Feelings of financial stress often stem from common issues such as carrying too much debt, not earning enough money, the expense of raising kids, marriage to a person that has different ideas about how to manage finances, and the list can go on.
There is a virtually endless list of reasons you may be feeling some financial stress. It can take its toll on your closest relationships, and when you are stressed it can start affecting other aspects of your life.
You may feel overwhelmed and think that a budget is only going to add to your financial stress, but it is the best tool you have to get control of your finances and stop worrying about money.
Create a Budget :
Your budget should consist of several smaller budgets. You need one for operating expenses, sales, purchases of new equipment and property, marketing, new hiring and production, to give a few examples. By looking at all of these areas of your business together, you can make wise decisions based on a balanced view of the needs of all aspects of your business.
For example, if you overspend on hew hiring, you could have no money left for marketing.
Your budget tells you how you’re doing. The foundation of your budget is your income. If you find that you are missing your income targets and have to cut back on expenditures, this tells you that you must make smarter decisions about where to focus your money.
For example, missing income targets might cause you to reallocate funds for marketing and sales to boost income levels. Keep this strategy adjustment in mind when you create your next budget.
If you include plans for expansion and purchases of equipment and property in your budget, you include growth in your budget. Such a budget helps you focus on setting aside money for growing your business, not merely surviving. This focus makes your decisions wiser, because you not only watch your current bottom line, you plan to grow your income for your future bottom line.
Creating crisis fund:
An emergency fund is an amount of money you have set aside to cover unexpected expenses and financial emergencies. Although a car repair can be expensive and stressful, if you know you can tap into your emergency fund to cover it, a lot of the stress will go away.
It is for this reason that an emergency fund should be liquid. This is the most critical feature that you should keep in mind when you are choosing where to park your emergency fund.
You should be able to withdraw the money when you need it without any delay. At the same time, you should ensure that you do not get penalized in the form of an exit load or pre-withdrawal penalty fee. The value of the amount invested should not go down either and must deliver guaranteed returns.
You cannot build an emergency fund overnight, but you should do it gradually. Set aside a particular amount every month in a different bank account. Soon it will grow into a suitable emergency fund that you wish to keep.
Say, you have decided to have an emergency fund of ₹1 lakh. In this case, you can put aside ₹5,000 or ₹10,000 every month before you accumulate the corpus you need. It is OK to even cut down on your investments to build this amount.
- Long-term emergency funds
This is where you save for large-scale emergencies like a major natural disaster or a sudden medical emergency. This option allows you to earn a slightly higher rate of interest but may take a couple days to liquidate.
- Short-term emergency funds
This is the fund you rush to in cases of immediate emergencies. Such an account will offer little in terms of interest but allow you immediate accessibility which in case of extreme situations can suffice till you gain access to your long-term emergency funds.
You can take classes on basic money management and investing, that will help you plan out a budget and do the things you need to succeed financially. A financial planner can help you create a long-term saving and investing strategy that will help you take care of your current needs and plan for retirement. It is important to realize that you do not have to face the problems alone. If you are feeling overwhelmed by debt you can work with a credit counselling.
It is important to know, the funds that are raised from sources outside a firm. The monies that are received from the sale of stock and bonds are external funds. Firms seek external funds when they are unable to finance expenditures with money generated from operations. External funds are particularly important for a young, fast-growing company that has capital requirements that greatly outstrip its ability to generate funds internally. Compare internal funds.
One type of external debt financing is long-term debt. Long-term loans typically include any debts that you expect to take more than a year to repay. Commonly, though, your long-term loans are used to purchase buildings, equipment and other major assets. An advantage of long-term financing is that you can repay the loan over an extended period, which minimizes your monthly payment obligation.
Plus, interest on property purchases is often tax-deductible. One drawback to this type of loan is that it’s usually secured by property, meaning if you can’t take it back, the lender can seize your building, equipment or inventory.
If you know that you do not make enough money to keep up with your current bills, decide what you can do to change the situation. It may include options such as going back to school to qualify for a higher paying job.
Change is not always easy. Start with small steps and work up to bigger changes. Additionally, if you make a mistake one week, go easy on yourself, and get right back on track so you can continue to stick to your budget and keep working on making those changes in your financial habits.
Save on transportation:
Rideshare services like ZipCar, Lyft, and Uber make it easier than ever to live car-free in major cities, allowing you to rent a car or hire a ride for the occasional Costco run, night out, or day trip to the country.
If a vehicle you own is rarely used, consider selling it. If nothing else, you’ll save money on insurance. If you’re able to get market price for your vehicle, you could also use the proceeds to beef up your savings account or pay off high-interest debt.
Save on debt:
If you think you might be eligible to refinance your mortgage at a lower rate, contact some lending institutions. Locking in a lower interest rate can not only save you money over the life of the loan, but can also lower your monthly payment and increase your monthly cash flow. Similarly, if your credit has improved a lot since you first purchased your car, you may now qualify for a far better interest rate, so it could be worth refinancing your auto loan as well.
If you have high balances on multiple credit cards, it can also make sense to utilize a debt consolidation loan. These loans allow you to combine several high-interest debts into one personal loan, which ideally has a lower interest rate than your current debts and enables you to pay down your debt faster. As with balance transfer cards, be sure to take into account any upfront fees and make your monthly payments on time.
Cut down on energy bills:
Mostly, remember also that under normal usage (four hours a day) and average electrical rates replacing a 60-watt bulb with a 14-watt CFL or LED saves about $0.66 per month.
Are there any electrical devices around the house that stay plugged in, but that you rarely use? Most electronic devices constantly draw a small amount of electricity, a phantom charge, that can add up quickly when you consider just how many devices and small appliances you own. To eliminate that usage, unplug any items or power strips you use infrequently.
Swap for organic entertainment:
Look at expenses such your gym membership, your membership with the local country club, and so on. How often do you really use these services? If you’re using a gym membership less than once a week or a country club membership less than once a month, you’re likely throwing away money. Try cancelling any memberships you’re on the fence about, and see if you really miss them.
Not much to do with the unseasonable offers if you do not use the services more than twice a year.
We live very far from our extended families, so we’re well aware of the costs of travel. To save as much as possible, we cut down on the amount of travel we do and use travel credit cards for everything from free hotel stays to airfare.
Save on junk:
When you cook at home, make a lot of whatever you’re preparing so you can freeze some of it for future meals and, even better, take some leftovers into work for lunch. Some people may shy away from leftovers, but there are some secrets to making any leftovers as good as the original.
Many people never even bother to look at some of the larger packages of non-perishable items – they think it’s just too much. Try looking at the cost per unit of all of the sizes and choose the one that’s the best deal. Check for coupons and coupon codes for items you use all the time, and if a good enough coupon presents itself, buy it in bulk.
Many products (not just food) are available in a store-brand or generic form for significantly less money. Look carefully at the ingredients in generic and name-brand products to see how similar they are. If they’re close, go with the generic one on a regular basis to consistently trim money from your shopping bill.
Save on insurance bills:
Ask at work about the various options available to you that might reduce your insurance costs, and don’t neglect to look into family options if you have children – if you do, all working members of the household should look at family coverage.
Find Positive Aspects of Your Life Each Day:
If possible, try to find some healthy outlets that do not cost a lot of money. Regular exercise and taking care of yourself can reduce your overall feelings of stress, which allows you to better focus on the problems and make headway. You can change your financial situation, and you will find it easier to accomplish if you are not worried and living in an anxious state all of the time.