Understanding Financial Stress: What is Financial Stress?
Financial stress is a common issue that affects many professionals, including speech-language pathologists (SLPs).
It arises from various sources such as insufficient income, high levels of debt, unexpected expenses, and lack of savings.
Financial stress can have a significant impact on overall well-being. It can lead to anxiety, depression, and a reduced ability to focus on work and personal life.
Financial stress often manifests as a worry about money, feeling overwhelmed by financial obligations, and being uncertain about the future. These feelings can lead to sleepless nights, irritability, and even physical symptoms like headaches and high blood pressure.
For SLPs, who often face student loans and the costs associated with continuing education and certifications, managing financial stress is particularly important.
Understanding and addressing financial stress is crucial for maintaining both mental and physical health so let’s take a stab at it today!
Budgeting and Financial Planning
One of the most effective ways to manage financial stress is through budgeting and financial planning. If it sounds terrible and off-putting to you, you are not alone.
That is the reaction of so many, myself included. But let me promise you, that if you focus yourself to sit down for a little bit and chip away, you will feel relieved and empowered!
Creating a budget helps you understand where your money is going, identify areas where you can cut costs, and ensure that you are living within your means.
Here are some quick start steps:
Step 1: Track Your Spending for a month:
Write down everything you spend each day for a month
OR
Go back through your bills for the prior month and write it all out!
Feel no pressure to change anything at this point. The purpose of this tracking is to give a clearer picture of your spending habits. In the end, it will help you to spend mindfully as well as identify areas where you can make some changes.
Step 2: Create a Budget
Based on your spending tracking, create a budget that allocates money for essentials (rent, utilities, groceries), savings, and discretionary spending (entertainment, dining out). Stick to this budget as closely as possible.
These budgeting structures offer different levels of detail and flexibility, allowing you to choose one that best fits your lifestyle and financial goals.
Here are popular budgeting structures that people use. Which one is right for you and your goals?
The 50/30/20 Budget Rule
50% of your money is budgeted for needs.
30% of your money is budgeted for wants.
20% of your money is budgeted for savings.
I am trying the format of 50/30/20 budget right now and I am a big fan. This method is guiding me toward more intentionality and balance. It feels like a sustainable structure. As a NYC resident and single parent, I may need to build my income to truly maintain this. Luckily for me, this is also covered in the book from which the structure comes from, Rich AF. The book is discussed in the next step!)
Zero-Based Budgeting
Allocate every dollar of your income to a specific expense, savings, or debt repayment category until you have zero dollars left to budget. This approach ensures you know exactly where your money is going.
The Envelope System
Withdraw cash for various categories and place the money into physical envelopes labeled with each category (e.g., groceries, entertainment). Once an envelope is empty, you can’t spend any more in that category for the month.
Pay Yourself First
Prioritize saving by setting aside a specific percentage of your income for savings and investments before budgeting for other expenses. This ensures you are consistently saving and investing for the future.
80/20 Budget
Simplify budgeting by saving 20% of your income and using the remaining 80% for all other expenses. This method focuses on ensuring a portion of your income goes to savings while keeping the budgeting process straightforward.
Reverse Budgeting
Start by setting your financial goals (e.g., saving for a house, paying off debt) and determining how much you need to allocate towards these goals each month. The remaining income can then be used for everyday expenses.
The Anti-Budget
Instead of tracking every expense, automate savings and debt repayments first, then spend the rest freely. This method works well if you find traditional budgeting too restrictive but still want to prioritize savings and debt reduction.
60% Solution
Allocate 60% of your income to committed expenses (needs and fixed costs like housing, food, utilities), and divide the remaining 40% into 10% chunks for retirement savings, long-term savings, short-term savings for irregular expenses, and fun money.
The One-Number Budget
Calculate a single number you can spend each day after accounting for savings and essential expenses. This simplifies budgeting to focusing on not exceeding that daily spending limit.
Step 3: Set Financial Goals
Having clear financial goals, such as saving for a house, paying off student loans, or building an emergency fund, can provide motivation and direction for your financial planning.
Do you know what your goal is? Do you need a goal?
