely done through interest rates imposed by your issuer, credit card or bank.
For instance, you’ve made a $5,000 purchase on a credit card with an 18% APR.
If you’re only repaying the minimum amount of let’s say $200 each month, it’s going to take you a solid 2 ½ years to settle your balance!
The real kicker?
You’re also now paying $1,313 in interest alone.
For credit card holders especially, this repayment structure is designed for you to fail.
If you have any hopes of squashing your financial strain once and for all, you need a fresh new perspective.
Here are some ways to cut your debt and financial strain in the shortest time possible:
· Paying more than your minimum. Of course, no one expects you to double your repayment! But this oldest trick in the book works even if you’re topping up an extra $50 to your student loans/month.
This also works by throwing your ‘found money’ (which is extra cash earned through annual bonuses, your side hustle, or after taxes) to making MORE than your minimum repayment.
· Negotiating with your credit card issuers. If your credit score is decent, most companies would consider giving you a lower interest rate on your repayments.
It’s also a pretty common practice! If your first request falls flat, some companies would even meet you halfway with temporary interest rate offers applicable for a few months.
· The bare-bones budget. This one borders on the pretty extreme. Although, it would work for those who are dead serious and 100% disciplined about getting out of debt as fast as possible.
Living on a bare-bones budget requires you to cut unnecessary ‘vampire’ subscriptions that could instead be channeled towards reducing your debt.
Did you know that the average American’s spending for subscription services alone is at $273?
And yes, we’re looking at your Netflix subscriptions, monthly care boxes, Spotify Premium and other things that are not essential to basic survival.
Take a few hours out of your day to add up all your services through a calculator.
Even if it’s not that outrageous number above, we can bet it’s one that’s going to make you a little uncomfortable.
You can start saving hundreds per month with Trim.
It’s essentially a platform that zeroes in on all of your subscription accounts and lets you know where your money is going!
4. Start Educating Yourself
It’s a lot to take in – we know!
But even though reducing your financial strain is definitely a step you should take, you don’t want to rush into the wrong direction.
Or just essentially go haywire and move back with your parents to cut back on costs.
Start with honing in on the one thing you’re stressed about.
Channel all of your efforts into how you can turn that around by online resources, tools, books, courses or professionals that would give you the best insight!
Here’s some resources we recommend for reducing your financial strain:
· Reducing student debt? Sites like Credible give you options to refinance your student loans. You can personalize your new structure to lower interest rates and flexible repayments.
· Problems with loans? Consider consolidating your debts into one single loan. Works best for those who want an uncomplicated, direct approach to eliminating debt.
· Worried about day-to-day budgeting? Follow personal finance management sites that give you free resources + best ways to budget yourself. You’ll find everything from free checklists, PDF guides, eBooks and other online resources that should be your everyday mantra.
· How to make more money? Take up a course on Udemy or Coursera and start learning a new, profitable skill! You can even brush up on an existing profession in order to be able to charge more as a freelancer.
But most of all…
There’s always going to be great financial advice out there that’s aimed at improving the quality of your finances.
So this might be overrated.
But, we think that the most useful phrase to keep in mind is:
STOP getting yourself into more situations that increases your strain.
Reducing Your Financial Stress And Strain
All of your efforts will only work if you have an extreme sense of discipline and laser focus.
Whether or not it’s through reducing your debt, making more money or coming up with a detailed budget.
So that’s why one of the worst mistakes someone can do for themselves financially is to compare their situations to someone else.
Lavish holidays, big cars, 5-star dinner spreads are constantly being thrown at you through social media. Who can blame you?
It’s important to remember that your journey is unique to yourself alone.
So the next time you’re pressured to use an annual bonus for a fancy vacation –consider this.
Is a trip to Hawaii that important or can it wait till I’m officially debt-free and without worry?
Let’s hope you answered the former!
Regardless, the point remains:
Keep hustling till the very last cent of your debt is paid and the budget is secured.
After all, you really can’t put a price on security and total peace of mind.