9 Powerful Steps to Reduce Financial Stress

Financial stress is probably one of the most exhausting and most common feelings. Before I started paying more attention to my finances and working toward my financial goals, I was stressed about money all the time. So what are some steps to reduce financial stress?

This post may contain affiliate links, including those from Amazon, where I make a commission on sales at no additional cost to you. Check out my Disclaimer for more information!

1. Get on a Budget

My number one recommendation to cut down on financial stress is to get on a budget. A budget enables you to tell your money where to go when you get paid, instead of the money just disappearing and you not knowing where you actually spent it. When you budget, you know exactly how much you have to spend on different things and can plan accordingly. It’s the first step in getting out of the paycheck-to-paycheck cycle.

Getting on a budget can be very difficult, especially if you have to break old spending habits. A lot of people trying to budget for one month, don’t stick to it, and then completely give up. Living on a budget can take a few months to get used to. Don’t give up if it doesn’t immediately go to plan – it takes time to change old habits!

2. Save an Emergency Fund

An emergency fund is a saving account you establish with a certain amount of money that can only be used in the event of an unexpected immediate expense. For example, a broken water heater, the car breaks down, or your dog gets sick. Wanting a new TV or going on a spontaneous trip are NOT emergencies.

Establishing an emergency fund will provide a lot of peace of mind and will relieve a lot of financial stress, especially when an emergency does happen. Something that you would have to stress and scrape the money together for in the past, can now just be handled. A good starting point for an emergency fund if you are just getting started with budgeting is around $1,000. Eventually an emergency fund with 4-6 months worth of expenses saved up is a great goal to have.

3. Track your Bill Payments

Some people are extremely type A and never miss a bill payment. However, if you just aren’t naturally that organized and have trouble remembering to pay your bills, having a tracking system for your bill payments will help you out a ton.

I use a budget planner to keep track of all my financial information, including my bill tracker. This can be as simple as a spreadsheet that lists all the months and all your bills and due dates so that you can check off when each one is paid. Here’s an example of

Erin Condren Deluxe Monthly for Budgeting

Setting your bills on auto-pay is also a great way to make sure your bills are paid — as long as you are able to keep track of your account balance. You don’t want to forget about the payment coming out and end up getting hit with an overdraft fee. A tracker that will help you know your bills are paid on time each month with help reduce that financial stress, as well as help you avoid late and overdraft fees.

4. Establish Sinking Funds

Sinking funds can be an absolute lifesaver, especially when it comes to sticking to a budget and handling both expected and unexpected expenses. Sinking funds work similar to an emergency fund, except you save the money for a specific expense. So, these really aren’t “unexpected” expenses, you just might not know exactly when an expense will come up. Sinking funds help you pay for things when they happen instead of having to rearrange your budget to cash flow them.

Sinking funds work great for things like car maintenance, vet fees, property taxes, insurance, even clothing and Christmas. You know you will have to pay for these things eventually, so saving a little bit of money into a separate savings account for these things each month will help you know the money will be there when the expense does happen.

5. Track Your Spending

A lot of financial stress people have comes from just not knowing how much money you have to spend and constantly feeling like you don’t have enough money between paydays. Usually, this is because you are spending money and have no idea where it’s actually going. You are likely spending money on things that really aren’t a high priority. Tracking your spending along with being on a budget can really help reduce this stress.

I was never able to stick to my budget before I started tracking my spending. I write down every single financial transaction I have so I know how much money I have left to spend, and how well I’m doing sticking to my budget. Again, I use my budget planner to track my spending. You can check out this entire blog post to see my system for tracking my spending and updating my budget. There are also many great apps like EveryDollar and You Need a Budget that can help you do a digital budget. Find whatever system works for you!

6. Make a Plan to Pay off Debt

Debt payments, especially student loans, are one of the biggest causes of financial stress. Having required payments hanging over you every month can cause a lot of anxiety, especially if you have a lot of payments to make. Creating a plan to get out of debt can provide a lot of relief. And just think how amazing it would feel to be debt-free!

Getting out of debt is a very hard process. Writing out a plan and setting goals is the first step to get started. There are two popular methods for getting out of debt: the debt snowball and the debt avalanche. Check out this post to learn all about how these two methods work.

Paying off debt takes patience because for most people it takes a little while. Debt has become so normal in our society that most people don’t even consider making extra payments or working on paying their debts off early. Getting ahead and paying off your debt is an amazing way to kick out that financial stress and finally be able to use your money to build the life you really want.

7. Let go of past mistakes

Everyone has made some type of financial mistake in their life. It’s just part of being an adult and learning to manage your money. The important thing is to learn from these mistakes instead of dwelling on them.

Carrying around financial shame isn’t going to help you make progress going forward. Make a plan to get your money in order and let the past mistakes be in the past. It will be much easier to let go of your financial past if you set financial goals and focus on hitting them instead of just dwelling on what you’ve done wrong.

8. Talk about money

A lot of people see money as a very taboo topic of conversation. I believe talking about money can be very helpful for most people. If you have a group of friends or family that support you and you trust, talking about money can open a lot of dialogue.

Especially if you make a plan to pay off debt, having support from others and being able to discuss your progress and challenges can provide a great source of motivation. Everyone struggles with managing their money at some time or other, and I think having others to discuss things with and bounce ideas off of helps me keep things in perspective.

9. Find a community

Finding a supportive financial community can also be very helpful when it comes to staying motivated and pushing forward towards your financial goals. Instagram is a great place to find a like-minded financial community. The debt-free community is amazing and supportive if you are trying to change your financial situation.

Obviously you will always find those that don’t agree with your financial choice or situation but remember that personal finance is personal and you will ultimately have to do what works for you. I really enjoy getting to share my money wins and provide words of support and encouragement to others.

Even with being on a budget and working on improving my spending habits, I still feel financial stress from time to time. I have found these steps to reduce financial stress, especially when you are just getting starting taking control of your finances.

Need more helps getting started?