Financial stress is one of the most common mental health issues facing people today. And it’s especially prevalent among women and lower-income individuals.
Whether you’re dealing with a temporary crisis or struggling with debt that’s taking a toll on your quality of life, there are ways to manage financial stress.
Unexpected expenses are those you don’t plan for but happen unexpectedly. These expenses include groceries, fuel, electric bills, taxes, and insurance, to name a few.
The good news is these can be planned for with the help of a savings budget. Expected expenses are those you know occur weekly, monthly, quarterly, or annually.
For example, you might set aside money weekly for your property taxes or monthly to cover your annual eye exam. This way, you won’t have to rely on your emergency fund when these expenses come due.
Unexpected income is an everyday financial stress when it comes to personal finances, from getting an unexpected bonus at work to receiving an inheritance or tax return. Managing this extra cash requires planning, though.
The most important thing is to set a plan before you start spending the money. This will help you avoid overspending or spending the money irresponsibly.
If you need help using windfall, you can seek help from a financial expert. They will examine your financial health and discuss possible windfall management options. They can also help you identify any potential tax consequences.
Unanticipated taxes can be one of the most disruptive financial stress triggers. Whether you made a mistake withholding tax or forgot to pay your estimated taxes for a side gig, unexpected tax bills can leave you scrambling to resolve your debt and make ends meet.
Fortunately, there are several ways to deal with unexpected tax bills. From pulling from savings to charging your liability to a credit card and setting up installments with the IRS, there are options for every situation.
A surprise IRS audit can also be a stressful financial stress trigger. The best way to avoid a surprise audit is to be sure your records are easily accessible and that you’re not inputting excessive deductions or claims on your tax return that lower an initially higher income.
Unexpected bills are daily and can be stressful when you’re under budget or haven’t saved enough for the unexpected. Examples include a new vehicle, a significant home improvement project, or hefty medical bills. The best way to manage these expenses is to prepare in advance. You can do this by budgeting a set amount for your emergency fund each month. You should also save a small percentage of each paycheck. This will allow you to cover an unexpected expense when it arises quickly.
In the words of an old school friend, “the more you save, the less you spend.” An intelligent approach to saving can help you snag those elusive savings goals. A solid plan for coping with unexpected costs will pay off in the long run.
Unexpected debt can be a real stressor. It can set you back from meeting your goals and achieving financial security.
It can also lead to negative consequences such as late payment fees, interest rates, and debt that’s hard to pay off.
Building a solid emergency fund is one of the best ways to manage unexpected debt. Setting aside three to six months of expenses can help you deal with unforeseen events and keep your financial stress in check.