What to do when sh*t hits the fan, or How to reduce your financial anxiety.

Bones. Bucks. Benjamins. Bank. However you say it, money captures attention. Whether it’s Googling for ideas on how to make more of it or salvaging a relationship due to a lack of it — money is on most of our minds, most of the time. A survey hosted by the American Psychological Association found that 64 percent of Americans consider money a significant source of stress. I know that feeling, and I’ve experienced my share of financial anxiety, too.

In 2007, my husband got a job with Lehman Brothers — two months before they went bankrupt. He made it through three rounds of layoffs, then was fired, then rehired part time as a contractor. Meanwhile, we had three little babies, two older children, and a lot of expenses. In a quest to curb my financial anxiety, I started to pick up whatever marketing or writing jobs I could get. Through this school of hard knocks, I’ve learned a lot of lessons along the way. Here are five tips to reducing your financial anxiety if and when the time comes.

1. Prepare for the future.

How do you envision your life five years from now? Twenty years? Are you paying for college? Buying a new home? Retiring in Tahiti? The first step to financial calm is knowing where you are going by setting long-range goals. The second step is to make plans that lead you to where you are going. Keep in mind, long-range plans are often interrupted by immediate needs. Things like roof repair or the need for a new furnace. So whatever road you travel, it’s important to prepare for unexpected dips in the road that can derail your plans. “You should have three to six months of your normal income in an account that’s safe and liquid,” says Roy Laux at Synergy Financial Services. “You should also have in that account savings for planned expenses.”

2. Create a professional income plan.

We often fear what we don’t understand, and trying to envision our financial future overwhelms even the most astute investor. “What I find interesting is that when clients approach retirement, they are accustomed to saving, saving and saving,” says Clinton Brown, CFP, at BCJ Financial. “Once they start retirement, there is a period of discomfort as they transition from the mindset of saving to the mindset of spending. They are used to seeing their accounts go up, and now look at the possibility of their accounts going down due to withdrawals.”

Brown says that creating a professional income plan can help alleviate these concerns as they can see, based on probability, what their future income flow could look like and from what sources.

3. Get your credit in check.

Knowledge and discipline are the keys to financial empowerment. But to make things right, you have to know where you stand. The professionals at Lexington Law suggest four ways to start building money muscle for better financial strength.

a) Create a budget to track spending and savings. Tracking your spending behavior is an effective way to expose habits that are hindering financial goals. For instance, when you count the number of times you ordered pizza instead of preparing meals at home, it’s an easy fix in spending choices.

b) Make a list of long-term goals. Things like buying a home, having a family, or retiring early can either be supported or jeopardized with the buying decisions you make today. Outline your current efforts to support these goals. Then, stick to your goals.

c) Talk to a financial planner about how to maximize income and minimize burdens.

It is never too late to prepare financially for your future. By sharing your concerns and plans, a trusted and competent planner can determine the best and most realistic strategy to help you move toward a secured future.

d) Talk to an expert about the benefits of credit health and how to strengthen your score.

A conversation with a professional offers both an investor and a lender perspective. And he or she can offer suggestions on how to improve your financial standing quickly and accurately.

4. Work as hard as you can.

During the peak of our financial stress, I kept busy and worked until I was too tired to work anymore. That way, I didn’t have time to sit and worry. If you are starting your journey toward financial recovery, don’t dwell on what has happened. Instead, focus on each day, your work performance and earning potential, and the power you now have to make smart choices that will support your financial well-being.

5. Downsize.

If there is anything we’ve learned from the housing and financial crisis of 2007, it’s that Americans are sometimes unclear on what they can purchase and what they can truly afford. No three-car garage is worth losing sleep every night and developing health problems due to stress over finances. If you feel overextended, it’s time to re-examine your situation. There’s no shame in downsizing when the stress is on. During the peak of our crisis, we had to short sell our home, and we were better off for it. Whether it’s downsizing your house or your restaurant budget, living within your means results in stress relief.

It’s time to take your anxiety over dollars and cents and convert it into smart money sense. These five strategies helped me to find a path to financial peace. And, I know they will help you, too.

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