Friday, June 30, 2023 / by Mario Daniel Sconza
4 Methods to Melt Financial Stress and Enjoy the Summer!
Money is by far and away the number one worry for Canadians and with high interest rates and inflation not going away anytime soon, it looks like financial stress could put a damper on your summertime fun. But is there any way to reduce financial stress that doesn’t involve more money?
Better financial literacy is one option and something we highly recommend. For example, having the knowledge to optimize the risk, return and fees on your RRSP investments or accurately forecast your retirement cash flow will help you from feeling overwhelmed and worried about your financial future. However, even with good financial literacy, it’s difficult to completely eliminate financial stress from our lives — so what else can you do to cope?
1. Have a clear picture of your financial situation. Do you know your average monthly spend? Do you know how much you owe, the interest rate on your debts, and how much you pay each month in interest charges? Have you ever tracked and categorized your expenses to identify areas (car? dining out? vacation? home improvement?) where you could cut back if required?
Avoiding these questions is understandable because the answers may lead to some hard lifestyle changes, but not knowing these basic facts is actually pumping up your stress levels. ‘Out of sight, out of mind’ is not a mantra for financial success. You need to confront the situation, collect and analyze your data, and then start creating a plan of attack to address any issues.
2. Don’t be ashamed and accept your mistakes. You will have to learn to live with any poor spending decisions from your past. Regret and anger won’t make that vacation you took on your credit card disappear. As financial educators, our advice is to move on from any emotional reaction to past mistakes.
That credit card vacation is long gone, just focus on your plan to channel more money towards paying for it! If you need to decline dinner and beers with the gang because you want to put that $75 towards your card, then just come out and say it, "Sorry, can’t really afford a big night out this week". More than 50% of Canadians live paycheque-to-paycheque, so it won’t likely be a surprise to them!
3. Set small, achievable financials goals to bolster your confidence and measure progress. For example, open a TFSA and put in $100 a month, or add $100 to your monthly minimum credit card payment. A hundred bucks might seem like a modest amount, but it is a realistic goal that will get you started.
The effect could also be a lot greater than you imagined. Did you know that putting a $100 month in a TFSA ($1200 year) from age 18 to 65 with average stock market returns will amount to almost $400K! Paying the minimum 3% plus $100 on a $5K credit card balance will cut the time required to pay it off from over 20 years to around 3 years and save you $4500 in interest charges!
4. Get inspired and stay motivated. We give free webinars every week that provide plenty of facts and inspiration, but we aren’t the only fish in the sea.
Follow a YouTuber or blogger that you really connect with, reach out to a support group, hang a goal chart or progress tracker on the wall, talk with a friend or relative who has the same issues and work together, book one of our free financial assessment calls, inquire at work about employee wellness programs — there are lots of methods and resources available even with a limited budget. It’s critical to maintain a positive attitude and don’t beat yourself up — there are plenty of others in the same boat!
We believe the ultimate goal is to completely eliminate financial stress by building your passive income, so you don’t have to go to work everyday to pay the bills. Achieving this goal will take some time and there is bound to be some stress along the way. Learn to cope and stay focused on your goals!
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