For better or worse, it's natural for our lives to revolve around money to some degree. And while money is a source of satisfaction for many U.S. adults, it's also a major stress inducer.
A good 87% of Americans say nothing makes them happier or drives up their confidence levels than feeling financially secure, according to Northwestern Mutual's 2018 Planning & Progress Study. At the same time, 54% of U.S. adults say money is a primary source of anxiety, while 52% say money causes them to experience feelings of insecurity.
If you'd rather not spend your days being stressed about money, there are some steps you can take to achieve that goal. And the sooner you do, the less sleep you'll lose over money matters.
1. Have a well-stocked emergency fund
One major source of financial anxiety is not knowing when the next unexpected bill might land in your lap. A good way to combat that stress, therefore, is to have enough money in the bank to know that you're covered as far as unplanned expenses go. And that's where your emergency fund comes in.
A good emergency fund is one with enough money to pay for at least three months' worth of living costs, and ideally, more like six months' worth of expenses. If you don't have emergency savings at present, start cutting back on spending so you can build yours slowly but surely. You might also consider working a side hustle, which will give you extra money to put in the bank. It'll most likely take you some time to establish that safety net, but the sooner you start working toward that goal, the better you'll feel about the prospect of an unanticipated expense.
2. Maintain a budget
One of the most stressful financial situations you might encounter is having no idea where your money is going. And a good way to avoid having that happen is to follow a budget. To create one, simply list your recurring monthly expenses, factor in one-time expenses, and compare that total to what you earn. If you find that you're spending down your paychecks completely, you'll need to make changes to not only give yourself some wiggle room, but allow for long-term savings. Having your expenses mapped out, however, will make it easy to identify those categories where you're able to cut back.
3. Live below your means
The more expenses you commit to on a regular basis, the less flexibility you'll have in your budget. That's why it pays to keep your fixed living costs to a minimum and buy yourself the freedom that comes with not maxing out your entire paycheck. This means that if you have the financial ability to take on a $1,500 monthly mortgage payment, find a home that'll cost you $1,200 instead. Similarly, rather than buy a car with a $500 monthly payment, look for one that'll cost you $100 less. Living below your means may require you to forgo certain luxuries, but the peace of mind it'll buy you will more than compensate.
4. Stay out of debt
One final way to alleviate some of the financial stress so many Americans face is to stay away from bad debt, which comes in the form of credit cards. Now it's OK to use a credit card to make purchases, but only if you make a point to pay off what you owe by the time each bill comes due. Otherwise, you'll put yourself in a position where you're throwing money away on interest, which is hardly something to feel good about.
Worse yet, once you kick-start a cycle of carrying a balance and accruing interest, you might struggle to break free from it. So do everything in your power to avoid that debt in the first place, and if you don't trust yourself to use a credit card wisely, do yourself a favor and pay with cash.
Money shouldn't be a major source of stress in your life, and if you manage your finances responsibly, it won't have to be. So build emergency savings, follow a budget, live below your means, and steer clear of dangerous debt. With any luck, that'll do the trick in buying you a degree of financial security and turning money into something positive, not negative.