4 Money Habits To Adopt To Avoid Financial Stress

The cost of living crisis is on everyone’s mind, and for a fair reason! It is making life a bit harder (or a lot harder for some) from a financial perspective and adding to the regular stresses of life. Here I share 4 money habits to adopt in order to avoid, or at least reduce, financial stress!

Cause of financial stress

Most of us have experienced some sort of financial stress in our lives. And no wonder, money is quite essential in many areas of life!

Many financial matters can cause us stress because often our sense of self worth is tied to our income or the level of lifestyle we are portraying to others.

Keeping an image up that we can’t afford can cause us to end up in financial difficulties and make us lose sleep.

But beyond just keeping up appearances, money is shelter, it is food and warmth. It is survival, and wondering whether you can afford the bare essentials is extremely stressful.

Do our money habits add to the stress

Poor money management habits can definitely add to your financial stress levels!

Spending more than you earn means going into debt, and going into debt means that you are paying interest on it, making the situation even worse.

We often also just bury our heads in the sand, rather than look at the state of our financial situation.

Having that nagging feeling that we should do something about it but won’t can add to the stress levels.

The way we talk about and think about money is important too.

Are you telling yourself that you are just bad with money, that there is no point, there’s nothing you can do about it?

The feeling of being out of control doesn’t sit well with human nature and causes unhappiness and stress that doesn’t need to be there.

4 money habits to adopt to avoid financial stress

While we can’t completely eliminate financial stress out of our lives, there are some habits we can adopt to help us feel that we are in control (because we definitely can be in control!), which can help us feel less stressed.

Budgeting

Budgeting is a great way to feel less stressed about money.

If you budget you will know exactly where your money is going and you are in control.

More about the benefits of budgeting here.

Saving

Saving money for things means that you won’t need to go into debt for things you want to buy.

Therefore you won’t have ongoing payments, and won’t pay interest either, making it easier to manage your cashflow and budget.

Saving an emergency fund is one of the essential pillars of financial independence, meaning you have cash reserves put aside for those curve balls that life throws at you.

If you are able to afford to be without a job for 3 months and not go into debt, how much peace of mind would it create?

That is often priceless.

More on how to set how much to have in an emergency fund here.

Investing

Investing means that you are putting your money to work, to earn money for you.

Investing is buying assets that grow in value over time and/or create additional cash flow to you just by you owning them.

Investing can help replace income that you earn from work, making you less reliant on outside factors for survival, like your job.

How would it make you feel if you knew you didn’t need your job to get money to live? Pretty stress free I’d say, or that’s how I’d feel anyway!

Insurance

Insurance is often overlooked when it comes to personal finance talk. But it is a great tool to make you feel safe and secure.

You can buy insurance to cover your ability to earn income, to take care of you if you are sick and unable to work and to cover some of your assets that you need to live a comfortable life.

Getting the right policy for you is essential though and since having an insurance is an extra cost to you, it is of utmost importance that the amount of cover is accurate and suitable, so the premiums don’t take too much of your purchasing power.

But regularly reviewing the financial risks you are facing and taking appropriate measures to cover yourself is a great habit to get into, and will for sure make you feel safer and more secure.

What habits help you feel less stressed about money? Share in the comments below!