6 Ways To Avoid Financial Stress Between Pay Periods
Financial stress is all too common. According to a recent MarketWatch Guides survey, roughly half of Americans feel like they’re broke. Around 66% feel like they live paycheck to paycheck.
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If that sounds just a bit too familiar, know that there are ways to avoid — or at least radically reduce — financial stress between pay periods. Here are a few solid tips to get you started.
Understand Your Income and Expenses
“Financial stress often comes from not knowing exactly what you have, don’t have and need to have. Many people think it’s less stressful to ignore finances, but the reality is — as with most areas of life — that you need to be aware of what’s going on in your life,” said consumer finance expert Kyle Enright, president of lending at Achieve.
Enright suggested starting with a simple budget. You can either do this in a traditional way using paper and pen, or you can use a free budgeting tool or app to help you out. Whatever the case, creating a budget doesn’t have to be difficult. And once you have it, you’ll have a much better idea of what you actually have vs. what you need.
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Really Cut Down on Spending
As you go about creating a budget, be absolutely honest with yourself. Do you need to have that monthly subscription service to Netflix? Is that three-times-a-week coffee run necessary, or could you be just as happy with going once a week?
Take a hard look at your spending habits and start prioritizing cutting down. You can always adjust your budget again later as you have more spending money.
“Keep all receipts (online and in-person purchases) for a few weeks and track where your money actually goes,” said Enright. “Then you can decide where you can cut back or adjust so your spending aligns more with your goals.”
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Set Up Automatic Payments
If you get paid a consistent amount on a specific day — or days — of the month, consider setting up autopay. You’ll want to really make sure the funds are going to be in your account before any bills come due, so write these down beforehand.
It also helps to have a clear budget at this point so you know approximately how much money you’ll have throughout the month to pay these bills. Doing this can eliminate the stress of having to juggle multiple payment dates. It can also help you avoid late fees.
“The easiest way to know you won’t be late is to pay every bill as soon as it arrives,” said Enright. “Some people have success scheduling online payments. Some note due dates on calendars they use consistently. Others write checks right away (and [subtract] them from the check register), then [put] the mailing date on the envelope. Put the envelope in a visible place and mail it after pay day. Pick what works for you and adhere to it consistently.”
Prioritize Your Debts
Debt is a major cause of financial stress, especially if you have due dates that don’t quite line up with your paycheck. If you’re not sure of the best way to pay off those debts, know that you have a lot of options, including:
Debt snowball method: List your debts in order of smallest to largest balance (regardless of interest). Make the minimum payments on all other debts while paying as much as you can on the smallest balance. Once that debt is gone, move on to the next and so on.
Debt avalanche method: List your debts in order from highest interest rate to smallest. Focus on paying off the highest-rate account first, while making the minimum payments on the others. Once you’ve paid off the first account, you can move on to the next.
You may also be able to consolidate your debts to reduce stress.
“Look into whether you could refinance or consolidate high interest debt into lower interest debt, or restructure the debt to reduce your monthly payments,” said Richard Barrington, financial analyst for Credit Sesame.
Depending on your credit score, debt consolidation could save you money on interest payments over time. It also streamlines your payments by rolling multiple debts into one, which can make it easier to keep up with those payments — and avoid late fees.
Ask for Help
Sometimes, you just need to know when to ask for help. This might not be easy, but doing it can alleviate quite a bit of financial stress.
If you’re dealing with a financial hardship, or if you even just need a mini reset, consider asking a family member who’s in a better financial situation for help. You might not want to make a habit of this, but you could also get some much-needed short-term relief.
And if that isn’t an option, there may be other resources.
“Know when you need to ask for more help,” said Barrington. “Consider whether debt counseling might be a necessary step.”
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Take Back Control of Your Finances
If you’re dealing with financial stress between pay periods, it could be because you don’t feel like you’re in control of your financial situation.
“One characteristic of financial stress is a feeling of helplessness. It’s that sense that your debts and your bills have gotten away from you, and there’s no catching up,” said Barrington. “The way to fight that feeling of helplessness is to get organized. Make a plan to deal with your financial problems.”
It’s OK if you can’t resolve every problem right away. It often takes time, so take it one day at a time and remind yourself that it’s okay to celebrate the small wins.
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