Do you ever feel on edge because you’re not sure if you have enough in your bank account to cover your bills and put food on the table? If so, you’re far from alone. A recent study by the United Way ALICE Project reveals that 51 million households — which equals half of Americans — can’t afford to cover basic necessities such as food, transportation, and housing.

The good news is that despite larger societal issues — wage inequality, systemic poverty, underpaid jobs — there are steps we can take as individuals to help us stress out less about our Money situation.

In honor of Independence Day, we’ll talk about how to be free from Financial stress.

Focus on Short Term Stability

It makes perfect sense, doesn’t it? To build a 10-story building, you’ll need to first lay the foundation. The Aspen Institute’s Short-Term Financial Stability Report points out that to have long-term stability — a six-month emergency fund, a retirement savings, making headway toward major purchases — you’ll need to start with focusing on the shorter term.

Per the report, the top three drivers of financial instability are Cash Flow Issues, struggling to save, and lack of credit. To start, focus on the most pressing challenge you’re currently faced with, or the one issue that will help your financial situation the most.

If it’s cash flow issues, see if you can find ways to earn more, either by negotiating for higher pay at your current job, working extra hours, taking on a side hustle, or enrolling in a class that could boost your earning potential. Or you can try to cut back on your living expenses. It’s helpful to start with the big or easy wins.
Don’t have strong credit? Besides the core basics such as making on-time payments and having a low debt-to-income ratio, you can consider a secured credit card, get a credit builder loan, or even having someone co-sign a credit card for you.

Build Awareness

Taking a hard look at our money isn’t fun, easy, or something that many of us are comfortable doing. “Knowing where you stand financially can be super scary,” says Garrett Philbin, a financial coach and founder of Be Awesome Not Broke. “But, the devil you know is better than the devil you don’t. You’ll find comfort in knowing what your actual situation is.”

It’s only by having awareness and knowing where you stand money-wise that you can build a plan to move forward. To start, look at the numbers in your bank account and savings or use a money management app to see exactly what you’ve been spending on. Next, figure out how much you actually have to spend, and create a plan from there. “That way, your plan for your money is rooted in some sort of reality,” says Philbin.

Create a Plan for Your Money

If you want to be in a place where you can comfortably cover your bills each month and have a bit of savings, be intentional with where that money is going. Ask yourself how much money is coming in each month, and where do you want it to go? Next-level move: figure out what your goals, priorities and values are, and how you can put your money toward those things.

“Once you build awareness, you can be proactive and intentional,” says Philbin. “It’s the difference between being reactive and proactive.”

Track That Plan

By tracking the budget you’ve created, you can see what’s working and what isn’t. That feedback allows you make better decisions so they’re in greater alignment with your goals, points out Philbin. Let’s say you’ve set aside some money toward savings, but find yourself falling short covering your living expenses. That can be pretty demoralizing, right? If the problem is rooted in cash flow issues, find ways to bolster your income so you’re in the flush.

Start Small and Bump Up Your Savings Over Time

Grant Sabatier, creator of Millennial Money and the author of Financial Freedom, recommends making tiny changes, then working your way up. Sabatier suggests starting with saving 1% of your income, then bumping up the amount by 1% every month. By the end of year, you’ll be saving 12% of your income or more.

He further explains: “The idea of starting small is that you are saving, but not “feeling it,” so you can ease into it at your own pace. It’s kind of like lifting weights — you don’t have to go right to 100 pounds, but you need to ease into it at a rate you’re comfortable with.”

Invest Extra Cash

That $10 bill you discover at the bottom of your purse. That jar you’ve been dumping spare change into. Instead of spending that extra money willy-nilly, invest that money, suggests Sabatier. That way your money will grow and work for you in the future.

If you’re focused on savings, put that money toward an emergency fund. The general rule of thumb is to have three to six months of living expenses.

No matter what our circumstances, we can make moves within our sphere of control to help us get a better handle on our money. By starting small, building awareness of our current situation, and focusing on what will help us the most, we can stress out far less about our finances.

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