No one likes having money troubles, but alas, it’s an all too common concern. One study from the London School of Economics found that nearly half of UK adults are affected by financial insecurity, which has been shown to lead to stress, sleep loss, and high blood pressure.
Finding yourself in financial difficulties ultimately impacts quality of life, yet while there’s no way to completely avoid money troubles, there are things you can do to mitigate the impact. One effective way to do this is to be aware of the main causes of stress and understand their solutions. With that in mind, we’ve put together a list of the common money-related causes of stress, as well as some guidance on how to avoid them.
Loss of Employment
The vast majority of people depend on the income from their job — when that job disappears, many people can quickly find themselves in a difficult financial situation.
You can decrease the risk of job loss by proactively working to upskill and boost your career, but even then, it’s not always avoidable. Building an emergency fund that covers 3 – 6 months of essential expenses can provide a buffer that gives you time to find new work in the event of unemployment. It’s also recommended to apply for any unemployment benefits you may be entitled to in the first week of losing your job, since it can take time before payments start.
Losing a Loved One
Losing a loved one can be heartbreaking from an emotional standpoint, but it can also lead to money problems if the deceased person was the primary breadwinner. In that scenario, the family may be left with unpaid debts, mortgage payments, and other expenses, without having a source of income. For this reason, it’s important to compare over 50s life insurance to find a policy that ensures the family can remain financially comfortable if the unthinkable happens. In addition, it’s recommended to put together an estate plan, which can ensure that the people you want to receive your assets after you die do so.
Poor Spending Habits
Many people are wary when they have to make a big purchase, but cavalier when it comes to small-value purchases. But the thing is, those small expenses are small on their own, but can be a significant sum when grouped together. Over time, they erode the foundation of your financial health, often resulting in lower-than-expected bank balances that can have you avoiding looking at your account.
The best way to overcome this is to be aware of where your money is actually being spent. By looking at your spending over the past three months, you might find that you’ve been overspending unnecessarily on avoidable purchases, such as takeout food/coffee. Unused and forgotten subscriptions, too, can be a drain on your bank balance. Check your automated payments, and make sure that you’re still using them. If you wouldn’t buy it today if you didn’t already have it, then cancel the subscription and put the money back in your pocket.
