It might be a great understatement to say that 2020 has been a stressful year. The pandemic has resulted in lost jobs, cut hours, and businesses shutting down or slowing dramatically. Hiring in certain industries has been reduced or slashed altogether.
Meanwhile, basic living expenses don’t go away — and car loans, credit card debt, and student loan debt may be feeling particularly heavy right now. It’s hard to not feel the weight of financial uncertainty at a time like this.
But, even in the midst of a pandemic, there are ways to start taking control of your money so that finances don’t control you and stress you out. Ultimately, it boils down to becoming well-acquainted with where you are financially, deciding where you want to be, and then putting a solid plan in place to get there.
Identify what is stressing you out
First, take some time to evaluate what currently stresses you out about money. Is there one particular thing that makes you panic the most? Maybe it’s your job situation (or lack of), or your debt, student loans, or an upcoming large expense. Or maybe making ends meet is becoming more and more challenging. Identify what it is and write it out. Get specific about what makes you feel panicky and stressed about the situation.
Determine where you are right now with your finances
Next, you need to get a clear picture of what your finances look like right now. The end of the year is a great time to become better informed and educated about your own financial situation. Gather up data and specific numbers on your finances: how much you owe and to whom, your basic living expenses, your outstanding debts, any upcoming necessary expenses you foresee in the new year, etc.
If you haven’t already, take these numbers and create a budget. Don’t go through the month making payments without any idea of how much money is coming in and how much is going out. The first step to taking control of your situation is to know exactly how much money you have to work with, and knowing exactly where it is going each month.
Set goals for the coming year
Take time to carefully consider what your short-term and long-term financial goals are in the coming year. These goals should be both measurable and realistic. For example, “spend less money” or “make more money” are too vague. By contrast, “pay off my $3,000 car loan,” or “save $1,000 for an emergency fund,” or “pay an extra $100 on my student loans each month” are specific, measurable goals that allow you to track your progress with relative ease.
Make a plan
Once you’ve set your short-term and long-term goals, it’s time to make a plan to reach these goals.
Most financial anxiety comes from not having a plan. If you know you want to pay off debt or save a certain amount, but never have the steps in place to achieve those goals, you’ll feel anxious and frustrated with your lack of progress.
Write out the steps you need to take to reach your goals. This is where it may be helpful to bring in advice from a financial advisor or counselor, or trusted mentor whose financial advice you trust. Your steps should include creating a budget, but also may include limiting extra/unnecessary expenses so you can pay off more of your debt, or starting a side hustle to make extra income that you can put toward your financial goals.
Stick with your plan
Perhaps the most challenging part of this entire process is sticking with your plan once you’ve carefully outlined it. Find a support system that will encourage and motivate you as you work toward your financial goals when the process gets difficult or tiring. Remember your ultimate long-term goals and where you want to end up — use that end goal to motivate you to stay consistent and focused.
Remember that money is a means, not an end
Ultimately, remember that money is not the ultimate end. It is a tool we can use to do other things. The best way to combat money stress is to put an end to the cycle it creates when you don’t have a firm idea of where you are and where you’d like to go, financially speaking. Setting goals, making a plan, and then sticking with that plan will give you the focus and direction you need to tell your money what to do and take control of the situation, instead of remaining at the mercy of uncertain, stressful finances.
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