Lesley-Anne Scorgie
Aug. 25, 2020
Losing sleep over your finances and getting angry or emotional won’t make the situation better. Instead, these common-sense techniques will help reduce money stress starting today, and empower you to take control. They also work really well even when we’re not feeling threatened by a global pandemic. As always, involve your spouse in this process; you need to be aligned with your finances or your stress will grow, not shrink.
Look at your accounts. Don’t hide from them
Awareness is the first step to reducing money stress. Log in and review your banking and credit accounts, alongside your CRA My Account, which contains information about taxes and your government benefits (which may be in flux as CERB gets replaced this fall). Note the balances and important updates or notifications. If your blood pressure starts to creep up, try to let the stress roll over you. You need to look, before you can make a plan to tweak and improve the situation.
Streamline
If during the above process you uncover that you have a lot of accounts scattered everywhere, which can be tough to manage, acknowledge the challenge, and over the next few weeks, start to streamline and reduce the accounts to only what’s necessary. Fewer accounts saves money on fees and allows you to keep better tabs on your finances.
Assess your money situation now, and then do it regularly
What do you think needs to change, now that you’ve faced the reality of your accounts? If you’re staring at overdraft balances, trimming your expenses is necessary, so make a list and start to tackle them. Note that non-essential spending tends to be easiest to cut — subscriptions, takeout, etc. If increasing your income through a side hustle seems to be the best approach, draft up a business road map and actions to test it out. Note that a side hustle doesn’t always need to be a new business idea. It could simply be a part-time gig driving a Lyft on weekends, or tutoring in the evenings. Just remember to set aside money for income taxes if your side hustle pays you in pre-tax dollars.
Use technology to your advantage
Set up your bills to be paid automatically on the day they are due (not before). Use a downloadable template or budgeting app to track your spending. Create a calendar entry in your phone to review your upcoming monthly expenses, and the previous month’s digital statements. Sign up for a free credit report and fraud alerts. If this seems like a lot of work, trust me — it’s going to get easier after these systems are in place.
Save for an emergency
The pandemic has shown a heightened need for reserve funds in the event that we lose work or have unexpected expenses. If you’ve never set aside money for an emergency, now is the time to do so, and create some peace of mind. This is best achieved through an automatic transfer from your chequing to your emergency savings account either daily, weekly or on payday. It takes time to build this fund, so just stick with it!
Invest in your future
When I was 17, I was on the Oprah Winfrey Show talking about how important it is for young people to learn healthy saving habits. My fellow guest was a woman named Marcia and her claim to fame was amassing $650,000 in retirement savings as a single mom, making less than $40,000 per year. One of her strategies was setting aside approximately $10 per day for her investments, from the moment she got her first job, until retirement at age 65.
The purpose of sharing this story with you is investing for retirement can be done with small amounts of money; the equivalent of a latte or sandwich purchase. So, if you’re thinking about getting started, see what you can do to free up a small daily amount of money to put toward your future.
Stop comparing yourself to others
The consumption culture we live in is hard on our mental health as well as our finances. Do what’s right for your finances, not because someone else is driving that decision, but because you genuinely care about the thing you’re spending on or saving for. Another thing to remember is that statistically, the luxurious lives that people post about on social media are backed by a lot of consumer debt, and debt is extremely bad for stress.
Learn more about it, and maybe get some help
No one is born with financial knowledge. It’s learned. The more you know, the greater your financial empowerment. You don’t need to be a pro at this stuff, but you should try to learn enough so you feel confident that you understand the decisions you are making with your day-to-day spending. It’s empowering to be able to assess important factors when it comes to debt (interest, payment terms, etc.), picking investments (risk tolerance, fees and historical rate of return) and who’s qualified to give you advice.
Read about money weekly. Talk to advisers. Sign up for money courses. Read the educational materials your bank sends you.
These techniques will not completely eliminate your financial worry, and that’s probably a good thing. You need to have a healthy tension between you and your money so that you’re curious and continuously trying to improve your situation.
