Unless you’re rolling in cash, opening your bank or credit card statements can feel like an exercise in humiliation. Every line item is a reminder of what you owe or how little you have. For most people, dealing with their finances is like uncluttering their garage. It’s complicated, frustrating and full of things you’ve forgotten about, but don’t want to deal with.
But if you want to live well, retire comfortably, and feel content with your finances, then you have to face them head-on. Hiding and hoping for the best won’t work out in your favor. Here are some basic strategies to face your financial stress head-on.
If you’re having trouble figuring out a budget or deciding how to best invest your 401(k), it’s OK to ask for help. There are countless financial advisors, planners and coaches available to get you on track.
A financial advisor or planner can help you create a budget, explain your weak points and create an investment plan. Look for a fee-only financial planner with a fiduciary responsibility, which means they have to do what’s best for you, not what will earn them a bigger fee since they charge a flat rate instead of working for commission. You can find a licensed advisor through the National Association of Personal Financial Advisors.
Before your appointment, make a list of the issues you’re facing and any questions you have. These can include how to get your student loans out of collections or how to tackle that $5,000 hospital bill.
If you can’t afford a professional, find an accountability partner, like a friend or family member. Pick someone who’s also dealing with some financial issues and who has a lifestyle similar to yours. You can create weekly or monthly check-ins and discuss your progress over email, in person, or even via text or Slack. Having an accountability partner will make it harder to avoid your finances since you’ll be reporting to someone.
Forgive Yourself Easily
When you’ve spent years or months hiding from your finances, facing them can feel like an impossible ordeal, especially if you set unrealistic expectations for yourself.
Emily Guy Birken, author of “End Financial Stress Now,” looks at financial management like cooking: Just because you forget to add a crucial ingredient or overcook the chicken doesn’t mean you’re doomed to be a bad cook the rest of your life.
“Any individual financial mistake might ruin your day (or week or longer), but it is not an overall indication that you are bad with money or that you are not learning how to improve,” she says. “The only way to truly entrench a problem with money… is to give up on learning because you are afraid.”
Trying to make a budget, but stuck on how to do so? Interested in starting an IRA for retirement, but not sure which funds to choose?
Thankfully, fintech apps can help you answer those questions in just a few clicks. Find a budgeting app like Mint that analyzes your bank account to track your spending.
Digit and Qapital are apps that automate saving based on your bank balance and your needs. They can make saving for various goals possible and easy to stick to.
Finally, robo-advisors are the perfect solution for beginning investors who don’t want to hire anyone to manage their portfolio. Robo-advisors ask a series of questions to determine users’ risk tolerance and retirement timeline before coming up with a semi-customized plan. Try Acorns or Betterment.
Most robo-advisors have low minimum deposits and fees. But make sure to do your research to choose the right tool for your needs.
Ultimately, when it comes to personal finance, you’re almost always better off doing something — no matter how small — than doing nothing. Hiding in fear in the hopes that your financial situation will change itself is not a plan. Begin taking action, and small gains will help keep you motivated for the long term.