Wealthy, broke, or somewhere in between, you likely feel some degree of financial stress.
After all, financial anxiety is nearly universal. Across all demographics, money is the single biggest source of stress in the United States.
Most adults say they sometimes feel financial stress. A quarter of adults say their money stress is “extreme.” (And this was before the pandemic.)
Everyone’s financial situation is unique. But, regardless of income, resources, or debt, many people share a common cause of financial stress.
A major source of financial stress you can quickly control
“We suffer more often in imagination than in reality.” – Seneca
When it comes to looking at financial reality, many people feel paralyzed. An example is seen in a comment about Tiller Money: “Another product I’d like to use to monitor my spending, BUT still can’t bear to look at my bank account.”
However, multiple studies reveal ambiguity strongly intensifies feelings of stress. Feeling out of touch with your financial details creates intense stress, even when your finances are fundamentally strong.
(Even worse, when you don’t know your exact financial situation, you can’t improve it. And the cycle continues.)
The good news is you can eliminate this source of stress in about thirty minutes.
Answer the following questions and know where you stand today. This process can help calm anxiety. It can empower you to make positive changes. And it can clarify where you might seek help to achieve your goals.
To help you gather and categorize your financial data, a spreadsheet template is linked at the bottom of this post. Or you can simply use a blank spreadsheet to gather answers in one place.
Also, this simple budget snapshot tool can help you see what you can afford to spend and save each month, as well as calculate your emergency fund and time to debt freedom.
1 – What’s my actual monthly income after taxes?
How much are you currently bringing in, after taxes, every month? And what days of the month is that income available in your bank account?
Many people (even those with steady paychecks) don’t precisely know this information. Sometimes you land unexpected income. More often, you get hit with larger-than-expected withholdings, taxes, or fees.
This number may be less than you want or need. But having as firm a grasp as possible on your income will help you feel better prepared, while avoiding credit card debt and overdraft fees.
Of course, if you have variable or “lumpy” income, forecasting what you’ll bring home is extra challenging. Here are recommendations for this scenario.
2 – What are my specific upcoming expenses and payment obligations?
Most people are surprised by how much they’re really obligated to spend each month. Typical payment obligations include:
Rather than estimating your monthly expenses, take time to actually review a few months of past transactions. Categorizing a few months of transactions in a spreadsheet can help you understand precisely how much you’ve really been spending.
- food & groceries
- rent or mortgage
- credit card bills
- student loan payments
- whatever needs to go into various savings accounts
- insurance obligations
- utility bills
- tax payments
- child support
- school tuition and fees
Tallying these expenses may not be fun, but the outcome is powerfully illuminating. You will know exactly where your money has been going. You will more easily understand where you can spend less and save more. And you’ll be prepared to create an accurate budget if you wish.
3 – What’s safe for me to spend?
Regardless of income, “how much can I safely spend” is one of the most common money questions. This is true for everyday “walking around money,” as well as for larger upcoming expenses.
Most of us juggle multiple bank accounts, credit cards, and upcoming bills, so it can be hard to know what’s available to spend. Plus, some people only consider cash safe-to-spend, while others are comfortable using credit (within limits).
This is all compounded by the fact that “nearly half of employed Americans said they “usually run out of money between paychecks” according to CNBC.
To know what’s safe to spend, it’s best to start with even a basic budget. The Foundation Template can help. And here’s a free report for the Foundation Template that shows what’s safe to spend each month.
Some debit cards such as Simple and Chime will allow you to create spending buckets and track what’s safe-to-spend.
4 – How much do I have on hand for emergencies?
Having a dedicated fund for emergencies is one of the best ways to feel financially prepared.
In the post “In a Crisis, is it Better to Reduce Debt or Increase Savings,” Certified Financial Planner (CFP) Akeiva Thomas says your emergency fund should have “Three to six months’ worth of expenses.”
But the New York Times notes “even small cash cushions can help people stave off disaster. As little as $250 can significantly help.”
The best time to build an emergency fund was five years ago. The second-best time is today. Depending on your financial situation, it may seem like an insurmountable task. But even putting aside a few dollars can make a positive impact.
- One of the best ways to build your fund is by putting your savings on autopilot
- Tips for how to build an emergency fund with Google Sheets
- Practical tips on building an emergency fund via the New York Times
5 – What do I currently owe on each account? How much in total?
“Always do what you are afraid to do.” – Ralph Waldo Emerson
Many people dread knowing this number. Student loans and medical debt in particular can feel insurmountable.
But again, uncertainty itself is very stressful. And when you know what you owe, you’ll be in a far better position to make a plan and get help for paying it off.
Start by looking at what you owe on all your credit cards. Same with your mortgage, student loans, and every other debt. You can use the free spreadsheet linked below to organzine everything.
- Debt Progress Report for Google Sheets
- The Debt Snowball Payoff Method
- What is the Best Credit Card Payoff Strategy?
6 – Do I need to earn more money?
Some people are simply spending beyond their means. But many others don’t earn enough to cover the rising costs of living.
If overspending isn’t the problem, the solution is to increase earnings. Again, it’s helpful to make a proper budget before considering how much more you need to earn. This way you can account for all your needs, including long-term savings and paying down debt.
Ways to earn more:
- Ask for a raise
- Start looking for a new job – yes, even in a downturn
- Start a side hustle. See “145 Side Hustle Ideas in a Free Spreadsheet“
- Get a second job
- Consider your investments and passive income strategies
- Use this simple budget snapshot tool to get a sense of what you can spend and save each month
7 – How are my retirement goals?
Many people – even those close to retirement – have little money saved for retirement. Retirement might be the farthest thing from your mind right now, or you might be preoccupied by it.
Regardless of your situation, you’ll feel better knowing you have a plan for retirement. There are many free retirement planning resources to help. It also may make sense to consult with a financial planner for this major issue.
Bonus: Who can I talk with about my financial situation?
One of the most immediate ways to relieve stress is talking about it with a trusted friend or loved one.
While talking about money is considered taboo, this article outlines how talking about money is “a seriously good idea for just about, well, everyone.”
You don’t necessarily need to confide in family or friends. There are dozens of online forums where you can ask questions, get advice, and vent about your money stress. Personal Finance on Reddit is helpful. Wisebread has a roundup of 9 Online Forums That’ll Help You Reach Your Financial Goals.
You can also hire a financial planner to help you feel more confident about your finances. It’s their job to listen and help you reach your financial goals.
Once you know where you stand, you can make your money plan with confidence
“A good plan today is better than a perfect plan tomorrow.”
Even the simplest financial plan will make you feel much better. You don’t need to spend months developing a flawless financial plan. You can start by tracking your spending and making a simple budget. Or again, you might consider working with a financial planner.
Being engaged, paying attention, asking questions, becoming aware of spending: these simple guidelines are everything you need to get started with a long-term plan to financial relief.
- 3 Steps to Get Started With Any Personal Budget Program
- Why a Successful Budget Prioritizes Your Happiness
- This Free Spreadsheet Helps You See Your Financial Picture
A free template for organizing your answers
To answer the questions above, you’ll need the last few months of transactions from all your financial accounts. You’ll then want to organize your data in a single spreadsheet so you can see your entire financial picture in one place.
If you don’t use a tool like Tiller Money that automatically gathers your data and keeps it up to date, you’ll first need to login to your accounts to download PDFs or CSV files. This help doc can get you started.
You can also use the free version of our Foundation Template to organize your income, debts, transactions, and balances. Get it here at the following link: