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How a solid financial plan can reduce stress

10 Apr 2021

People often mistakenly believe that their stress would disappear if they just had more money, they believe that if they earn more it will put them on the right road to find happiness.

It can be true that earning more improves your financial health, however it is rarely that black and white. In this blog we look and how a solid financial plan can reduce your stress, no matter what salary you earn.

You can feel anxious about your financial situation no matter how much you earn. We often discover that clients with higher salaries also have inflated lifestyles, they must earn more to merely stay afloat. This can be a cause of huge stress and anxiety!

In this post our Generation Wealth Management Director Andrew Waller will discuss what is at the root of money stress and offer ten strategies to lead to a more peaceful life.

What is the cause of financial stress?

Stress itself is nothing more than your body’s response to a situation or a series of events, each person perceives stress differently. However, there are a few common triggers of money stress. In this blog I aim to help you understand and avoid.

Living beyond your means

The biggest and most widespread problem we deal with at generation Wealth Management is people living beyond their means. In a nutshell this is when living expenses exceed your income. Clients will come to use trapped in the cycle of financing their lifestyle using some form of debt, such as a credit card, loan, or home equity line of credit. If you are living beyond your means you need to attempt to cut your outgoings.

Cut your expenditure

The first step when cutting your expenditure is to decide what is truly important to you. Once you have made a note of those you will feel empowered to take control by determinedly cutting your expenses.

Create a spending plan. Can you reduce your housing costs? This is a good place to start because for most people it is the largest single expense. If your housing expense is a source of financial stress, could you consider downsizing or relocating?  Try to ensure that no more than 25% of your gross income is spent on a mortgage or rent payment.

Vehicles are another expensive category to cut, buying a pre-owned vehicle is a much better deal than buying a new one as new vehicles depreciate so much in the first year – perhaps consider a lease deal. Also consider other options to save, such as using public transportation, working from home, or moving to an area where you could drive less.

Automate your saving

Automate as many of your transactions as possible so they happen without you having to think about it. If you have a simple plan in place to achieve your goals, such as retirement, building emergency savings, or buying a home, that can be the secret to alleviating money stress.

It is okay to start small. Even if you can only set aside £25 a month for savings and £25 for retirement, you will be surprised how quickly balances can grow over time. Treat savings like mandatory bills that you owe yourself and automate them when possible.

Stay informed about your finances

Never delay opening bills. It can be tempting to ignore them if you know you can’t pay them them but that will only make you more stressed. Keep track of your spending, your saving, and whether you need to tweak your monthly budget.

Get professional help

Never believe that a financial challenge is a sign of personal failure or weakness. Whatever your situation, millions of people have struggled with the same thing. You and your family can grow stronger by proactively working through your money challenges.

If you would like to discuss your finances with one of our friendly team please do get in touch.

 

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