One of the common denominators in the lives of all business owners is financial stress. The American Psychological Association (APA) reports that 72% of adults feel stressed regarding money matters. That’s why it’s essential to learn ways of managing it effectively. Good financial health is the lifeblood of all businesses. Hence, it can be pretty frustrating when one’s financial situation is at risk. Despite the complexities, one must learn to navigate financial stress for securing the financial health of their business and personal psychological peace. So, below are a few tips for coping with stress and taking better control of one’s financial situation, no matter how challenging:
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Create Extra Sources of Income
If you’re under financial stress, the chances are that you’ve already realized that your budget requires some additional funds. However, it can be challenging to earn on the side without straining oneself too much. Fortunately, there’s no shortage of ways to increase one’s income and relieving financial stress. For instance, you can capitalize on a hobby like baking or sell your preloved clothing. You may also opt for freelancing or home tutoring. Remember, it doesn’t have to be grand as long as it brings in more-than-negligible cash.
Get Outside Help
Sometimes, a financial struggle might be more than what an individual can handle on their own. In such cases, seeking outside help for your spending/budgeting issues becomes critical. Business owners can enroll in basic financial management classes to up their skills. If looking for more in-depth knowledge, enroll in an MBA with accounting concentration to learn the techniques for financial success. One can also take short courses that exclusively teach personal finances and its various aspects like budgeting.
However, if the debt is the reason behind your stress, you might want to contact credit counseling services. They can assist in negotiations with the creditors and restructuring debt.
Additionally, working with a financial advisor can help businesses develop fool-proof investment and saving strategies. These strategies can ensure a company continues all current and future operations without financial stress.
Organize and Declutter Budget
A well-structured budget is a business’s best defense against financial setbacks. It can offer better control of one’s finances and more informed spending decisions, resulting in less wastage of one’s hard-earned income. Plus, a solid spending plan can ensure you’re not just covering your current expenditures but saving something for the future too. Surprisingly, budgets can help locate any excess money that businesses can direct towards debt payments. As time passes and your budgeting skills improve, you’ll become more efficient and ultimately reduce the time and energy exerted on handling finances.
Moreover, decluttering your budget is essential for improving one’s financial position. However, given the world’s uncertainty, regular budget checkups are more crucial than ever. Schedule some time to keep tabs on your finances and try to organize and declutter all the debits and credits in your bank account. Having firm control of your situation can significantly reduce the amount of stress you feel.
Identify the Problem Areas
Financial issues usually arise from low income, excess spending, or a mix of both. For example, your current income might not be sufficient to cover your payments and bills. So, what can you do? Start by taking small steps to turn the situation in your favor. You may consider rejoining school for advanced education or upskill to earn more.
Alternatively, if the issue concerns spending and compulsive shopping behavior, a professional can assist you in coping with it. Identifying the problem can help you plan its solution; consequently, you can permanently change the situation and reduce stress.
Develop a Game Plan
As soon as you have a basic idea of your financial issues and ways of overcoming them, start developing a realistic and achievable plan of action. Set goals with specific timelines. These timelines can be short, like 2-3 months, or longer, like 24-36 months, depending on the goals’ nature. Also, when setting future goals, evaluate your current progress with the said goal.
Suppose if your business goal includes paying a supplier debt of $500,000. In that scenario, try recording the current debt balance side-by-side to the goal of bringing it down to $0. Similarly, try including the exact sum of monthly debt repayments so that you can pull off paying it within the desired timeline.
Make a Financial Buffer
In most cases, financial stress relates to little room for financial mistakes or miscalculations. Financial stress can especially overwhelm business owners earning slim profits. It takes only one unexpected expense to hurl you flying into the debt rabbit hole.
For that purpose, setting up an emergency fund may ease some troubles. Start by contributing excess income into an emergency or savings fund. By doing so, one can develop a buffer that provides much-needed relief during tough times, e.g., medical emergencies.
In A Nutshell
As a global pandemic wreaks havoc on businesses and industries, it is now more crucial than ever to find strategies to manage and overcome financial duress. The recommended methods may prove valuable in coping with financial pressure and improving your business processes––including seeking external help, identifying problem areas, and creating emergency funds. Though individual situations may vary, you can probably gain some clarity through these tips.