It can be easy to feel overwhelmed with financial stress. Regardless if it’s coming from debt, the loss of a source of income, financial shortage, or emergency, it can certainly wear you down. Failing to manage your finances properly, even with an excess of it, can also end up dealing you pain and frustration.
Fortunately, there are methods to relieve you from these burdens, so that hopefully you can better dedicate your focus towards the other things that matter in life. While applying for a line of credit like personal or payday loans online can help you get out of financial issues fast, there are certainly other ways that you can explore as well.
Seeking Another Source of Income
Relying on a single source of income is risky especially during these trying times. Hence, why not explore other options such as starting a business or investing in a financial product. The trick is to diversify your income streams. After all, it really is unwise to put all your eggs in one basket.
Those with already hectic work schedules might want to explore passive income streams. Putting up rental services or publishing a website takes less and less effort in the long run while their profits continue to grow even while you sleep.
Create a Budget…and Stick to It!
If you can’t increase your income streams, then maybe you can limit your spending instead? Calculate your cash inflow and outflow each month. The ideal outcome is to have all your expenses covered with a little bit of cash to spare for a rainy day.
If that’s not the case, then you might want to reconsider your expenses per month. Keeping a journal to track all your expenses as they happen will also help in tracking down the root cause of your financial issues.
Set up an Emergency Fund
We cannot stress enough how essential an emergency fund is. This is a savings account specifically dedicated to serving as a safety net during unexpected incidents like the sudden loss of a job, a medical emergency, and more.
Your emergency fund should ideally be equivalent to the amount required for your family to continue living comfortably for six months in case you suddenly find yourself unemployed. The bigger the amount, the better, though.
Create a Financial Goal and an Action Plan
Finally, it will help to set a financial goal to have something to look forward to despite going through your current situation. It will give you the needed inspiration to move forward.
However, a goal without an action plan is just dreaming and can even lead to greater frustration and stress. Hence, here’s a quick guide on how to formulate one:
- Work backward.Set your goal. Dream big yet make it realistic and achievable. This is the endpoint of your plan from which we are going to work backward from.
- Set milestones.Depending on how big your financial goal is, create a number of milestones that are critical for you to meet in order to turn this dream into a reality. Ideally, these milestones could be accomplished within one to three years. If they’re not, then divide them further.
- Set smaller actionable steps.Now, choose the first milestone that you’re going to work on for the next few years. Break down this milestone further to smaller actionable steps. These are financial projects that can be achieved within six months or less.
- Reward yourself.Finally, don’t forget to set rewards after completing each step. While the end goal is reward enough, it’s simply too far away to motivate you right now. Just make sure that your reward won’t set you back financially!