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Money stress has reached new heights in recent months thanks to inflation, rising housing prices and rising gasoline prices.
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According to the American Psychological Association, about 87% of Americans say the rising cost of everyday items like groceries and gas is a “significant source of stress.” annual survey. A CreditWise Survey also revealed that 73% of adults said finances were a major cause of stress, outranking family, work and politics.
Yet financial experts say that with the right mindset and habits in place, Americans can ease their worries about money, even in today’s tight economy. Here’s what you can do to ease the burden of rising prices.
Create a realistic budget
Having a budget may seem like a no-brainer, but you might be surprised how many people don’t use one. A survey of 1,900 Americans by The Penny Hoarder shows that more than 55% of adults don’t budget and 56% don’t know how much they spent in the previous month.
Still, experts say setting up a set monthly budget is the first step to alleviating your financial stress.
“Write down your household income exactly,” says Levon Galstyan, CPA at Oak View Legal Group. “When developing the budget, divide your income into three sections: the fixed payment, your needs and those of your family, and savings. Make sure you don’t stray from the budget, although it’s essential to give it some breathing room for a few unforeseen expenses.
Reduce expenses as much as possible
Nathan Liao, Certified Management Accountant and Founder of CMA Exam Academyrecommends scanning your budget regularly to see if there are extra expenses you can eliminate.
“Many families make the mistake of not looking at their actual expenses when setting their monthly budget,” he says. “It can really drain their budget, because they can unknowingly be paying monthly subscriptions for publications they no longer read, mobile apps they no longer use, streaming services they no longer watch, etc. It is therefore relevant to open your bank and credit card statements, check each item, identify those that are recurring expenses, then eliminate those that you no longer need.
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You can cut your expenses even further by buying store-brand versions of everyday grocery items, using discounts and coupons, and buying in bulk.
“Whenever you buy packaged food and personal care items like baby shampoo and soap, you should go for family-sized items,” Liao says. “Do it even if there are only one or two people living in your household! Family-sized items will have a lower price per unit or serving, and personal care products will last much longer. Plus, whenever you cook a family meal for yourself or someone else, you can save the leftovers for your lunch or dinner the next day, saving you even more money.
Repay debt strategically
“Debt can become a big headache if not managed properly,” says Galstyan. “If you’re having trouble dealing with it, it’s time to change the way you manage your debt.”
If you find that trying to pay off several debts at once is too much for your finances, consider using the snowball strategy. This involves paying off the smallest debt first, then moving on to the next smaller one. Continue this pattern until you have eliminated every debt.
Or you can try the opposite approach: the avalanche method, which involves paying off your largest debt first and reducing gradually. Galstyan recommends adding a little extra money to your payments each month to speed up this process.
“You can try debt consolidation programs that can help you consolidate your debt into single monthly installments,” he says. “These programs will help you manage your repayments systematically and efficiently.”
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Communicate with your partner or family about finances
Samantha Hawrylack, co-founder of the personal finance blog How to shootsays communication is key to managing money-related stress, especially if you have a partner.
“If you’re married or have a partner, it’s important to be on the same page financially,” she says. “Couples or families can ease their financial stress by communicating openly about money and working together to make wise financial decisions.”
Finding ways to reduce spending together can help ensure that the budget is a mutual agreement and can avoid misunderstandings about spending. Plus, when both parties agree on a plan, it’s easier to hold each other accountable.
“And if you’re able to stick to a financial plan,” says Hawrylack, “you’ll be in a much better position to weather whatever financial storms come your way.”
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