Money is the biggest cause of stress in the United States, according to the American Psychological Association. If we know exactly what causes our money stress, we can address it. We can take charge and work with the rules of the system, and make sure we prioritize our mental health
Causes of financial stress and how we can solve them
While we all want to earn more, there are deeper, underlying issues we need to resolve first
- The first step to getting rid of money stress and living a healthier, happier life is to identify the specific reasons that are causing you to worry
Short-term Thinking
Take a step back in the short term to grow in the long term
- Focus on long-term quality of life
- Quality of life is the most important metric
- Avoid money stress by not prioritizing money.
- There’s nothing wrong with earning less and having a better life
No emergency fund
56% of Americans cannot cover a $1,000 emergency expense with savings
- Solution: Build your emergency fund, little by little
- Use the 3-account-strategy to save money
- It’s all about consistency
- Have at least six months’ worth of living expenses in your savings account
A lack of financial literacy
Managing money is not something you learn in school
- How you spend, save, get into debt, and invest depend on you
- Apply the advice that is relevant and effective
- Everyone is at a different phase in their personal finance journey, so it matters that you apply it to be successful
Earning more is not enough
The goal is freedom – freedom to do what you want and to work for whom you respect.
- When I see an opportunity that might earn me more but reduces my overall freedom, then I don’t pursue it. I prioritize living a simple and well-balanced life.
Unrealistic expectations about life
Focus on the process, not the outcomes
- Everyone wants to get in better shape, travel to nice places, earn more, etc., but these outcomes are driven by consistent work over a long period
- Warren Buffett didn’t become wealthy by making a single, big trade in just one year, it took him decades of consistent work
