Anxiety is a feeling characterized by emotions of tension, worried thoughts, and physical changes. People can develop anxiety from a number of situations, including finances. Many Canadians are currently plagued with financial anxiety due to the COVID-19 pandemic. While avoiding the virus is on everyone’s mind, your mental health is just as important.
As of January 2021, the unemployment rate was 9.4%. Exactly one year prior, the rate was 5.5%. Without steady income, it’s challenging to keep up with economic obligations. This is the main source of financial anxiety among Canadians right now.
Even if you’ve had employment throughout the pandemic, that doesn’t mean you won’t feel money anxiety or future job loss. Wealthy people or employed individuals can still experience anxiety over their finances. As an example, many people stress over the fallen value of their investments. In addition, others are fearful of losing their job at any moment causing undue stress.
This fact isn’t meant to scare or intimidate. Rather, it is to communicate that having money worries is completely normal and you’re not alone.
If you’ve identified that you’re struggling with financial stress, you’ve come to the right place. In this article, we provide tips for taking control of financial anxiety. In addition, we show you how to manage your finances to further reduce stress.
Tips for managing financial anxiety
Until you get your emotions under control, it can be challenging to address your finances. Below are some tips to managing financial anxiety:
- Practice relaxation, such as yoga, deep breathing or listening to music
- Take care of your physical health by eating balanced meals, exercising and sleeping
- Talk to a friend or family member
- Keep a journal to understand your thoughts and challenge your anxieties
- Reach out for help
How to deal with money problems
A sound piece of financial advice people forget about is their budget. Many people overspend without realizing it. Creating a budget allows you to cut out what’s unnecessary. In addition, you can establish how much money you need to earn to meet your living expenses.
Create an emergency fund, then save
A major source of financial anxiety is the fear that you cannot manage a sudden financial crisis. This is actually a legitimate fear. The inability to cover the cost of an emergency could cause more financial problems.
To reduce your anxiety, you should start contributing to an emergency fund. Try to save money to cover 3 to 12 months of expenses. Having money for a rainy day will make you feel more comfortable about potential emergencies. After you prepare an emergency fund, begin saving for other life goals.
Improve your credit
Having good credit is a part of adequate financial health. In Canada, credit plays an important role in obtaining new financing. If your credit is in poor shape, you may have challenges achieving your financial goals. This can cause financial anxiety.
A good starting point is to use a secured savings loan or a secured credit card. There are several credit card companies that offer these kinds of cards. Also, be sure to pay your debts on time and in full. Eliminate old debts, and avoid using credit unless you need it.
How can Canadians address large credit card debt accumulation?
TransUnion, one of the credit bureaus, revealed there are 44 million active credit cards in Canada. The total amount of outstanding debt is over $85 billion. This is a significant amount of debt, particularly during a pandemic.
The longer Canadians avoid dealing with credit card debt, the more interest they’ll accrue. In addition, credit scores will experience damage. If you’re ready to get your credit card debt under control, consider implementing one of these strategies:
- Pay more than the minimum balance every month
- Create a debt reduction plan
- Consolidate your debts
- Enroll in a debt management plan
- Settle your debts for less than what you owe
- File for a consumer proposal or bankruptcy
If you’re struggling with your financial situation, consider meeting with a credit counselor at Consolidated Credit. They can help you identify the best decision for your financial problems in addition to walking you through the execution.