Is your psychological wellbeing at risk due to money problems? Do you lie awake at night wondering how you could better manage your finances? Plenty of adults face money problems and eventually get through the challenge with their mental, physical, and emotional wellness intact. Occasional monetary hurdles are part of life, so there’s no need to let them get the best of you. Here are some strategies that can help you establish a savings account to fall back on in emergencies, get through college painlessly, create a realistic budget, always have a source of income, and build a solid credit score along the way.
Make Saving a Habit
Place a fixed percentage of all your earnings into a savings account. This is not an emergency fund, which consists of about three months’ income and is maintained in a separate account. Build up the emergency fund first, and then begin ramping up the savings with your monthly percentage of income contributions. At first, experiment with five percent, but if that seems too easy, move to seven, ten, or fifteen percent.
Use Student Loans to Pay for College
If you don’t want to drown in stress by having to maintain a full-time job during college, take out private student loans to cover all the expenses associated with your degree program. Undergraduate coursework is tough enough without having to add in the pressure to maintain a job. When you opt for private student loans to pay for expenses, you’ll have access to a higher borrowing limit than most other kinds of loans, can take advantage of competitive interest rates, and will always know where you stand in terms of payback periods and other details of the loan agreement.
Practice the “ABE” Principle to Survive Tough Times
ABE stands for always be employed, except during school, of course. For example, after you begin your career, there’s no need to let a layoff or short-term bout of unemployment put a dent in your financial or mental wellness. Use the ABE principle and take any paying job to fill in those weeks or months of your layoff period. That way, you’ll not only have a steady source of income but will augment your résumé with something future employers always look for, which is continuous employment.
Know Where Your Money Goes
Make a realistic but detailed budget so you know where every dollar goes. Whatever you earn, inherit, win, find, or collect on sales of things you sell online, every dollar should be funneled through your monthly budget. Use the savings principle noted above to pay yourself first, then pay monthly bills, interest-bearing debt, and stick any surplus into an emergency fund. The point is not so much the categories you create within the budget but the fact that you assign a destination for every single dollar that comes in.
Build a Credit History
Use credit cards wisely, pay all your monthly obligations on time or slightly early, never miss a car or mortgage/rent payment, and try to maintain an employment record with no major time gaps. Additionally, it helps to not change residences too often in order to build up a solid credit rating.