Learning how to manage your funds to become financially fit is a long-term commitment. But by incorporating some healthy habits into your day-to-day life, you can reduce your financial stress. Here are some budgeting tips to reduce financial stress by investing in your retirement savings, creating an emergency fund, and creating a budget that works for you.

Reduce financial stress by setting up your retirement savings

Thinking about the future can be stressful. According to Investopedia, almost half of Americans don’t have a retirement fund whatsoever and only 60% of workers have a 401(K) option from their employer. Whether you’re self-employed, a young worker, or your company simply doesn’t offer a 401(K), there are other ways to save for your retirement.

Since a lot of people don’t have the option of an employer 401(K) they rely on their IRA which is paid into through every check. Did you know you can ask your employer to withhold a larger percentage for your IRA? Or, if you’re self-employed, you can go through third-party services like Fidelity to set up alternative retirement funds for monthly or bi-monthly payments. These are two great alternative options if you want to plan for your future without a 401(K) readily available to you. The earlier you start saving in a retirement fund, the more time your money’s value has to grow.

Getting serious about your retirement fund is wise to prepare for your future and reduce your financial stress. When creating your retirement fund, it’s important to be aware of the risks. For example, if the dollar is experiencing high inflation, its value runs the risk of depreciating over time. A volatile stock market can affect the availability of your fund when you decide to retire. There is also the possibility of high tax and interest rates applied to your retirement fund if you don’t carefully set it up. For these reasons, it is doubly important to have a realistic emergency fund.  

Create an emergency fund to weather the storms of tomorrow

If the pandemic has shown us anything, it’s that you never know when things will get turned upside down. Creating an emergency fund that can sustain you for three to six months is the smart way to plan for the unexpected.

If your car dies or there’s a hole in your roof, would you have the capital to pay it off right now? According to Bankrate, one-third of Americans would need to borrow money to pay for an unexpected emergency. Open a savings account to be prepared for any situation that may come up.

Opening up a savings account and putting funds into it every month is a great way to keep your funds safe and secure. According to NerdWallet’s columnist, Liz Weston, making monthly payments into your savings and treating it like a necessary bill, like electricity or wifi, makes it easier to part with the money. By creating a savings account that is separate from your checking, you can begin storing money that is out of sight, out of mind. Opening an account that also has a high yield interest rate can give your money more value so you can meet your savings goals faster. 

Create a budget that works for you, and stick to it

Creating a budget is a wise way to begin implementing some of these tips. Start by creating a monthly plan for yourself. Every monthly budget and financial plan depends on the person’s current situation: do you have loans to pay off, a child’s tuition, or are you saving for a down payment on a home? Look at your expenses for a whole month and find areas where you can move money around. Where are you spending the most? What do you need and what do you want?

Self-discipline is one of the most challenging things to maintain when learning to stick to a budget. Keeping reminders of your financial goals and questioning every purchase will help you stick to your budget. A monthly budget will get you financially fit and reduce financial stress.

Let us help you plan for tomorrow 

We know that this past year has not been easy for many who have struggled financially, but we hope that these financial tips will help you prepare for the unexpected. Not all of us can hire an investment planner, but we can all begin thinking about tomorrow to inspire today. Here at DEXSTA, we are just one phone call away to help you reduce your financial stress.