As the U.S. economy grapples with the effects of the pandemic and inflation, 59% of Americans say the past 12 months have been the most stressful of their lives, according to a new survey.
The data comes from a poll of 1,000 Americans by Clever Real Estate. The report found that a large part of this stress is related to peoples' finances — with a staggering 80% of Americans stressed about the cost of living.
Fortunately, there are steps Americans can take to alleviate financial stress and better prepare for the future.
1. Set up an automatic savings transfer
More than half of Americans (61%) cite managing money as a source of stress, making it a more common source of stress than their homes (49%), relationships (48%), or jobs (45%).
Building a savings account is one of the best ways to alleviate money stress, and you can start by setting up a recurring automatic transfer. Even if you begin with transferring just $5 a week to a savings account, getting into the habit is more important than depositing a large amount.
2. Organize your bills
A lack of information and organization regarding your financial situation can also contribute to stress. Although it can be hard to check your bank account every day, taking stock of your financial health will help establish a sense of control over your bills.
Andrew Daniels, the founder of Family Money Plan, suggests making a list of all of your monthly expenses.
"Write down what day your bills are due, and compare that to your monthly income," Daniels said. "Keep track throughout the month, and pay attention to your inflow and outflow."
Daniels said checking the numbers can be done in as little as five minutes a day, and doing so can help you feel more in command of your finances.
3. Build your credit.
If you don't know what your credit score is, there's an easy way to find out. You can use a free service, such as Credit Karma or Credit Sesame, to get an update on your score. Like most things, a little bit of knowledge goes a long way.
Although it might seem intimidating at first, an understanding of how to improve your credit can help you make more informed financial decisions — something especially useful to the 44% of Americans who report feeling stressed about their lack of financial literacy.
4. Find financial mentors
Asking people you know for advice about your financial situation can be difficult — even more so when 53% of Americans are stressed about having less money than their friends. But seeking out a mentor can help you stay accountable on your money journey.
The best mentor is someone who has been in similar circumstances to you, but is a couple of years ahead in terms of financial progress. For example, someone who recently got out of debt, or recently raised their credit score by 50 points, is more likely to be familiar with your financial struggles than someone 20 years your senior.
5. Take advantage of employee resources
Nearly 3 in 5 Americans (57%) say they're stressed about not having enough money saved for retirement.
If your employer provides benefits such as a retirement match, life insurance, or similar financial perks, now is a good time to ask your boss or human resources department to help you understand each aspect of what your job offers.
6. Prioritize and simplify
The idea that Americans must cut all unnecessary expenses from their budgets is a common refrain in articles about money management. But don't take that advice overly literally. In reality, we all have different priorities.
For example, one person might view their yoga studio membership as essential, while someone else might have a membership and never use it. Think about what you value most in your life. What is your top priority? Is it traveling? Is it eating healthy, organic food? Whatever it is, don't rush to abandon the pursuit that most enriches your life. Only cut what falls lower on your list of priorities.
This gives you permission to continue enjoying the things you value. Then, by cutting out the things you don't, such as your cable subscription, you can still free up cash flow and improve your financial situation.
7. Create specific goals
Have you ever noticed that whenever people sign up for a race, they start to run a lot to prepare? It’s the same with money goals.
First, take your time and familiarize yourself with your finances by following the previous tips. That means understanding your employer's benefits, knowing your numbers, examining your expenses, and choosing your financial priorities. Once you do this, you’re better able to create specific financial goals.
From there, choose a goal and give yourself a deadline. Create some accountability by sharing your goal with your mentors or trusted friends. The more specific the goal and the more accountability you have, the more likely you are to achieve it.
Ultimately, when it comes to financial stress, be kind to yourself. Reducing money stress is not something that happens overnight. It will take consistent effort and time to improve your financial situation, but it’s certainly worth it.
Reducing stress means better health, and learning about your money is an empowering process. Start today with the tips listed above, and take the first steps to reduce your financial stress once and for all.