So here’s a scenario, you’re driving to work one day and your tire goes flat. You need a replacement that’s going to cost you $250. You didn’t plan for this to happen so you end up taking a small loan to pay for it. As you get to the end of paying off this loan, you get your electricity bill but you’re scared to open the email because again, you know you don’t have the money to pay for it until payday in 2 weeks. Even then, the bill becomes overdue and you have to pay more for it.
Story of your life?? Don’t worry, you’re not alone.
Research conducted by National Australia Bank found that two million Australians are experiencing severe or high financial stress, while a further 10 million are living with some level of financial worry.
Financial stress is mostly a symptom of bad debt, not earning enough money or poor planning. Life constantly throws you curveballs that you have to deal but didn’t plan for.
We want to help, so we’ve put together a list of 5 things you can do to turn this around.
Take one step at a time, no rush
There’s no point of thinking you can cut back any one expense by $500 in one go. That’s not how you go about it. Instead, you need to look at everything you’re spending your money on and aim to cut each one by small amounts. If you spend $400 on groceries, see if you can decrease it by $50 first, then $100.
Step by step, you’ll be able to change your spending habits. And don’t worry, forgive yourself if you slip here and there, you’re only human. But make sure you know yourself and how you can dodge temptation – if you can’t go into a sneaker store without buying something, then stop visiting them!!
Create a budget, and stick to it
This is where most people hit a roadblock. It takes a little bit of time and effort to create a budget. And also, where do you start?? Lucky for you, in this age of technology, there are plenty of apps just like Cheq (link to our app store) that can create your budgets for you.
There are easy ways, and hard ways to create a budget. At its basic form, a budget should include certain things (link to our other blog post) to make sure it’s effective. When creating your budget you need to be realistic, no fluff. You need to keep yourself honest and accountable to it so there’s no point of setting yourself up for failure. If you know you spend $300 on going out over the weekend, then there’s no point of setting a budget for $100 because it just won’t work. Instead, start at what you actually spend and see how it looks at the end of the budget then you can adjust it if need be. Just like a crash diet or intense new workout routine can lead to burnout, you don’t want to set overly ambitious financial goals that you may abandon in a few weeks or months.
Track your spending, like a hawk
Know what you spend your money on. To do this, you need to get into the habit of looking at your transactions on a day to day basis. A good way to do this is to look at your bank app at the end of each day to monitor and ensure your budget is on track. Take a list of the items you’ve spent your money on and understand the things that you could have foregone. By tracking your spending frequently you get to make the most out of your income. The more you get into a habit of tracking your expenses, the more diligent you’ll get about spending. You’ll start feeling guilty when temptation gets the best of you.
The small things matter
You know all these coffees you buy during the day? They amount to something big at the end of the week. Identify all the things that you spend your money on that could have less expensive substitutes.
Instead of buying coffee everyday, settle for the coffee machine at work. Find yourself buying lunch every day?? Try making it yourself. And let’s not forget about all the Uber eats you buy with an average order costing $25!! That could have paid for your lunch for the whole week!! These little things that you tend to spend your money on without noticing can add up quickly, so don’t discount them.
Create an emergency fund
Not to get this confused with a regular savings account. An emergency fund is meant to be used for unexpected bulls and financial emergencies – think that tire or electricity bill we spoke about at the start of the article.
You see, if you know that you can always tap into this emergency fund for unforeseen things, a lot of your stress will go away. This also helps you with the money you’ve budgeted for your day to day expenses because you’ll know there’s extra money in the bank ready to cover these unexpected curveballs.
You should aim to have at least $1,000 in your emergency fund until you’re out of debt. But how do you get there? Small steps.. Start by putting aside $10 a week, then slowly work your way up to reach your goal. You can also consider selling some things you never use to reach your goal faster.
And don’t forget, you can always get outside help from professionals or family members. Just simply talking it through with someone can help decrease your stress and get you focused on punching that brick wall.