Do you want to reduce your financial stress and finally get ahead? Check out these 12 tips that helped us go from $34K in debt to a six-figure net worth in only 2 years.
For many people, the subject of personal finance can be overwhelming and stressful. But it doesn’t have to be that way. In fact, there are quite a few ways that you can reduce financial stress and start confidently working toward your goals.
In fact, even a few simple changes can make a significant impact on you and your family’s financial future.
And that’s exactly why we’re here.
For the rest of this guide, I’m going to cover 12 easy-to-implement tips that you can employ to significantly reduce your financial stress.
Let’s get to it!
1. Get On A Zero-Based Budget
Having a strong (and specific) financial plan is key to reducing your financial stress.
That’s why, one of the top things we recommend is getting on a zero-based budget.
A zero-based budget is a budgeting methodology wherein you give every dollar of your income a specific purpose until you have zero dollars left to budget.
From giving, saving, and investing to debt payments, mortgage/rent, buying groceries, and even recreational spending, a zero-based budget forces you to take complete control of your money.
This helps reduce your financial stress in multiple ways.
First, you don’t have to stress about having a plan or what you are going to do next when you get a paycheck. By living on a zero-based budget, you already know what needs to be done.
The only thing left is stick to your plan.
The other benefit is that it helps reduce wasteful spending.
When you have extra money with no plan, you are more likely to spend on things you don’t need. A zero-based budget leaves no money on the table for you to spend on unplanned or unnecessary items.
Interested in budgeting? Check out some of our other guides:
- 21 Simple Tips To Make Budgeting Easy
- Why Is Budgeting Important? 10 Key Benefits
- 50 Budgeting Tips (For Every Stage Of Life)
- Living On A College Budget: 21 Tips That Won’t Wreck Your Fun!
- How To Stick To Your Budget: 21 Simple Tips
- Budgeting For Gifts: 10 Tips To Make It Easy
- 25 Tips For Living On A Food Budget
2. Pay Off Your Consumer Debt
Living with debt can be an enormous financial burden.
After all, the more of your hard-earned money that goes toward consumer debt, the less you have to live off of or save.
This can cause a tremendous amount of financial stress and anxiety.
For this reason, you should prioritize paying down your consumer debt with any additional money you have in your budget. As you pay off your debts, it will free up more and more cash to pay off other debts.
Before you know it, you will be completely debt-free.
The other benefit to paying off debt is that you’ll have fewer bills to pay each month, and thus, fewer payments to stress you out.
You might not realize it, but keeping track of what bills are due requires a lot of mental effort.
The fewer bills you have, the easier it will be to manage your finances.
This also helps reduce the risk of having late fees or additional interest due to missed payments.
3. Cut Your Expenses
Our expenses change over time, they can easily creep upward without us even knowing it.
Therefore, you should sit down and list out all of your expenses.
What things can you live without?
Do you really need to eat out several times per week?
Do you really need to pay for subscriptions to Hulu, Netflix, and Disney+?
Every expense that you can cut from your budget gets you one step closer to financial freedom.
Oh, and if you’re really struggling with financial stress, don’t be afraid to cut things aggressively.
In most cases, you won’t even miss the items you eliminate. And even if you do, you can always add those expenses back later if you truly miss them.
Want some help cutting expenses? Check out some of our related content:
- Top 10 Ways To Reduce Your Fixed Expenses
- What Is Impulse Spending? (Plus 10 Easy Tips To Control It)
- 10 Reasons Why You Should Track Your Expenses
- What Does It Mean To Track Your Money? (And How To Do It)
- How To Stop Wasting Money On: Food, Clothes, Travel and More!
- Is Frugal An Insult? What It Really Means To Be Frugal
4. Set Smaller Financial Goals
There is a famous quote that goes “How do you eat an elephant? One bite at a time.”.
When it comes to financial goals, this strategy certainly applies.
Part of the reason that so many people can’t get started on their financial journey is that the task seems unattainable.
Take retirement savings for example.
In my experience, most experts will tell you that the average American needs between $1 million to $2 million to retire comfortably. For many people, this seems like an unrealistic target. Your blood pressure probably went up just reading it.
However, by breaking this goal down into smaller goals, it will help make the target seem more manageable.
For instance, let’s imagine you’re 35 years old with $0 in retirement savings. If you invest $1,000 per month and earn an 8% average annual return, you’ll be a millionaire by the time you’re 61. (See the screenshot below.)
You could set the goal of simply setting up your company matching 401k. Or you could set the goal to reach $10,000 in savings. Every step along the way gets you one step closer to where you want to be.
5. Stop Using Credit Cards
One of the worst forms of consumer debt deserves its own section in this article.
Yes, we’re talking about credit cards.
With their notoriously high interest rates, it’s extremely difficult to get out of credit card debt–especially if you are making just the minimum payments.
If you have credit card debt, you should immediately stop the bleeding by getting rid of your cards. Then, switch all spending strictly to debit cards.
With a debit card, you don’t have to worry about paying off your balance before interest accrues. In fact, you won’t even have to worry about interest at all.
Tracking expenses is also easier with a debit card since you only have to manage one account — your checking account.
