Thursday, February 23, 2017

Got A Bad Case Of The Money Blues? Here's How To Bust Out Of It

Money stress is one of the biggest problems in most people’s lives and their relationships. All that anxiety about your bank account can spill over into other parts of your life, causing you to panic and eating up your energy.

In this post, we’re going to look at all the ways that you can fight back against this curse. Here are some common reasons why people get stressed out about money and what they can do to fix them.

Money Stress #1: Drowning In Bills

The biggest money stress on most people’s list is “drowning” - or the idea that no matter how much money they earn during the month, they never have enough to cover their bills. Drowning is a common problem, and it feels as if you are on a slowly sinking ship and there’s nothing you can do about it.

The good news is that there are ways to get rid of this problem: it just requires making some small changes to your life. One of the ways to get around it is to downsize or move to a smaller flat. Often you can cut your rent bills by as much as 30 percent by changing location, as well as reduce the amount you pay in local taxes.

Another way to avoid drowning is to start budgeting more effectively. Often, the reason you don't have any money left over in your account at the end of the month is because of all the little things that are eating up your finances. For instance, if you and your family have a habit of eating out every other night, then you’ll quickly find that you run out of disposable income.

Money Stress #2: Barely Surviving

Another common stressor is this idea of barely surviving. People in this position work six or seven days a week, and take on extra work in the evenings just to make ends meet. They are managing to keep their heads above water, but only just.

According to recent data, around 47 percent of people live from paycheck to paycheck, relying on their current month’s income to pay for bills and rent with no reserves in the bank. Again, it’s a question of making a concerted effort to either spend less or earn more. Common approaches to this problem include going for promotions, including managerial roles, as well as using personal unsecured loans to pay for career training. For people who are barely surviving, it’s not usually an excess of spending that is the problem, it’s a lack of earned income.

Money Stress #3: Magnifying And Minimizing

Andrew Shatte is an academic and a leading thinker in the area of money psychology. He's spent a lot of time thinking and authoring books about the common mental habits that people get into when they think about money. One of those habits he calls “magnifying and minimizing.” It’s the tendency to minimize all the good things in life and magnify all the things that are bad.

Shatte gives an example. Suppose you’re trying to save up £24,000 over two years to put down a deposit on a house. That means putting away about £1000 every month for 24 months. After four months, you’ll have £4000 in the bank. Shatte says that people who magnify and minimize will focus on the £24,000 that they have to save up after four months, rather than recognize the £4000 that they have already banked. The way to stop this mental habit he says, is to stop worrying about your long term goals and instead be proud of what you have already achieved.

Money Stress #4: Overgeneralizing

Often when we see other people who are financially successful, we assume that everything else about their life is great too. Suppose, for instance, you see a guy stepping out of a brand new top-of-the-range BMW. People who overgeneralize about money will immediately think to themselves that he must have a lot of money, have a great career and a family, and have plenty of money leftover to go on holiday four or five times a year.

But Shatte points out that this probably isn’t true. Just because somebody steps out of an expensive car doesn’t mean that they own it. And even if they do, there’s every chance that they are thousands of pounds in debt to pay for it. Shatte also points out that just because a man has a great car doesn’t mean that he has a great family life. For all we know, he may have bought the car to console himself because his family life is in tatters.

The best way to prevent yourself from overgeneralizing, Shatte says, is to think of all the ways having an expensive car could have messed up that man’s life. Perhaps he’s under mountains of debt. Perhaps his wife left him because all their money was spent on his car. Perhaps he stole the car and is living in fear of being caught by the police. Nobody knows.

Money Stress #5: Being Chronically Pessimistic

Imagine this. It’s early in the morning, and you get up. You find yourself thinking about a conversation you overheard at work the previous day between your manager and his boss. They were talking about how the company might have to downsize in the future to remain competitive. You immediately start thinking about whether your job is at risk, and the more you think about it, the more likely it seems that it will come true. You’ll be left penniless, out on the street with nowhere to go, rummaging through garbage cans for your next meal.

Psychologists call this sort of thing catastrophic thinking, and it can take its toll on your health. It can lead people to horrible places, says Shatte.

The way to prevent this harmful thought process is to convert it into a positive strategy to protect yourself. Shatte says that individuals who suffer from catastrophic thinking need to do things like setting up emergency savings accounts that can tide them over for six months if the worst happens and focusing on the things that they won’t lose.

Having money blues is common in our society and you don't need to be in that situation. What is your biggest money stress? Comment down below!

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