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Financial worries are regularly reported to be the worst source of stress for adults, and stress can have a seriously negative affect on your mental health. But don’t worry, money is not as difficult to keep under control as you think it is. Here are five top tips for helping you make the most of your money for a stress-free life.

Know your income and expenditure

This might seem quite basic, but you’d be amazed how many people aren’t actually sure how much of their income is expendable after tax, rent and utilities and how much they spend. A budget can help you get in control of your finances, and, most importantly, help you to see where you can afford to cut-down your spending. Maybe you don’t need to buy yourself a morning coffee every day? Or maybe your finances can motivate you to quit smoking?

This might be the most crucial step, and it is very important that you consider everything when you are figuring out a budget. If you have internet banking, or access to your previous statements, use the past 3 months of expenditure as a basis. But, don’t forget all the seasonal, one-off costs, such as Christmas, holidays and birthdays. It may take you a few months of trial and error to get the balance perfect, but you will feel much more in control of your finances.

Sort out your debts

Almost everyone will have a certain amount of debt. Whether it is student debt, credit card debt, a mortgage, or a car loan, debt has become a very normal aspect of modern life. This means you need to get on top of them, just like you got on top of your income and expenditure. First of all, make sure you include all your debt repayments in your budget. This is very important as some people can lose track of their debts, particularly if a creditor sells your debt on to another provider, and this can cause a really nasty shock later on when it re-emerges.

Secondly, you should note down what your ‘priority debts’ are. These are debts like tax arrears, which have very severe consequences if you don’t pay them. While it is important to pay off non-priority debts, and, at the very least, keep up with minimum monthly payments, the immediate consequences of not paying off a credit card bill is much less severe than not paying tax, rent or utilities.

Last of all, you should make sure that you understand your debt solution options. Most people think that bankruptcy is the only option when you are in financial trouble, but the truth is that there are a huge number of debt solutions available for people in all kinds of financial situations. Some are legally binding, while some are informal, but there is almost definitely a solution for you if you are stressed and struggling. There are plenty of websites and advisors who can help you if you want to find out more.

Save for a Financial Emergency

When you have organised your budget, and sorted out your debts. The next step is to think about savings. The most important thing to do is save for a financial emergency. Generally, it is advised that, before you save for anything else, you put aside 6 months subsistence in case something happens that prevents you from working for a while. This may be moving location, being injured, having a child, or one of the many other life events that can dramatically affect your financial situation.

So, for example, if you spend £300 on rent, £50 on utilities, and £200 on expenses every month, you will want to make sure that you have £3,300 saved to help you survive a financial emergency.

Invest for the Future

Now that you are prepared for the worst, you can start to think about your future. It is often argued that you should try and save at least 10% of all your pay checks, but the truth is, most people find that they should really be trying to save as much as possible. You may have short term goals, such as a car, or a holiday, but you will also have long term goals, such as your pension. Having so many goals can make you feel like there is never enough money, but take it one day at a time and you’ll be alright.

First of all, you need to separate your long-term goals from your short-term goals. Any goals which are shorter than 10 years into the future can be dealt with through normal savings products, with a bank. This should allow you to put aside money, bit-by-bit, and earn a little bit of interest. These goals could range from anything from a particular holiday, to a car, or, even, a deposit on a house.

For long-term goals, you might want to think about investing. This is because, if your interest rate is lower than the current inflation rate, your money may begin to seriously lose value if you only rely on savings products. This is more complicated, and not for everyone due to the risk involved. You are also likely to need more expendable income to be able to try investing. If you want to know more about investing, and savings, click here.

Don’t forget to enjoy life

As we said earlier, money is one of the worst stresses that life throws at you, so the single most important thing you have to learn is to take a deep breath. Money should always be respected, but it is also not the most important thing in life. Make sure you are still treating yourself well; whether it is a bit of retail therapy, tickets to the match of the year, buying yourself a good-quality laptop for your studies, or just hanging with your best mate – there are all sorts of things that you do that are just important as saving money.

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