This makes budgeting and tracking your spending significantly easier as you only have to log in to one account to view the state of your finances.
I realize this goes against the grain of what society tells you to do, but before you thumb your nose at the idea of cutting up your credit cards, consider this:
Before my wife and I stopped using credit cards, we were barely making ends meet and we lived a life full of financial stress. Our finances always felt a little messy, we didn’t have an emergency fund, and we just couldn’t ever seem to get ahead.
Now, after 3 years of living a completely debt-free lifestyle, we have a 6-month emergency fund, a net worth over six-figures, and we almost never feel any kind of financial pressure or stress.
I’m telling you, despite what the world would have you believe, living without credit cards is one of the best ways to simplify your finances and reduce the financial stress in your life.
6. Get A Second Job (Or Start A Side Business)
Getting a second job or starting a side business is a great way to bring in additional income and reduce financial stress.
And the best part is, there are lots of options for additional work.
You can wait tables in the evenings, drive for Uber on the weekend, start a blog (this is what we did), or even start freelancing through a platform like Fiverr.
While this doesn’t have to be a long-term solution, it is a great way to relieve some of the financial pressure in your life.
In fact, if you decide to get a second job, I recommend setting a goal that you want to achieve with your additional income. For example, you might set a goal to save $10,000 for your emergency fund.
Then, once you achieve that goal, you can make the decision whether to pick another goal or quit.
Interested in getting a second job or starting a side hustle? Check out some of our other helpful posts:
- Top 10 Reasons To Get A Second Job
- 5 Blogging Secrets Every Beginner Needs To Know
- 18 Proven Ways To Make Money With A WordPress Blog
- 17 Proven Ways To Make Money As A Freelance Writer
- How To Make Money On Fiverr (The Beginner’s Guide)
- 9 Lucrative Freelance Skills You Can ACTUALLY Learn Online
- Is A Second Job Worth It? (Benefits vs. Drawbacks)
7. Get On The Same Page As Your Spouse
If you’re experiencing financial stress in your marriage, you should, with no exceptions, sit down and discuss your finances with your spouse.
I realize that for many couples, this can be a stressful conversation.
But seriously, not being on the same page is way worse.
To put it lightly, it’s difficult to reach financial freedom if you aren’t working toward the same goals.
So, figure out the financial goals you want to achieve, create a budget you both agree on, and attack your finances together.
The more aligned you are, the less stressful your financial situation will be.
8. Allocate Some Money For Fun
When it comes to personal finance, it’s critical to make sure that you are consistently making progress toward your goals.
However, when you put too much pressure on yourself it can cause you a lot of stress and anxiety.
For this reason, I encourage you to set aside time and money to have a little fun such as going to the movies, visiting an amusement park, or dining at a nice restaurant.
While you shouldn’t overdo these kinds of activities, if you never have any fun, then what’s the point of earning an income?
All that said, if you’re in the process of getting out of debt, we recommend that you budget no more than 5% to 10% of your take-home pay for fun and recreation.
However, once you are debt-free, you can increase this amount.
9. Find A Cheaper Place To Live
Housing is usually the largest expense in a person’s budget.
So, if your monthly rent or mortgage is straining the rest of your financial situation, think about ways that you can alleviate it.
For renters, this could be as simple as finding a cheaper place to live.
Homeowners will need to put in a little extra work, but downsizing can be a fantastic, stress-reducing option.
In some cases, it may even make sense to sell your home and rent instead.
I always say, owning a home can either be a blessing or a curse.
If the cost of owning a home is causing you financial stress and holding you back, don’t feel obligated to keep it.
Remember, you can always buy another house when your financial situation improves.
10. Take A Debt-Free Personal Finance Class
If you are just getting started or feel a little lost, you should sign up for a debt-free personal finance class.
We highly recommend Financial Peace University created by financial guru Dave Ramsey.
In the course, you will learn how to properly budget and manage your finances as you work toward financial freedom. In addition to useful knowledge, you will have access to lots of great tools and resources to help you on your journey.
11. Talk To A Financial Coach/Advisor
Sometimes you need an expert to help you feel confident in your financial decisions.
By using a financial advisor or coach, you can alleviate some of the stress and burden from yourself.
A professional can help you create your budget, choose the right investments, and plan for retirement.
12. Get Support From The Debt-Free Community
It’s easy to feel stressed and alone in your journey.
Trust me, I’ve been there!
However, I want you to know you that you are not alone.
There are many online communities that are dedicated to giving financial advice, providing resources, and connecting people who are in similar situations.
It makes it much easier when you realize that there are other people out there who are facing the same challenges. It’s also encouraging to see those who have successfully met their goals.
I highly recommend using these kinds of communities to generate ideas, find encouragement, and help one another.
You’ve Got This!
There’s no doubt, personal finance can be a stressful area of life. But don’t let that discourage you from achieving your dreams of financial freedom.
As long as you take things one day at a time, stick to your budget and before you know it, you will reach financial freedom.
Oh, and if you need a little encouragement, feel free to reach out in the comments below. We may not have all the answers, but one thing’s for sure… we’re rooting for you! And we’d love the opportunity to cheer you on!