A recent survey conducted by SurveyMonkey in collaboration with CNBC has revealed a troubling statistic: a staggering 73% of Americans are currently grappling with financial stress. This alarming trend is largely attributed to various factors such as fears of layoffs, elevated interest rates, and the continual rise in prices. As the economic landscape remains shaky, it becomes increasingly essential for individuals to adopt sound money management strategies to avoid difficulties in meeting basic expenses or resorting to credit to bridge financial gaps.

Money management expert Rachel Cruze has recently shared her insights on how to not only survive but thrive financially during challenging times. In her latest YouTube video, she outlines five essential steps that can empower individuals to better manage their finances and avoid the pitfalls of poor money habits.

1. Start Using a Budget

According to Cruze, one of the primary reasons individuals feel overwhelmed and fearful about their financial situation is the absence of a budget. Without a clear understanding of ones financial status, it can be easy to feel a lack of control. However, implementing a budget allows you to visualize your income and expenses, providing a realistic overview of your financial health. By tracking where each dollar goes throughout the month, you can identify and cut back on unnecessary spending.

Cruze advocates for the use of the Ramsey Solutions EveryDollar app, which not only helps in budgeting but also offers a wealth of financial education resources. For those who prefer a more traditional approach, a simple spreadsheet or even a handwritten budget can be quite effective.

2. Get Your Money in the Positive

Cruze discusses the significant issue many face: living paycheck to paycheck and often finding themselves in debt due to overspending. This cycle can feel like a trap that is difficult to escape. Her advice? Stop relying on debt as a crutch and explore alternative ways to compensate for any financial shortfall. This could mean making cuts in your budget or even considering a side job to boost your income.

When you manage to keep your finances in the positive, you create opportunities for growing your net worth. Additionally, minimizing reliance on credit cards will help you avoid the crippling interest rates that currently average around 22%, according to recent data from the Federal Reserve.

3. Build Your Starter Emergency Fund

Before diving into debt repayment, Cruze emphasizes the importance of establishing a financial cushion. Having a reserve fund is crucial to manage unexpected expenses, ensuring you won't have to go back into debt when emergencies arise, she explains. She recommends setting an initial goal of saving $1,000 to serve as a safety net for unforeseen costs like medical bills or urgent home repairs. While this may appear daunting, identifying additional income streams can expedite this process.

A recent blog post from Ramsey Solutions offered several inventive ideas for generating extra funds, such as tapping into your hobbies to make money, participating in online surveys, renting out your vehicle, or engaging in gig economy jobs like Uber or Instacart. The key is to find something you enjoy that can also provide long-term financial benefits.