Don’t count yourself alone if you stress about your finances. The American Psychological Association reports that 72 percent of Americans worry about theirs, too. On the whole, worry and stress aren’t regarded by this group as positive emotions or behaviors, since it has negative physical side effects.
The only time that stress is a good feeling is when you recognize the causes and take actions to find solutions. These tips might help you build a healthier financial future:
Steps to Stop Stressing About Money Now
- Become a penny pincher. Look at your daily expenditures and see which are necessary and those that are discretionary. You might be able to save substantial amounts of money by brewing your own coffee and packing a lunch instead of going out. You can also save money buying generic vs. name-brand and only buying what’s on sale.
- Trim overhead costs. Take control of your monthly housing costs by tackling your energy bill. It’s the one area that’s in your control. Keep your air conditioner clean by changing the air filter and cleaning the outdoor condenser periodically. Cooling costs add up in the summer, and a dirty HVAC system increases them even more. Turn down the water heater’s temperature, and make a conscious attempt to use less cold and hot water.
Pay Down That Debt
Start with the highest interest debt. Making a payment that’s larger than required will reduce the amount of interest you pay over time. Avoid using credit cards to make purchases. If you’re tempted, ask yourself if you’re willing to pay at least twice as much for that item. Unless you pay off the balance monthly, you’ll pay that much, if not more, by the time you pay off the credit card.
See also Should You Invest or Pay Off Debt First?
Look Toward the Future
Once you start to see your savings grow by practicing frugal living and paying off debt, consider investing your savings. If your employer offers a 401k plan, set aside time to explore it. You can also get advice from an independent registered financial adviser about your options, timeline, and expectations, or start your search online for successful ways to invest.
Minimize Risks by Diversifying
Your age and expectations will dictate the intensity of your savings program. If you have plenty of years ahead of you to secure your future, you’ll have more choices for investing and if risk-averse, you can choose safer investment vehicles. They will have lower rates of return, but minimize the chance of losses.
Diversity is key to all investment strategies. A mix of stocks and money market holdings will insulate you from industry-related downturns. Adding real estate holdings adds security, as well. Both financial markets and real estate have proven track records.
In addition to stability and return on investment, real estate is one of the few that provides a positive cash flow while increasing in value. Besides taking advantage of the appreciation, the monthly rent will provide an income in excess of your expenses. Property management companies will assume much of the responsibilities associated with rental property, giving you a passive income stream.
Real estate is also one of the few investments that give you significant tax benefits that offset nearly all the costs associated with rental property, including travel. The deductions start at acquisition and when you do cash it out, special IRS provisions might allow you to shelter the gains.
See also A Real Estate Investor’s Guide to Taxes
Last But Not Least…
When you start to feel stressed out by money, let the feeling prompt you to do something about your situation. With a little discipline and help from experts, you will be taking positive steps toward a healthier and more satisfying future.
Talk to one of our investment specialists to learn how JWB can help you earn passive income through long term real estate investing.