3263: How Financial Habits and Situations Can Affect Productivity by Luke Smith with Carl Pullein

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[00:01:01] Optimal Finance Daily – How Financial Habits and Situations Can Affect Productivity by Luke Smith with CarlPollein.com If you've ever worried about money, you know that the effects of financial stress seep into nearly every facet of your life. You don't just worry about your finances when your rent is due or you see the stack of bills on your kitchen table. Even when you punch in for work, you're still agonizing over your situation.

[00:01:29] Stressing about money while you're supposed to be earning it can negatively affect your productivity. Taking your financial worry to work with you could potentially jeopardize your livelihood. Since losing your job would only compound your stress, you must make a plan for how to improve your financial habits so that the worst-case scenario doesn't happen. The first step is understanding how your financial situation affects your work performance.

[00:01:55] From there, you'll see how building strong financial habits translate into improved productivity. Why Financial Situations Cause Stress According to the 2020 Getting Paid in America Survey by the American Payroll Association, approximately 69% of people living in the U.S. would experience financial strain if their paychecks were delayed for a week.

[00:02:20] The survey respondents said a missed paycheck would put them in a position where it was either somewhat or very difficult to meet their financial obligations. Individuals living paycheck to paycheck are existing on the edge of financial ruin. High debt, medical bills, and health insurance are just some of the financial obligations that can cause stress. If you aren't managing your money well, financial setbacks and unforeseen expenses can skyrocket your stress levels.

[00:02:48] A major reason bad financial situations cause stress is that people often don't know how to get themselves out. People see a mountain in front of them and have no idea how to climb it. Frequently, there's a lack of knowledge regarding taking on debt and a cloudy understanding of how to repay it. Missed payments can quickly spiral out of control and have negative consequences for not just your credit and finances, but also your mental health.

[00:03:15] To avoid these negative consequences, you must commit to conquering the mountain in front of you and put a strategy in place to do so. How stress affects productivity Regardless of the source, stress can impact your mental health and physical well-being. In the workplace, the negative effects of stress look like lower job performance and decreased productivity.

[00:03:38] Other consequences include reduced work quality, delayed deadlines, conflict among colleagues, workplace accidents, and burnout. A 2019 study by Colonial Life revealed that more than 20% of respondents admitted to spending at least five hours of the work week thinking about stressors such as health, jobs, and finances.

[00:04:01] Using additional data from the U.S. Bureau of Labor Statistics, Colonial Life estimated that employers are losing billions of dollars annually due to stress-induced productivity loss. Fortunately, there are steps you can take to improve your financial situation and in turn return to your normal productivity output. Having a plan to establish solid financial habits will help you feel less stressed and more in control of your financial future.

[00:04:30] Tips for building good money habits Establishing solid financial habits starts with knowing your expenses inside and out. Before you can save money, you need to know exactly how you're spending it. Learning how to budget begins with tracking your income, spending habits, and various expenses. No purchase is too small not to be noted. With such information on hand, you can then use a simple budget calculator to get a clear picture of your financial situation.

[00:04:59] Whatever budget calculator you choose to utilize should have a section for savings. At a minimum, set aside money each month for an emergency fund. With savings set aside, you'll have more options should an unexpected situation arise. And that knowledge alone will give you greater peace of mind. Beyond an emergency fund, you can set up separate savings accounts for investments and retirement.

[00:05:24] Finally, and perhaps most importantly, you must put together and take action on a plan to get out of debt. To pay your debt down in the most effective way possible, you need to know what options are available to you. If you have multiple debts, research the debt avalanche and debt snowball repayment methods. The former involves paying off your largest debt first, while the latter advises beginning with the smallest one.

[00:05:49] These strategies can help you rebuild your credit, even after bankruptcy, and keep you from spiraling into debt again down the road. From paying down your debt in the most efficient way possible to saving an emergency fund, establishing good financial habits will decrease your stress levels and allow you to focus your energy on important tasks. When your mind is occupied with money worries, it's difficult to be productive.

[00:06:14] Having a plan to manage your finances will boost your confidence in other areas of your life. Embracing financial responsibility will help you to feel happier and more secure, as well as free you up to perform better at work. You just listened to the post titled, How Financial Habits and Situations Can Affect Productivity, by Luke Smith with CarlPulline.com.

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[00:08:05] Lege mit vorgefertigten Layouts los und verschiebe Module und Widgets, wie es dir passt. Besuche pro.kraken.com. Trading crypto. Ohne Kompromisse. Keine Anlageberatung. Crypto trading birgt ein Verlustrisiko. Paywood Europe Solutions Limited tätig als Kraken ist durch die Central Bank of Island autorisiert. This article had me reflecting back on my own procrastination when it came to getting out of debt, saving, and investing. I think my biggest problem in my 20s was simply that I wasn't all that aware of my financial situation.

[00:08:35] I knew I had some debt, but it wasn't until I ran my free credit report and looked at everything collectively that I realized I was actually 30 grand in debt. That certainly created some urgency, but if I didn't get curious, I might still be blissfully unaware. The other reason why I procrastinated was because I thought I'd be making so much money one day that my lack of saving and investing when I was young wouldn't matter.

[00:09:01] I mean, it's great that I had big dreams for myself and believes that I had high earning potential, but it's also a god-awful strategy for someone who's financially illiterate. I had no idea about the power of compound interest and definitely lost out on investment gains in my younger years. But the thing is, everything is figureoutable, even if you're getting a late start. For me, I started at 28. You can fix this.

[00:09:27] Now, I'm what's considered coast-fi, meaning that if I don't contribute one more penny to my retirement vehicles, they will compound and grow to what I need at traditional retirement age. Finally, I procrastinated because I felt like I didn't understand enough about investing to do it confidently. And when I would try to learn on my own, it really intimidated me. If you've been listening for a while, you know that J.L. Collins' book, The Simple Path to Wealth, is what cured me of my investing fears.

[00:09:57] I also realized over time that I don't need to know everything about investing in order to properly save for retirement. And even now, as someone who reads and talks about money every day, I still don't know everything. I am learning right alongside you as I narrate these posts. Sometimes I think the financial services industry purposely makes things complicated so that we're willing to pay the high management fees for a financial advisor. But it doesn't have to be that way.

[00:10:23] We can educate ourselves enough to be confident about our financial choices. And then if we do hire a financial advisor, we'll be in a position to ask the right questions and feel more confident that we're working with someone we can trust. The fact that you're listening to this podcast is a great sign that you have a bright financial future ahead of you. And that should do it for today. Have a happy rest of your day. And I'll see you on the Friday show tomorrow, where your optimal life awaits.