How to cope with financial stress
Financial stress is something many Canadians experience. In fact, a 2019 survey by the Canadian Payroll Association found that finances are one of top sources of stress in Canada, and that 83% of Canadians are worried about the rising costs of living and inflation.
If you’re experiencing a change in your financial situation or are facing rising household costs and a limited income, you may feel anxiety about your ability to manage your finances. The important thing is to begin coping with financial stress as soon as it becomes an issue; if you’re not coping well, financial stress can actually worsen your financial situation and have impacts on your mental health.
If you’re experiencing financial stress, we recommend the following 6 steps:
1. Talk to someone
If you’re feeling stressed, bottling up your concerns to face alone is never the answer. Even if you feel awkward talking about money, sharing your concerns with a trusted person can help you let go of tension and put things in perspective. Who you talk to is up to you – it doesn’t have to be a person who can help you change your situation, just someone you feel comfortable sharing your feelings with.
2. Do a financial 360
When you’re in a financial pinch, getting a clear picture of your financial footing may be something you’ve avoided. Letting your finances slide can actually have a negative effect, however, and could cause your worries to worsen. When you’re ready, taking stock of your income, expenses, savings and debts can do wonders to reduce worry by removing fear of the unknown.
3. Seek professional financial advice
Whether you connect with your bank or financial institution, a financial advisor, or an organization that offers financial counselling, you may want to seek support from a financial professional who can help you identify opportunities to improve your financial wellbeing.
4. Determine your options for managing debt
If you’re in a bind and aren’t sure if you have enough money to manage all of your payments, let your creditors know. Lenders appreciate being told if you’re facing a financial challenge before you get behind on payments. Often they are able to provide payment arrangements that can prevent you from falling behind on debt. Solutions may include a renewal of your balance or adjustment of terms, either of which should offer reduced payments, or deferring payments for a specified period of time.
Tip: While these tactics can create relief and allow you to stay up to date with payments, they can impact the amount of interest you’ll pay in the long run. Know your options and the potential repercussions, and then take the route that’s best for you.
5. Consider debt consolidation
If you’re facing multiple debts like credit cards, store accounts and loans – each of which probably have different payment amounts and payment dates – simplicity might be the solution. With debt consolidation, you take on a new loan or line of credit and use it to pay off your outstanding debts. Then you focus on making payments against the debt consolidation loan, without the stress of managing other debts at the same time. Learn more about debt consolidation here.
6. Make a new financial plan, and stick to it
After you’ve taken stock of your financial situation and reviewed your options for change, create a plan for the “new financial you”. You’ll want to create a budget that is realistic and achievable within your current income and expenses. While doing so, you’ll also need to identify where you can curb expenses.
Once you make a plan, stick to your limitations. This may mean you’ll cut out takeout or meals out with family and friends, but that’s ok – remember, the more you are honest with people when temptations arise (“Sorry, I can’t grab lunch today – I’m on a budget!”), the stronger your commitment will be. People will respect your boundaries, and may even ask you for advice if they, too, are feeling financially stressed.
When money management issues strike, remember: you’re not alone. Many Canadians feel the daily pressures of financial obligations and lifestyle choices, and have taken on a bit more debt than they feel comfortable with. If you’re feeling financially stressed, don’t wait to uncover and resolve underlying issues. With a bit of dedication, you can remain calm, take stock of the situation, determine options for getting out from under debt and put yourself on a new path toward financial success.
Interested in a loan? Try our free loan quote! In just a few minutes, we’ll tell you how much money you could qualify for and what your payments might be. No obligation and no impact to your credit score.