My Favorite Personal Finance Books
Rich AF by Vivian Tu (Foundational Finance Books)
I Will Teach You to Be Rich by Ramit Sethi (Budgeting and Saving)
You Are a Badass at Making Money: Master the Mindset of Wealth by Jen Sincero (Mindset and Behavioral Finance)
Foundational Finance Books
Your Money or Your Life by Vicki Robin and Joe Dominguez
The Total Money Makeover by Dave Ramsey
Rich Dad Poor Dad by Robert T. Kiyosaki
Budgeting and Saving
The Simple Path to Wealth by JL Collins
Investing
The Intelligent Investor by Benjamin Graham
A Random Walk Down Wall Street by Burton G. Malkiel
Common Sense on Mutual Funds by John C. Bogle
Financial Independence and Early Retirement
Early Retirement Extreme by Jacob Lund Fisker
Unshakeable: Your Financial Freedom Playbook by Tony Robbins
Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier
Mindset and Behavioral Finance
Thinking, Fast and Slow by Daniel Kahneman
The Psychology of Money by Morgan Housel
Books (audiobooks) are my current go-to, so I put them first.
I read the first two and they were everything I needed. I enjoyed the third. It was a great listen and motivator. The second portion of the list is a compilation of recommendations I have received. There is something for everyone!
One of my financial goals is to simply understand my money and to take more action in taking “care of future me.” (That’s the title of Chapter 4 of Rich AF by Vivian Tu.)
I found the most helpful and systematic way to build my knowledge foundation is books!
(I went with Audible in the car so I can save my reading time for some entertaining novels!)
I recently listened to Rich AF on Audible and I highly recommend it. Though it is not aimed at my age group, I got so much out of it. The author, Vivian Tu, keeps it simple. She provides plenty of descriptions and examples and is encouraging and entertaining at the same time. The book comes with a download that you can refer back to as needed. (I needed to immediately because I immediately forgot almost every new word I learned.)
I am in the middle of developing my budget according to her advice. She is also fun to follow on Instagram (@your.richbff). She posts tons of great tips and some fun glimpses into her life.
If you are ready to get a little more advanced, I also recommend I Will Teach You to Be Rich: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works by Ramit Sethi. This was also easy to listen to and had tons of actionable advice. (It was a bit more advanced than I am so I have it on the backburner for when I complete all the steps from Rich AF.)
What I got immediately from both was high levels of motivation and empowerment! Priceless! Lol.
There are many excellent online resources can help you gain a better understanding of your finances, create effective budgets, invest wisely, and plan for your financial future.
Here are some highly regarded sources:
Personal Finance Blogs and Websites
- NerdWallet provides a wealth of information on various financial topics, including budgeting, investing, credit cards, and more.
- The Balance offers practical advice on personal finance, saving, investing, and managing money.
- Investopedia is known for its comprehensive financial and investment education articles and tools.
Financial Planning Tools and Apps
- Mint is a free budgeting tool that helps you track your spending, create budgets, and monitor your financial health.
- You Need a Budget (YNAB) is a budgeting app designed to help you get control of your money, reduce debt, and save more.
- Personal Capital combines budgeting software with investment tracking and retirement planning tools.
Online Financial Advisors
- Betterment is a robo-advisor that provides automated investment management and financial planning services. (IMO Vivian Tu does an amazing job of explaining what a robo-advisor is and how to decide if this is for you.)
- Wealthfront is another popular robo-advisor offering personalized financial planning and investment management.
- Vanguard Personal Advisor Services combines robo-advising with access to human financial advisors for a more personalized approach.
Educational Platforms and Courses
- Khan Academy offers free courses on personal finance and economics.
- Coursera features courses on financial planning, investing, and other finance-related topics from top universities and institutions.
- Udemy provides a wide range of personal finance courses, including budgeting, investing, and retirement planning.
Financial News and Media
- CNBC provides up-to-date financial news, market insights, and personal finance advice.
- Bloomberg offers extensive coverage of financial markets, investing, and economic news.
- Forbes is known for its articles on personal finance, investing, and wealth management.
Government and Non-Profit Resources
- MyMoney.gov is a U.S. government website dedicated to teaching all aspects of financial literacy.
- National Foundation for Credit Counseling (NFCC) offers free or low-cost financial counseling and education.
- Consumer Financial Protection Bureau (CFPB) provides tools and resources to help you make informed financial decisions.
Step 4: Adjust as Needed
Your budget is not set in stone. Regularly review and adjust it based on changes in your income, expenses, or financial goals.
Remember, taking control of your financial wellness is a powerful step towards a more balanced and stress-free life, paving the way for a brighter and more secure future.