To say financial stress is ruining America’s day would be an understatement. As a nation, the United States is anything but zen when it comes to money. And we get it; Paying for weddings, childcare, rent, medical bills, student loans, and everything in between can really add up. But letting that financial stress grow or fester can also have some fairly serious consequences on both your wallet and your overall health.
In fact, in a 2017 survey of SoFi members, a whopping 83% said they felt as though they couldn’t relax due to the burden of their student loan debt. Furthermore, a full 50% of respondents said they felt that dealing with student loan debt caused them to experience depression.
Additionally, more than 30% of those respondents said they literally lost sleep due to the overwhelming stress of their student loan debt, causing them to miss work, opportunities to travel, and make advances in both their personal and professional lives. Though these numbers can seem daunting, there are steps we can all take to collectively free ourselves from financial stress forever.
Steps to Help Overcome Financial Stress
1. Figure out Your Financial Pain Points
The first step to ending your financial stress is to figure out what’s making you feel that way in the first place. Is it your spending, your student loans, your mortgage, saving for the future, or some combination of them all?
It’s OK, just decide what the stress is, then you’re able to move forward with fixing it. (If you’re unsure of which part of your financial picture is stressing you out most, take SoFi’s quiz here.)
2. Create a Budget
Guess what? People who create budgets really do tend to stick to them. In fact, according to an America Saves Week survey , people who create personal savings and budget goals are almost twice as likely as those with no plan (84% versus 46%) to actually save some cash.
Creating a personalized — and realistic— budget can be key to unburdening yourself from your money stress. This way, you don’t even need to think about your cash flow, because you’ll know where every single cent you make is going.
To create a budget, you first need to gather all your financial documents (loans, credit card statements, pay stubs) to see where cash is both coming in and going out. Next, list out every single monthly expense you have, including rent, food, entertainment, car payment, insurance, and any debt payments you might have.
Finally, list your income and savings goals. From here, you should be able to adjust and figure out how to increase your savings goals based on how much you have left over after necessary spending. For more help with budgeting use SoFi Relay. SoFi Relay tracks all of your money, all in one place (at no cost) so you stay on pace to hit your goals.
3. Prepare for the Unexpected with an Emergency Fund
Building an emergency fund can seem like the last thing on your mind when you’re already stressed about money. However, having an emergency fund will allow you to deal with unexpected situations without stress. With an emergency fund, you know that no matter what happens, you’ll have it covered.
A healthy emergency fund should be stocked with three to six months worth of expenses. And since you already created a budget, you know exactly how much money you’re going to need each month.
It’s OK to start small with an emergency fund; Just start putting away what you can, as often as you can. Then, truly keep your hands off this cash reserve until you really, really need it. Read more on how to build out your emergency savings and get started literally right now.
Not sure where to put your emergency fund? Learn more about SoFi Checking and Savings, an online bank account that has no fees and where you can earn up to 1.25% APY.
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4. Consider Debt Consolidation as an Option
Take a look at your current debt situation. Are your interest rates too high? If the answer is yes, you should set aside some time to shop around for a better interest rate. If you have credit card debt that’s hovering around 15% to 20%, you could seriously reduce your interest rate with a personal loan.
Furthermore, if you have debt spread over multiple credit cards, credit card consolidation with a personal loan would mean you just have one loan to focus on, as opposed to paying multiple credit card bills every month. If you’re also paying too much interest on your car loan, you can consolidate that too by bundling it into your personal loan.
5. Look into Student Loan Refinancing
Through student loan refinancing, you could qualify for a lower interest rate, which means your student loans could cost you less money. You can also shorten your repayment term such that you can pay your student loans off faster.
Or if your monthly payments are too high, you can extend your repayment term, and pay less each month. Either way, refinancing allows you to just pay off one student loan, as opposed to nine different loans all with varying interest rates.
As Ravi Kantha, a SoFi member who refinanced his student loans, previously explained, refinancing has helped him “relax at night. Loans were a burden that cast a shadow on every decision. Every single financial choice we had to make was influenced by our loans—things as small as where to eat dinner and as large as where to live and how to invest our earnings.”
6. Set Yourself Up for Future Financial Freedom
If you’ve taken the above steps already, you’re well on your way to staving off money stress in your day-to-day life. Now, it’s time to plan for the future. In order to keep the financial frights away, it’s important to put away money for retirement. Putting money into a wealth management account or retirement plan will help alleviate some of the anxiety that comes with worrying about the future.
SoFi will work with you to figure out your savings goals, help you diversify your investment portfolio, and automatically rebalance your investments so your money works hard for you even when you’re not thinking about it. Not an expert on financial planning? That’s OK, because SoFi will have your back here, too. As a SoFi member, you’ll gain access to financial planning with actual human advisors without an added fee. Let them take on some of your financial stress.
7. Add a Second Income Stream
Sometimes it’s not about subtracting spending from your daily life, but rather it’s about adding more cash to your pocket. Picking a side hustle that fits into your current lifestyle without taking up too much of your free time can really add value to your wallet and your life.
Before choosing a gig, think about what you’d like to do. Perhaps you’d like to put those copy editing skills to use by freelancing on the side, or you’d want to offer up your services a few hours a week as a social media consultant.
Maybe you really love spending time in your car listening to the radio and talking with strangers, in which case driving for a ride sharing app might be for you. If you’re having a hard time identifying what you’d like to do on the side, try answering these five questions, which should help steer you in the right direction.
Of course, you could also go all Marie Kondo on your life and declutter like a madman. But instead of throwing out all those unworn clothes and tossing all your unused home goods, why not try to sell them first?
For clothing and shoes, try selling to a local second-hand store near you, such as Crosswinds or Buffalo Exchange. For furniture and other goods, try listing on eBay or Craigslist. All that extra cash could make for a nice deposit into your new investment account with SoFi Invest®, and get you just a little bit closer to your stress-free financial goals.
Thinking about consolidating your debt or refinancing your student loans? SoFi personal and student refinance loans can help you get out of debt sooner—and maybe even save you money along the way.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .
SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Neither SoFi nor its affiliates is a bank.
SoFi Checking and SavingsTM is offered through SoFi Securities, LLC, member FINRA / SIPC . Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet