Being worried about money is common in our culture. It should, in theory rank, on the lowest rung (which indicates the most important and fundamental) of Abraham Maslow’s famous pyramid about the hierarchy of needs because money satisfies our basic needs for food and shelter. The fear of not having enough of it, either in the moment or in the future, causes significant stress.
Anxiety about money affects most people. Even wealthy people are often worried about money.
In 2017, the Consumer Financial Protection Bureau (CFPB) conducted a nationwide survey, the first of its kind, about how anxious Americans were about money. They found that about 40% of the population struggled to make ends meet and things have not improved since then. Another survey was done in 2019, this time by the Freedom Debt Relief organization, which revealed that about 41% of the population could not save enough money for retirement.
So, how do you get relief from your financial worries? Three practical steps you can take to reduce money anxiety are to increase your income, organize all your financial documents, and improve your financial literacy.
Worried about Money: Increase Your Income
You can change your income level. You just have to make new decisions. First, discern the cause of your insufficient income. Usually, it’s something simple. Next, brainstorm possible solutions. Then, research your options. Last, take action.
Here are some common scenarios and tentative solutions when you’re worried about money:
If you are not earning enough because of your skill level, then you need to figure out what to learn to earn more. Don’t have time to go back to school? You can always study online during your free time.
If you are not earning enough despite your qualifications, then you may need to find another job in your industry that pays you what you’re worth.
When you are not earning enough because your industry is no longer in high demand, then it may be time to change industries. As technology evolves, many skills that once paid well are now in less demand.
Sometimes, too, you may not be earning enough despite having your own business. In this case, you, rather than a corporate employer, have limited your own income. You must find out what successful people in your niche are doing to change how you run your business.
Organize All Your Financial Docs
Money anxiety isn’t always because of under-earning (earning less than the rising cost of living). Sometimes it’s because of not having a clear idea of how much money is coming into your household and how much money is going out.
A notes app will help you organize all your financial documents. Every year you will need at least two sets of documents: documents to give you an idea about income and expenses and documents for tax filings.
Improve Your Financial Literacy
Most people learn about money informally—by earning it, spending it, and talking about it with others. They just know enough to manage their income, spending, and savings.
One way to improve financial literacy is to read personal finance blogs. They will help you pick up many new ideas on how to make and manage your money. Good personal finance tips will remind you of what you know but have not applied while others will offer you new ideas that could change your life for the better.
Almost half of the American population feels that they have to struggle to make ends meet. However there are some practical ways to reduce money anxiety. If you’re anxious because you’re not earning enough, you can find ways to improve your income.
If you’re anxious because you’re not clear about your financial situation, you can organize all your money docs. And if you’re worried about money because you don’t know how to manage it, you can start reading finance blogs to improve your financial literacy.