Do you feel as if you are not in control of your money? That it has a mind of its own and is never enough? Are you constantly struggling to make ends meet and unable to save, or cannot save the way you would like to, though you earn good money? Well, I can assure you that you are not alone in your struggle. Many individuals, including those earning more than you do, admit to suffering from financial stress. In fact, a Bloomberg report last year revealed that a significant portion of wealthy Americans lack confidence in their financial standing and worry about losing their wealth, rising prices and not being able to provide for their families’ basic needs. Financial stress can often affect various aspects of your daily life, including sleep, mental and physical health, and even your relationships. While it is quite common for everyone to experience financial stress at some point in their lives, it is important to recognise that it does not have to be a permanent state of being. With the right strategies, you can reclaim control over your finances. Let us explore three steps to taking back control and remaining atop your finances.

Identify the Underlying Issues

Start by pinpointing the source of your financial stress. By identifying the issues specific to you, you can create an effective plan to overcome them. Oftentimes, it is not always immediately obvious what is driving your financial stress, so take some time to examine your circumstances and financial habits. Maybe it is unexpected expenses, overspending, or a recent life change like a new baby, moving out on your own, or a divorce. Understanding the root of your financial stress is the first step to addressing it.

Time to Combat Financial Stress

While there is no one-size-fits-all solution for curing financial stress, one proven strategy is to create and stick to a budget. Contrary to common misconceptions, budgeting is not exclusive to those with limited means. In fact, a budget empowers you to be in control of your finances as it “tells your money where to go instead of wondering where it went”. Not having a budget, regardless of your income, is like stumbling around in the dark and it will only keep you burdened and may prevent you from reaching your long-term financial goals. If you are not consistently budgeting, it is time to start and begin to reap the financial benefits. Develop a budget, which is effectively your spending plan for the allocation of your money. You can align it with your income cycle. If you already have a budget, congratulations. However, if you are still experiencing financial stress, it might be time to review your budget to see where you need to make changes. A simple yet effective budget model to follow is the 50/30/20 rule. This allows you to manage your money sustainably by dividing your monthly after-tax income into three categories: 50 per cent for needs, 30 per cent for wants, and 20 per cent for savings and/or paying down debt.

Get a Grip on Your Money Reality

Before tackling a budget, it is essential to assess how much you earn, how much you spend and what you spend it on, to confront your financial reality head-on. See where your money is going now; put it on “paper”. You may think you know but there is nothing like seeing those numbers in black and white. It will let you know if you need to find ways to maximise your income to create a buffer or if you are spending too much and need to cut your expenses to free up funds to save and invest. Many individuals often underestimate their expenses. By tracking your expenditures, you take control and gain a better understanding of your financial situation. To get a sense of your money reality, carefully examine your bank and credit card statements to assess whether you are consistently spending more money than you are earning. If this is the case, do not worry; instead, focus on implementing strategies to either reduce expenses and/or boost your income. Take a closer look at your spending habits to identify areas where you are overspending. Begin by tightening control over your variable costs such as entertainment, grocery spending and unnecessary subscriptions. For example, opt for cooking at home instead of dining out, and consider free exercise options like
YouTube classes instead of expensive gym memberships. These and your largest expenses are excellent areas to start as they present opportunities for immediate savings.

While cutting expenses is valuable, oftentimes it may not be a viable option. Depending on your income and expenses, it might be that it is just not possible to cut anymore. Additionally, constantly depriving yourself by reducing expenses can itself lead to financial stress. Therefore, it is essential to also examine your income and explore opportunities to boost it. This could include various strategies such as seeking a higher-paying job or a promotion, pursuing side gigs, or investing in income-generating assets. Creating additional streams of income is a proven method to expand your financial cushion and by balancing expense reduction with income growth, you can achieve financial stability and reduce stress in the long run.

Ultimately, after assessing what you spend money on each month and implementing steps to grow your income, the key is to aim for a realistic budget that you can stick to. Within that budget, ensure that you are paying yourself first. Before you spend one cent on anything else, take out 10-20 per cent of your income and put that towards investing. This money will work for you, while you are working. Adopting this mentality is necessary to make steps towards controlling your money and securing your financial future. Furthermore, by doing so you create a safety net, to protect you from becoming overwhelmed by financial stress.

It is important not to underestimate the significance of minimising financial stress to your overall financial well-being. Taking the time to develop and stick to a budget is going to be critical. This will require you to better monitor your expense and grow your income in order to alleviate this stress. If your situation is, however, a little more complex, an NCB wealth advisor can help devise a plan for you to regain control of your finances and reach your future financial goals, rather than allowing money to control you.