According to a study by Northwestern Mutual, money is the leading source of stress for 44% of Americans, ahead of politics, relationships and work. More than a quarter of those surveyed said that financial anxiety made them feel depressed at least once per month. Money can have real impacts on your health and well-being. Yet, the contributors to your financial life, including job security and unpredictable national or global influences, can be confusing to understand for even the most financially-savvy amongst us.
So, how can the average person deal with financial anxiety while making smart decisions for their present and future? Here are some tips:
- If you experience significant anxiety relating to your finances, try to pinpoint the source of your concerns and take necessary steps to address them. For example, if you are worried about not making enough money, consider your options for switching jobs or careers. If, on the other hand, you are worried about not having adequate investments, do some research into the housing market or stock market for options to invest. If your main concern is about expanding your family and meeting their needs, consider sitting down with a financial advisor to examine your cash flow; if you find that your dollars are escaping into areas of lesser value, you can stop spending there and save money for more important needs.
- Share your worries. Make sure you and other stakeholders, such as your family or life partner, are on the same page when it comes to your finances. Discuss major moves, such as investments and switching jobs, with them. Consider how you can support each other; for example, it might be beneficial for one of you to focus on meeting the rent or mortgage payments, while the other spends on household and miscellaneous expenses.
- Set smart goals. If you are trying to save, whether that is towards a new gadget, a holiday, your children’s education or a new home, set your targets and timelines realistically. While you may be able to save for a couple of months to buy a new phone, do not expect to save for your child’s college education in a matter of months. Plan well ahead for the larger expenses! You can set up payroll deductions to be put into various accounts, or automatic transfers from your checking or savings into investment accounts. You can’t spend dollars that you can’t see.
- Before making a purchase, ask yourself if what you are buying is a NEED or a WANT. A need is something you must have (food and other daily necessities). A want is just that- you don’t need it but you want it. It could be a new pair of shoes when your old pair are not worn out. Or a new, bigger television when the one you have is really just fine. Saying no to WANTs is a key to paying down debt and saving for more meaningful purchases.
If you don’t have a simple method of gathering and analyzing your financial information, you can consider using an automated program that can do the calculations for you. Popular software include Mint.com, YNAB, or Quicken. Moreover, no matter what situation you may be in, going in person to chat with a financial advisor about your financial health can be invaluable.
While there may be nothing you can do about recessions, global economic shifts or changes in tax laws, you can safeguard your financial security and peace of mind by being organized about your financial life. This will allow you to devote more energy to your work, family, health and other areas that bring you satisfaction and joy.