No matter what your financial situation looks like, most people will experience stress from time to time. However, for many adults, financial stress is at a dangerous high.
Approximately 58% of Americans say their finances control their lives, according to a report from Capital One. This stress manifests itself in many ways, with survey participants saying they often feel fatigued or find it difficult to sleep or concentrate at work due to stress.
But stress can affect more than just your mental health. The report revealed that it can have a disastrous effect on your finances as well.
Image source: Getty Images.
Too much stress can put your finances in jeopardy
Feeling minor amounts of stress every so often is likely nothing to worry about, but if you're feeling stressed over money more often than not, it can lead to poor financial health.
Americans who experience high levels of financial stress were more likely to have unhealthy financial habits, according to the Capital One report. Highly stressed adults were less likely to save consistently, plan their spending, and feel in control of their finances. They were also more likely to spend impulsively, and less likely to believe that those who work hard will achieve success.
Each of these behaviors can be dangerous alone, but together they can spell disaster. If you're overspending, not saving consistently, and also beginning to feel like you have no control and will never be successful no matter how hard you work, it's easy to start making poor financial decisions. The consequences of those decisions may then further increase your stress, which could cause your finances to quickly spiral out of control.
The good news is that even if you're feeling stressed about money, you can get control over your situation and develop a healthier financial mind-set in just a couple of simple steps.
Step 1: Make sure you know where your money is going
Managing your money well is a mental game, and if you go into it with the right mindset, you're more likely to be successful.
The first step is to begin tracking your spending so you have a clear idea of where all your money is going. Part of the reason managing your money may be stressful is that it can feel like there's never enough cash to go around. And if you're living paycheck to paycheck, it likely seems you have no extra money to put toward your other financial goals.
However, there's a chance you have more extra cash than you think. Case in point: roughly 60% of Americans say they're living paycheck to paycheck, according to a survey from Charles Schwab. However, that same survey also found that the average American spends close to $500 per month on unnecessary costs.
In other words, even if you feel broke all the time, there's a chance you might not realize exactly how much you're spending in each area of your budget. Once you start tracking your expenses, however, it's easier to see where you're spending -- and where you can afford to cut back.
Step 2: Create a plan to keep your spending in check
The next step to living a financially healthy lifestyle is to plan your spending and make sure every expense is worthwhile. The average American spends around $450 per month on impulse purchases, according to a report from deal-sharing site Slickdeals. That amounts to $5,400 per year, and around $324,000 over the average person's lifetime.
Even if you're only spending a few dollars here and there, those expenses add up quickly. Set limits for yourself to keep these costs under control, no matter how big or small they may be. For large expenses, force yourself to go through a mandatory waiting period. For example, before you spend $100, you may need to wait 24 hours to consider whether the purchase is worthwhile. For bigger expenses, you might set longer waiting periods. Even for smaller purchases, you may choose to set daily spending limits so you don't overspend without realizing it.
When every dollar you spend is intentional and purposeful, you're more likely to feel in control of your situation because you know exactly where all your money is going. This may also free up some room in your budget so you can start putting more money toward your other financial goals, like paying down debt or saving for retirement.
No matter what your ultimate financial goals look like, too much stress can potentially ruin your chances of achieving them. With these simple steps, you can lower your stress, improve your finances, and develop healthy habits that will last a lifetime.
