For most of us, stress and financial matters seem to go hand in hand.
For the vast majority of people that I speak to, the thought of bank balances and interest rates, limited incomes and mandatory deductions is enough to bring them out in a cold sweat.
And it’s hardly surprising when you consider the current economic condition we’ve been plunged into!
Whilst the pomp of the Olympic Games might be doing something to help us forget about our dwindling finances, the fact remains that personal money pots are shadows of their former selves.
Managing your money has therefore become a prime concern and, as a financial advisor, it is something I routinely offer guidance on.
While I can promote the benefits of choosing the right savings account till I’m blue in the face, what you really want to know is how to make money management stress free.
Well, here’s how:
The fundamental part of any form of money management is tracking payments and transactions. Despite this basic fact, you would be surprised at the number of people I speak to who fail to keep a record of what their money is doing.
Whilst some may claim ‘ignorance is bliss’, when it comes to your money nothing could be further from the truth. If you have no clue where your spending your money each month, it will eventually catch up with you. This means keeping invoices and receipts and marking them off of bank statements each month as well as keeping a track of all monthly outgoings and incomes.
Interest rates should inquired about when possible so that you know exactly how much you’re earning on investments or repaying on credit.
Ultimately, knowledge is power and the more you know about your finances the more control, and the less stress, you’ll feel.
Budgets are sexy!
Budgets are in, but don't just take J. Money's from Budgets are Sexy's word for it. There has to be some form of monitoring where you're money is going.
Of course, watching what your money is doing is not enough and you need to take proactive steps.
The easiest way to make money management stress free is to budget responsibly – this means setting an attainable amount of money to live off.
I’ve lost count of the number of people who have spoken to me about their overly optimistic goals with regards to money.
In an ideal world it would be great to save more than 50% of your wages, the truth is that this will never be a reality. (Please prove me wrong).
It's hard for me to convince people to save at least 20% towards retirement!
To reduce your stress levels, set your sights in reality and alleviate the pressure you’ve placed upon yourself.
Looking for an easy way to budget that's actually cool? Take a look at You Need a Budget (YNAB).
Make it Automatic
Saving for retirement stresses out even the best of us. To make sure you are saving consistently, every time you make money you should have contributions to your retirement accounts come out automatically.
If even managing an account gives you stress, check out a robo-advisor like Betterment. These companies will have you fill out a short survey, adjust your account for your personalized risk tolerance, and you just put money in on a regular basis. Rebalancing and reviewing the account are all taken care of for you.
Just because you’re dealing with personal finances doesn’t mean you have to deal with them alone. Seeking advice is highly recommended (well, it is my profession after all) and even I use the expertise of others to ensure I offer the best guidance.
For anything IRA related, my first and only stop is Ed Slott's IRA forums. I've ventured there with the most complex IRA questions and have always left with the answer I needed.
If I've ever needed greater clarification on credit scores, Phil Tirone from 720CreditScore.com is my go to guy. Period.
The point is: don't go at it alone.
Focus on your strengths and align yourself with the experts or resources that you need to handle the rest. The result? A whole lot less stress in your life. 🙂