5 Practical Tips for Creating Financial Peace of Mind | INVESTEDMOM
Financial anxiety exists in every tax bracket and for individuals with varying spending habits. Certain life events affect your financial situation, whether you have a six-figure income or get by with a minimum-wage job. Your money management skills affect your peace of mind through family emergencies or even just trying to catch up on bills.
In the last few years, individuals' financial plans across the country was interrupted by the Covid-19 Pandemic. The pandemic led to the loss of employment for 114 million people worldwide. Many were left without any income and are now in debt as they try to get back on their feet. Others lost their homes, business assets, and savings as they overcame the difficulties of staying afloat during such a difficult time.
In 2022, inflation reached 8.75% globally, making it even harder to keep up with our personal finance goals. The cost of living increased drastically, and aside from having to recover from the effects that the Pandemic left us all with, we are now paying higher than usual prices for everyday items. All of these factors contribute to the stress and anxiety we feel as consumers as we try to better our financial behavior to achieve our financial goals.
Regardless of what is happening in the economy and the markets, though, there are steps that you can take to reduce your anxiety and build confidence as you tackle your debt and begin saving. To help you understand the steps to control your stress and the worries and anxiety surrounding money, we have gathered five practical tips to help you achieve financial peace of mind.
#1 Establish a Long-Term Plan
One of the first things you must consider is your financial state. You should be able to begin saving for retirement without straining your current finances. This is only feasible for some, depending on their debt and their income, but figuring out where to cut back and where to invest for long-term market success can be a great start.
Take a step back and analyze what you want for your future finances and what you want your retirement plan to look like. This can require you to do the math and figure out approximately how much money you intend to need during those golden years. Once you have that figured out, you can determine your savings goals.
You must also identify your priorities and determine how they impact your goals. For example, is it your priority to pay down debt now to save more in the future, or would you save more now and continue paying down debt slowly? Everyone's priorities are different, and it is more difficult to successfully keep them when you have a massive mountain of debt or more prominent families to feed. Regardless of your situation, though, it is essential that you analyze and truly determine your long-term goals. Those with kids may have a long-term goal of saving for their children's college education. These important questions need answers and will set you on the right path toward reaching your long-term savings goals.
#2 Create a Budget
Another step towards mastering your finances is understanding the relationship between your monthly income and fixed/variable expenses. While you might think you have control of your budget, this is only sometimes the case. Some people believe they stick to a budget, but when they write down everything they spend, they quickly realize they spend much more than they thought. Especially now that we don't have to handle cash daily, it can be much easier to overspend unknowingly.
A great way to create an adequate budget is to write down all the money coming into your bank account. Additionally, write down all your monthly expenses, including the fixed bills and the things you usually spend money on for fun, including online shopping or eating out. Once you realize how much you spend on unnecessary items, you can determine how much cash you can throw into a savings account or ways to reduce your debt.
There are many different ways to begin a budget, and with technology rapidly advancing, plenty of apps can help you quickly and conveniently track your income and spending. One idea is to begin a money diary to write down everything you spend money on. This diary is completed daily, weekly, or even monthly to give you an overall picture of where your money is going.
Many people realize they have a vast potential to save more money once they start tracking where it all goes. All they need to do is make better financial decisions. A successful budget needs constant reviews and adjustments to make sure that you maximize your savings potential.
#3 Start a Fund for Emergencies
One of the most effective ways to reduce anxiety is to set up an emergency fund. This is because you never know what life will throw at you and what your family might need to overcome difficult times. The COVID-19 pandemic is the perfect example of a situation where the whole world was on lockdown, many were left without a job, and feeding families became difficult for many. An emergency fund would have provided some sense of relief during such difficult times.
An emergency fund covers expenses needed to pay bills if you lose your job. An emergency fund can cover anything you and your family go through unexpectedly. These events can include medical, car, or home repair emergencies. The idea is to make sure you have enough to cover anything unexpected so that you don't have to worry about how you will pay for this emergency.
Ideally, you want to save enough money to cover living expenses for at least six months. This number looks different for everyone, depending on their income and expenses. It takes time to build a saving account, especially one intended to cover at least six months of living expenses, but it is attainable. You just need to start, even if you only save a little at a time.
#4 Diversify Your Portfolio
Investing can be intimidating if you have never done it before, but it is one of the best and fastest ways to grow your money. Avoid having all your assets in the same investment or just sitting in a bank account when you can diversify your portfolio and grow your money through different avenues. You can keep your money in stocks, mutual funds, and different savings accounts, like CDs. When you invest in a diverse portfolio, your money grows in various ways, including increasing interest. If it is your first time investing, you can always find a financial advisor to help you understand the best investments.
With investing, you will always run into certain risks. The higher the risk of an investment, the higher the return is. It can be scary to invest money in an account that is a high risk, knowing that you might lose all of your money. That is why you must research and find alternative investments that reduce the excessive risk involved in your investments.
#5 Improve Your Financial Literacy
Another great way to reach financial peace is finding the right financial education tools. A solid financial education is crucial in developing foundational skills that help you make smarter choices with your money. Whether you need money management assistance or want to understand the ever-changing markets, having access to the proper knowledge can boost your confidence in making the best financial choices.
Besides reaching financial peace, having a solid financial foundation has plenty of benefits. You can learn the basics, such as creating an adequate budget and following through with it. This essential skill is only sometimes taught to us, and it can be hard work to learn it independently, but we don't have to. Get the education you need to create an adequate budget to gain the financial results you seek through those who already have the knowledge.
Another benefit of financial education is planning for retirement. Many of us might believe that we are a long way from that stage in our lives, but the fact is that we won't work forever, and planning for retirement helps set us up for success when that time comes. Plenty of challenges can arise as we age, and having financial freedom eliminates one of those significant challenges.
There are so many resources that you can use to help you find the financial peace you crave. Online coaches can help get you started with some tremendous foundational skills. You can also find online courses, like the one from Invested Mom, that will help you achieve your financial goals while focusing on reaching that financial peace.
Reaching Financial Peace of Mind
Finding peace while reaching your life goals is possible with the right tools. Whether you have a dream vacation home you want to sell or purchase to enjoy during retirement, or you want to have enough wealth to live debt free, you can take control of your finances now to develop a plan that will get you on track with your goals, regardless of any uncertainties in the economy and markets.
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Invested Mom's mission is to take you from financial overwhelm to attaining the financial literacy you need to reach financial freedom while having peace of mind. Their self-paced course can help you master the skills required to increase your income, get out of debt faster than you can imagine, and invest your money to reach that wealth you desire in life. Sign up for Invested Mom's course to learn how to increase your income today and create financial peace of mind.
Meet the Author:
Inge was born and raised in Cape Town, South Africa, and moved to Canada in 2010 looking for a better life. She always had an entrepreneurial spirit and started her first side hustle when she was 9 years old – selling fudge at school during lunch breaks.
It wasn’t until much later that she realized that saving isn’t enough to get ahead. She was always very interested in real estate, but saving up for a down payment was grueling and slow, and the demands of life kept getting in the way.
She started investing in herself and upgrading her skills while learning how to invest. She quickly became debt free and compounded her money at a staggering rate.
It wasn’t until she became a coach that she realized how significant an impact she can make in people’s lives by sharing her journey, learnings, and processes.
So here she is, advocating for everyone who is invested and wants to build their wealth, especially the mommas!