Since I force myself to think about money all the time (I write thousands of words on money topics every week), I do worry about money sometimes.  Some of my money worries are legitimate: how will I earn money when my current position ends in August? Am I spending too much and not saving enough? Is a bird in hand really worth two in the bush? (sorry, just popped into my head)

But have no fear! There is hope to decreasing your worries, and some of the best tactics actually aren’t just “earn more money” or “become a millionaire.” Here’s what I do:

Decrease risk.  Being properly insured is a great way to bring peace of mind.  I have a $10,000 renters’ insurance policy with an annual premium of only $80.  This is a great deal to me since I can have all of the things in my apartment replaced if there’s a fire or break-in. This is a bargain not only in terms of if my apartment burned down, but it’s a relief knowing I have backup in the case of a catastrophe. After racking up $3,500 for an ambulance ride and hospital visit last month, it felt great to have health insurance, too.

Tackle small problems before they get big.  I know this is old news by now, but financial planning is the best way to make sure you’re making sound decisions.  An easy way to start planning right now is to track spending and at least have a basic budget. If you stay on track, there will be fewer surprises and less to worry about.

Be realistic.  You simply can’t change your financial fortunes overnight, but you can start right now.  Set financial goals right away and you’ll be on the right path.  If you’re trying to cut down on spending, move down gradually instead of trying to slash 80% at one time.

Start a “worry fund.” Call it what you will (there are plenty different fund names/types of funds out there) but having this safeguard here should ease your worries about unexpected expenses.  Save up enough to survive for several months without income, and that should provide some assurance that you won’t be screwed if your life changes suddenly.

Automate finances so you don’t have to deal with the annoying bills as often. Obviously automating finances won’t solve your problems when you spend money that you don’t have, but it will at least prevent the thought of money coming into your mind a few less times.  If you’ve set up all your account correctly, you won’t have to worry about missing payment due dates and other deadlines, either.

Create multiple streams of income. This isn’t the easiest advice, but it might be the most important.  A lot of our worries center on having a job and getting a regular paycheck from that job.  For most Americans, if they lose their job, 100% of the income disappears. The best way to counter this is to diversify your income streams (just like you might diversify you investment portfolio).  For most, your full-time job will still provide the majority of income.  But earning money on the side can help, even if it’s only an extra $200 a month.  Here’s a great list of ideas to get started (that happen to be location independent, too).

Consider the worst.  Here’s a little exercise: think about your biggest money worries and then imagine the worst that can happen if you don’t solve them.  What did you come up with? You’re broke? Bankrupt? Evicted? It’s going to take a financial meltdown for these things to happen, and that’s probably not going to happen overnight.  Even if you do find yourself in one of these positions, all these problems can be fixed. I know this sucks, but your life isn’t over.

Live in the present.  As inspired by Eckhart Tolle, I’ve attempted to master this in the past. The idea is that when you can’t or won’t do something in that very moment to solve a problem, the problem doesn’t exist right then and shouldn’t occupy your mind. While I’ll admit that it’s challenging, it has helped me relax when there’s literally nothing I can do about my money worries. If I start thinking about how I’m going to pay my bills while I’m off hiking in the woods, I’ll move my mind back to the present and stop thinking about it.  Can I possibly be doing anything about earning money while I’m walking through the forest? No, and I’m not about to run out of the woods and go figure it out, either.

No matter what you do, it’ll be hard to totally defeat your money worries, even if you have millions of dollars.  But my general advice for any worry (not just money): do something about it right now. It’s unproductive to worry, especially when you could be taking action to defeat your problems.

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photo by: [ Roberto Bouza ]