Financial pressure is one of the most common reasons why Americans are so stressed out.1 The pandemic has only made this financial stress more dire with 30 million unemployed workers among a shaky economy.
For many of us, the root cause of our financial stress is not feeling secure. Without financial security, just covering normal day-to-day expenses becomes much more difficult. And all the extra worry can take a serious toll on our overall health and wellbeing!
While we can’t control many of these external factors, we can take steps to improve our situation and our mindset. Here are six things you can do right now to feel more financially secure.
1. Trim Your Budget
If you don’t already follow a budget, now is the time to start! Saving money can be an incredible motivator, so you likely can find real ways to cut down on everyday expenses even if it’s just a few dollars here and there.
Understanding your spending habits can help you tailor a budget that really works for your lifestyle and habits. For example, do you spend a lot around payday? A structured financial plan can help you keep more money in your pocket until you get paid again. Or, maybe you have a habit of splurging a little too much if you’re feeling down — going for a pleasant walk outside when you feel the need to online shop can help curb a shopping habit.
To learn more about your habits, try to look at the past month or two of your bank statement(s) to track every single penny that you earned and spent in that time. You might also be able to use your bank’s app or website to access more advanced spending reports. Does anything surprise you? Can you find any patterns?
Consider cutting down on some of these other costly expenses:
- Subscription and membership fees: Do you really use all of your benefits? Is it possible to skip a month? Recurring monthly charges can take a toll on your budget.
- Daily conveniences: An occasional to-go coffee or taxi ride can help you save time, but these expenses will come with a premium price.
- Eating out: Restaurant takeout can be very costly and unhealthy, but you can make these easy meals without cooking!
2. Build Your Emergency Fund
An emergency fund can help you cover surprise expenses like car or home repairs without having to fall behind on your other bills and payments. It can also help you get by between jobs or with a seasonal income.
Building your emergency fund is a solid step towards financial security. Most financial experts suggest aiming for three to six months’ worth of living expenses, but if you don’t have $1,000 saved, start there. Living on a smaller budget can help you build an emergency fund faster.
Saving money is easiest when you don’t have to think about it. If you have access to autosave with your bank, consider setting up a recurring transfer. Even a regular $20 transfer to a savings account from each paycheck can really add up over time!
3. Pay Down Debt
Debt may be hard to avoid, but a little bit can turn into a lot if you don’t make a conscious effort to pay down your balance. It can also cost you more in the long run as you repay the money borrowed and any interest accrued for your loan. Your budget can become harder to manage when you have more than one outstanding debt payments.
You might not be able to completely eliminate your balance, but you can work out a reliable strategy to repay your debt over time with these resources and tips:
- How to Prioritize Your Debt
- Debt Repayment Tips, Strategies and Tools
- Are You on the Right Track to Eliminate Debt?
4. Monitor Your Credit
Have you checked your free credit report recently? It’s an important part of your financial health! Staying on top of your credit score can help you save money, secure more affordable financing and even help you get a job.
While it might take a while to raise your score substantially, you can improve your credit health with good financial habits like paying bills on time and keeping your credit utilization low.
5. Establish a Line of Credit
An emergency fund can help you cover unexpected expenses, but what happens if your bills exceed your funds? While you can’t plan for every possible scenario, it’s helpful to have another funding option available to use when you need it. Access to revolving credit, like a personal line of credit or credit card, can help you pay for expenses when your emergency fund isn’t sufficient.
6. Brush Up On Your Professional Skills
Increasing your earning potential can take you even further on the path to financial security. Regardless of your career path or employment situation, learning a new or advanced skill can improve your opportunities, increase your confidence and give you a competitive advantage in your field.
It’s also beneficial to stay up-to-date on the latest interviewing trends for your industry. Keep your resume and portfolio updated so that you can quickly look for jobs if necessary. Check out a few job postings for similar positions; can you see areas for improvement? Does your skill set align with others in your field? Look for opportunities that can make you a more appealing and versatile job candidate.