We are living in challenging times. Heightened household costs have accompanied historic wage stagnation, while other key life milestones like homeownership have been effectively priced out of many people’s budgets.
It should come as no surprise, then, that over half of UK adults have felt more anxious and stressed as a result of their financial situation.
Mental health is an extremely important thing to tackle the right way, irrespective of its causes. However, when it comes to financial stress, there are some hands-on ways in which you can tackle the root causes of such stress – alongside, of course, the well-recommended routes of GP consultation and therapy. How might you directly combat financial stress, for the betterment of both your mental and financial health.
Budgeting and Financial Planning
The first step in this journey is, unavoidably, to take stock of your financial situation. Troubling as it may be to directly reckon with the route of your worries, you need to know exactly what position you are in before you can properly tackle it. This means squaring your average monthly household income against your average expenditure, and adding up your total debt obligations – be they credit cards, overdrafts, or overdue loans. From here, you can start to identify areas where you might be able to free up some financial space.
Debt Management
The main goal for your budgeting, initially, should be to get yourself out from under pre-existing debt obligations. Interest rates and late payment fees are together more damaging for your finances than savings interest rates are helpful; as such, you should prioritise paying down debts where possible.
In cases where you have multiple debt obligations and no easy way to prioritise one, it can be helpful to make use of bad credit debt consolidation loans. These enable those with poor credit history to access funds, with which they can satisfy their various lenders in one fell swoop. These can be high-interest agreements, but the resulting repayments may be much more favourable than the compound result of disparate repayments.
Building an Emergency Fund
The journey out from under the yoke of financial stress is a long, non-linear and ongoing one. After getting your existing debts under control, there are many next steps you can take to benefit your long-term financial security and reduce the risk of future hardship – but there is one imperative step you should seek to take first: creating an emergency fund.
Even if you have the best intentions with regard to a long-term financial budget, life can have other plans. Something as simple as an emergency car or boiler repair can plunge you back into the red despite your best efforts. This is why an emergency fund, amounting to at least three months’ household costs, can be vital for protecting your wider finances. The sooner you put one in place, the sooner you can relax into planning for the long term.
