10 ways to stop worrying so much about money

With a recession underway and a constant bombardment of bad news, everyone is worried about one thing:  money. You don’t need money to be happy, but having money and watching it disappear doesn’t help your mood one bit.

I am a worrier. I have found that there are a few simple things that allow me to sleep a lot easier at night, though.  Most of them are simple, and none of them require a tremendous amount of work – just a change in attitude or habits.

1.  Set up an emergency fund.

Everyone should have an emergency fund.  Even if you don’t think you need one, make sure you have at least a month or two of cash on hand at the bank.  I recommend using HSBC or ING high-yield savings accounts for an emergency fund, because it takes a couple of days to withdraw money from each.  Having money that’s easy to get to – but not TOO easy – will relieve a lot of short term stress.  Don’t have an emergency fund?  Even if you can only add another $10 to your fund, do it.

2.  Pay down your debt.

I’ve seen a lot of complicated ways to go about this, but Robert Kiyosaki (of all people) has the best tip I’ve seen.  If you have consumer debt, pick out an amount you can afford each month and apply it to your highest-rate debt using some sort of autopay if you have it.  Repeat every month until it’s gone, but this way you can forget about it and get about the business of your career or your business.

3.  Put as many bills on autopay as possible.

Almost every bank has an online presence now.  Mine lets you “pull” your credit card information straight into your bank account, so you can see all the bills lined up in one place.  Paying them can be as easy as setting the autopay up to be a certain amount each month – and then forgetting about it!  If you’re still writing checks and mailing them in, you’re creating a lot of worry that you don’t need!

4.  Consolidate your accounts.

I wrote a guest post about this a long time ago, but it’s still true.  I used to have a dozen credit cards, checking accounts at multiple banks and IRAs and other investment accounts scattered everywhere.  Don’t use an account more than once a month?  Consolidate!  Most banks and brokerages will be happy to help you consolidate your accounts, so pick the ones that offer the most benefits to you and get started consolidating.

5.  Consolidate your financial information in one place.

With free services like Quicken Online, Mint, Geezeo and others all over the internet these days you can easily set up an account that gives you a quick “snapshot” of your financial health without logging in to 15 different sites.  My bank uses Yodlee, which pulls in everything from my home’s value in Zillow to my retirement accounts to my credit cards.  I don’t worry too much about net worth, but it’s still nice to be able to see it when I want to see it.

6.  Get insurance for everything that needs insurance, and don’t for anything else.

I had rental car insurance built into my auto insurance for a couple of years after I bought a second car.  The chance I would need insurance for a rental was minimal.  Money down the drain!  Review your insurance policies and make sure you aren’t paying for things you don’t need.

7.  Stop checking your retirement plan information.

If you have a reasonable plan set up, and you’re confident about the long-term prospects of your plan then there’s no reason – none at all – to check the value of your retirement plan more than 3-4 times per year.  The money in an IRA or 401(k) is meant to be used when you’ll be in your 60s or later.

8.  Set up targeted accounts.

Even though I advocated consolidating accounts above, having separate-purpose or targeted “sub-accounts” within a single account can be helpful.  Many of the high-yield savings accounts are good for this purpose.  For example, we have a separate “vacation account” that we put a small amount into each month, simply so we can forget about that money.

9.  Overwithhold on taxes.

This strategy’s been debated for years – is it better to give the government a loan or not have the shock of an additional payment at the end of the year?  Good tax planning can probably get you closer to zero, but overwithholding a bit can help you avoid nasty surprises.

10.  Consider alternatives, but after considering – forget.

Study alternatives, investigate, consider, but then decide and once you’ve decided, forget about the alternatives you didn’t choose.  Once you’ve chosen one path, sitting around worrying about what might have been is pointless and unproductive.  Don’t fight yesterday’s battles – move forward to the next challenge!

photo credit: Lisa Brewster