Money-related stress reached new heights in recent months thanks to inflation, rising housing costs and gas price hikes.
Around 87% of Americans say the increasing costs of everyday items like groceries and gas are a “significant source of stress,” according to the American Psychological Association’s annual poll. A CreditWise survey also revealed that 73% of adults said finances were a major cause of stress, outranking family, work and politics.
Yet financial experts say that with the right mindset and habits in place, Americans can lessen their money-related worries — even in today’s tight economy. Here’s what you can do to ease the burden of rising prices.
Create a Realistic Budget
Having a budget might seem like a no-brainer, but you may be surprised at how many people don’t use one. A survey by The Penny Hoarder of 1,900 Americans shows that over 55% of adults don’t budget, and 56% don’t know how much they spent the month before.
Yet experts say setting up a fixed monthly budget is the first step to alleviating your money stress.
“Make note of exactly how much your household income is,” says Levon Galstyan, a CPA at Oak View Law Group. “While making the budget, divide your income into three sections: the fixed payment, you and your family’s needs, and savings. Make sure you don’t stray from the budget, although it’s essential to leave some breathing room in it for a few unforeseen expenses.”
Cut Expenses Wherever Possible
Nathan Liao, a Certified Management Accountant and founder of CMA Exam Academy, recommends regularly analyzing your budget to see if there are additional expenses you can eliminate.
“Many families make the mistake of not examining their actual expenses when they set up their monthly budget,” he says. “This can really drain their budget, as they may be unknowingly paying monthly subscriptions for publications they no longer read, mobile apps they no longer use, streaming services they no longer watch, and the like. So it’s pertinent to open your bank and credit card statements, check every line item, identify which ones are recurring expenses, and then eliminate the ones you no longer need.”
You can cut down expenses even further by shopping for store-brand versions of everyday grocery items, using discounts and coupons, and buying in bulk.
“Every time you shop for packaged food and personal care items like shampoo and baby wash, you should opt for the family-sized items,” Liao says. “Do this even if there’s just one or two people living in your household! The family-sized items will have a lower price per unit or serving, and the personal care products will last a lot longer. Also, every time you make a family-sized meal for yourself or one other person, you can save the leftovers for your lunch or dinner the next day, saving even more money.”
Pay Down Debt Strategically
“Debt can become a big headache if not handled properly,” Galstyan says. “If you have trouble dealing with it, it’s time to change how you tackle your debt.”
If you find that trying to pay off multiple debts at once is too much strain on your finances, consider using the snowball strategy. This entails paying off the smallest debt first and then moving on to the next smallest one. Continue this pattern until you’ve eliminated each debt.
Or you could try the opposite approach: the avalanche method, which involves paying off your largest debt first and working your way down. Galstyan recommends adding a little extra money to your payments every month to speed up this process.
“You can try debt consolidation programs that may help you consolidate your debt into single monthly payments,” he says. “These programs will help you manage your debt payments systematically and efficiently.”
Communicate With Your Partner or Family About Finances
Samantha Hawrylack, co-founder of the personal finance blog How To FIRE, says communication is crucial to managing money-related stress, especially if you have a partner.
“If you’re married or have a partner, it’s important to be on the same page financially,” she says. “Couples or families can ease their financial stress by communicating openly about money and working together to make sound financial decisions.”
Looking for ways to cut expenses together can help ensure the budget is a mutual agreement and can prevent misunderstandings about spending. Plus, when both parties agree to a plan, it’s easier to hold one another accountable.
“And if you’re able to stick to a financial plan,” Hawrylack says, “you’ll be in a much better position to weather any financial storms that come your way.”
More From GOBankingRates