Do financial troubles keep you awake at night? If so, you’re not alone. A CreditCards.com survey found that about 6 in 10 adults lose sleep over at least one financial problem. After all, our recently released research report on financial stress reported that one quarter of employees who took our financial wellness assessment last year indicated high or overwhelming financial stress, and 85% had at least some financial stress.
This lack of sleep can lead to health problems and lower productivity at work. It’s not just sleep though. Financial stress can also lead to severe anxiety and depression, overeating, substance abuse, increased smoking, accidents, and relationship issues.
The good news is that we’ve found that workplace financial wellness programs can help reduce this stress. In particular, repeat interactions with a coach that motivates and encourages you to make behavioral changes by taking small steps one at a time can lead to substantial progress. Of course, not everyone has access to a financial wellness coach, but we’ve developed this C.A.L.M. approach that you can use on your own:
Create a plan.
If you’re having trouble making even the payments on your debt, contact your creditors and see if you can negotiate a payment plan or consider using a nonprofit credit counseling agency to negotiate on your behalf. If you can make at least the minimum payments, use our Debt Blaster calculator to see how quickly you can become debt-free (and how much interest you can save) by making extra payments towards your highest interest rate debt and then applying those payments to the next highest interest rate debt as each balance is paid off. If lack of emergency savings is stressing you out, you can calculate how much you need to save each month to have enough money to cover 3-6 months of your necessary expenses. Finally, if you’re worried about not saving enough for retirement, run a retirement calculator to see how much you need to save to get on track.
Automate bill payment and savings.
Once you know how much you need to save or pay towards your debt, consider setting it up on auto-pilot. You can have the debt payments debited directly from your bank account, savings for emergencies transferred from your checking to a separate savings account, and retirement savings deducted from your paycheck into your employer’s plan or transferred from your checking account into an IRA or an investment account. If you wait until the end of the month, you may find there’s simply not enough money left over. You can also automate your other bills to help make sure you don’t miss any payments that can lead to late payment fees and even damage to your credit score.
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Lower nonessential spending.
Look for opportunities to reduce expenses to close the gap in your budget from the extra debt payments or savings. You can start by looking at your last few months of bank and credit card statements and recording your expenses to see where your money is currently going. This tends to be a real eye-opener the first time people do this.
Once you’ve done this, ask yourself the following questions. First, are you spending money in areas that you don’t really need to? For example, are you paying for newspapers or magazines you don’t really read, a membership to a gym you don’t go to, cell phone data you don’t use, or cable channels you don’t watch? My fellow Financial Finesse planner and Forbes contributor Kelly Long CPA, CFP® writes here about some things she stopped doing while getting out of debt.
Second, are there things you’re spending money on that you can get in a lower cost way? Would you be willing to make coffee and lunch at home instead of always buying them out? Could you replace your cable TV shows with services like Netflix, Hulu Plus, Redbox, Sling TV, or even an HD TV antennae? Did you ever look into switching to a prepaid cell phone plan? Have you tried negotiating your bills on your own and/or with a bill negotiation service?
Finally, what big expenses can you give up if necessary? Would you be willing to get a roommate? How about giving up your car? These may sound drastic but they can save you a lot of money and may not be as painful as they sound. (You might even prefer it.)
Set small, achievable goals on the way to your long term goals and keep track of your debt and savings balances to monitor your progress. When you inevitably take a step backwards, just keep your eye focused on the eventual goal.
As you achieve one goal, don’t forget to set the next one. Financial wellness, like physical wellness, is a never-ending journey. In fact, having no financial stress can be a problem too. It means you need to set your bar a little higher… but first get some sleep.