Money and Mental Health
Managing your financial well-being
Part 6 | Reading Time: 4 minutes
By Ian Bin
Hey there, it’s fascinating how money and mental health are so interconnected these days. We all want to succeed and achieve financial stability, but it can also be stressful and overwhelming. Did you know that a survey found that 73% of Americans indicated that finances are the No. 1 cause of stress? It is even reported as a leading cause of stress more often than politics.1
Finding balance
According to Forbes, stress resulting from financial challenges is usually chronic.1 Financial stress can weigh on our minds, causing anxiety and sleepless nights. I’ve been thinking a lot about the intersection between the life skill of balancing and managing our finances responsibly and caring for our mental well-being. We need to strike a harmonious chord between financial aspirations and emotional fulfillment, so why don’t we go through some easy tips to try and help you manage that stress and find balance?
Budgeting might sound like a pain, but reaching your financial goals is essential. Create a working budget to see where your money goes each month. As we’ve talked about in our previous blog, start simple. Try and keep track of how much you earned in a month and the total for how much you spent in that month. This way, you know where your money is going, and it helps you take charge of your finances and make conscious spending decisions. Doing this lets you allocate funds for both necessities and treats because you already know your current spending. A household budget can positively affect a person’s emotional state by reducing stress, anxiety, and frustration.2
Preparing for life's surprises
Life is full of surprises. Building an emergency fund is essential to help counter those surprises. Did you know 57% of U.S. adults are uncomfortable with their current emergency savings?3 If that’s you too, let’s get you comfy. Starting out, set aside a small amount regularly, and you’ll be amazed at how it accumulates over time. Even something like $50 a month can stack up over a year in a savings account. Then it could save you if something like your car breaks down, you get an unexpected bill or something happens to your current job. An emergency fund acts as a safety net for unexpected expenses and can ease the stress you may have for the uncertainties in the future.
In the hustle and bustle of life, it’s easy to neglect self-care. But taking care of your mental health is crucial. Engage in activities that recharge your batteries and keep your mind positive. Whether going for a walk, practicing mindfulness, or enjoying a creative hobby, prioritize self-care in your daily routine. It is essential to understand that if you have some hobbies or decide to go out one night with friends and spend some money, that is normal! As our saving vs. spending blog mentioned, no one expects you to save everything. It’s okay to have fun sometimes and spend money, especially for mental health. It is all about balance. Because if you keep all your money but are miserable, then what is the point?
Setting achievable milestones
When setting financial goals, dream big, but be realistic. It’s great to have ambitious aspirations but breaking them down into achievable milestones that you can hit will keep you motivated. Celebrate every step forward in progress, no matter how small – each one shows improvement, which is always something to be proud of. The American Psychiatric Association reports that 70% of adults worry about money.4 Setting goals is proven to help reduce your financial stress and get you on track to the future you want. A Schwab study found that people with a plan are at least 25% more likely to feel financially stable.4
If you’re overwhelmed by financial decisions, that’s normal. Even talking to a close friend and being open with your finances can lead to a better understanding of your current situation and where you want to be with your goals. It can take time to figure out where to start. I created this blog series to help with that financial anxiety. If you want somewhere to start, try downloading the 3Nickels app. It has an education tool that covers common personal finance concerns, including budgeting, how to buy a car, how to pay off debt, and more. Ultimately, if you are trying to better your knowledge of finance, then you are improving. Being open, whether with an app or a close friend, can lead you to a better understanding of your financial situation.
Progress takes time
Lastly, remember that progress takes time, and taking things one step at a time is okay. Be patient with yourself as you navigate the financial journey. Life is full of ups and downs, but with determination and a positive mindset, you’ll find the balance between money and mental health that works best for you. Implement these tips and be kind to yourself. Let’s look forward to a brighter and more balanced future ahead!
Resources
1 Today, Purdue. “Mental Well-Being Inherently Connected to Financial Wellness.” Purdue University News, www.purdue.edu/newsroom/purduetoday/releases/2021/Q1/mental-well-being-inherently-connected-to-financial-wellness.html. Accessed 1 Aug. 2023.
2 “New Survey Shows Consumers, No Matter Their Income or Assets, Need Support with Spending, Household Budgeting.” CFP Board, www.cfp.net/news/2019/01/new-survey-shows-consumers-no-matter-their-income-or-assets-need-support-with-spending-household. Accessed 1 Aug. 2023.
3 Gillespie, Lane. “Bankrate’s Annual Emergency Fund Report.” Bankrate, www.bankrate.com/banking/savings/emergency-savings-report/. Accessed 1 Aug. 2023.
4 “Set Financial Goals: It’s the Secret to a Prosperous and Secure Future.” NewRetirement, 9 July 2023, www.newretirement.com/retirement/how-to-set-financial-goals-for-short-medium-and-long-term-prosperity/.
2 “New Survey Shows Consumers, No Matter Their Income or Assets, Need Support with Spending, Household Budgeting.” CFP Board, www.cfp.net/news/2019/01/new-survey-shows-consumers-no-matter-their-income-or-assets-need-support-with-spending-household. Accessed 1 Aug. 2023.
3 Gillespie, Lane. “Bankrate’s Annual Emergency Fund Report.” Bankrate, www.bankrate.com/banking/savings/emergency-savings-report/. Accessed 1 Aug. 2023.
4 “Set Financial Goals: It’s the Secret to a Prosperous and Secure Future.” NewRetirement, 9 July 2023, www.newretirement.com/retirement/how-to-set-financial-goals-for-short-medium-and-long-term-prosperity/.
