Improving Financial Wellness During Challenging Times

Share on PinterestFinancial wellbeing is not about the number in your bank account, it is about your inner emotions about money and how they can ultimately affect your mental and physical health. Bonnin Studio / Stocksy United

  • The pandemic is causing increasing financial stress.
  • Financial well-being is possible even in financially difficult times.
  • Uncovering beliefs about money can help achieve financial well-being.

There is undoubtedly more than enough stress between the pandemic and the political turmoil.

For many of us, money is a source of stress during these difficult times.

According to the American Psychological Association, 64 percent of Americans say money is a significant source of stress in their lives, and 52 percent say they have had a negative financial impact due to the pandemic.

While the link between stress and physical and mental health is well known, realizing how stress affects your financial wellbeing can help you take control.

“If I am stressed about money or worry that I have unemployment or a lot of debt, it will add additional stress, and if I have mental health problems, they will be more likely,” Nathan Astle, therapist and board member of the Financial Therapy Association, said Healthline.

When a person is struggling with their mental health, Astle says they might behave differently with regard to their finances. For example, they are more likely to participate in retail therapy or avoid paying attention to their budget.

“The stress we are under during the pandemic certainly affects the way we manage our finances. Everyone is afraid of some things and our fear response becomes overly activated when we see danger in many places. It can be overwhelming and makes it harder to make good decisions. It’s helpful to work through the symptoms of anxiety and the cause of anxiety, ”said Astle.

Understanding what financial wellbeing means is a good place to start. Astle says that financial wellbeing has three components:

  1. Financial education isKnow about finances, like your creditworthiness and what the score means.
  2. Financial behavior involves making decisions about how to spend and save money.
  3. Inner emotions towards money relate to how you feel or think how you spend money. For example, do you think that all wealthy people are greedy?

Financial wellbeing isn’t about wealth, says Christina Klenotic, senior vice president and head of Brand and Strategic Partnerships at Laurel Road.

In fact, a widely trusted Princeton University survey found that higher annual income doesn’t hurt emotional well-being, although income less than $ 75,000 a year can lead to dissatisfaction.

“[Ultimately] It all comes down to how you manage your personal finances and how they support your overall life goals. A deep understanding of your finances and how to manage them towards your goals in order to minimize the stress of money management is the best path to financial wellbeing, ”Klenotic told Healthline.

While financial well-being takes time and trial and error, it is possible even in difficult financial times.

Here are eight ways to get you started.

According to a study by Laurel Road, 52 percent of Millennials and Gen Zers regret the way they used to manage their finances in 2020.

“When we start a new year, treat yourself to a clean slate and redo your budget. The spending habits of the past year are a thing of the past; now you have to look ahead, ”said Klenotic.

To understand why you are doing your money the way you do, Astle recommends taking the Klontz Money Script Inventory Quiz, which consists of around 50 questions.

The quiz helps reveal your money beliefs, financial behavior, and subconscious beliefs about money that have been ingrained since you were a child.

“This divides you into one of four groups. One group is the belief that money is bad. If I have that belief, I could unconsciously do things to sabotage my financial success because I don’t want to be greedy, ”said Astle.

When making financial decisions, Astle says that mindfulness exercises keep your emotions in check.

“Anxiety and depression lead to a separation from our body. Our heads are in the clouds and we don’t pay attention to the feeling in our bodies, ”he said.

Before you look at your finances or talk to your partner about it, Astle says that you should be present in the room. For example, consider your surroundings – the colors in the room, where you are sitting and much more.

“Then you will be more able to perceive your emotions and be able to approach those emotions using the rational part of your brain that makes good decisions that will help you connect with [your partner]”Said Astle.

Take the time to write down your income and expenses.

“It doesn’t have to be complicated, and you aren’t expected to get to the heart of the budget the first time,” said Klenotic.

She suggests using the 50/30/20 rule for budgeting:

  • 50 percent are accounted for by fixed costs such as rent, ancillary costs and car payments.
  • 30 percent flow into flexible expenses such as variable costs for groceries, entertainment or shopping.
  • 20 percent goes towards financial goals like building an emergency fund, paying off credit card debt, and saving for retirement.

“See if this works for you, and also consider using an app to manage and organize your budget,” Klenotic said.

Calculate a percentage of your income that you can use for savings and use your budget as a guide, suggests Klenotic.

“For those who may be unemployed right now, don’t feel the pressure to save and don’t wreck yourself when you dive into your savings. that’s why you have it, “she said.

“If you are concerned that your savings will be depleted, consider scenario planning of how you will be able to rebuild your savings after your employment (i.e., predict what you will need to save in the coming year to rebuild your nest egg) or even Tap into your 401 (k). “

Refinancing student loans at a lower interest rate or a different payment plan can maximize your overall savings on student debt, and also reduce your total monthly expenses.

“Look for a simple and personalized digital lending platform like Laurel Road that makes the process easy and gives you peace of mind. While most lenders require employment to refinance, it is definitely an option to keep in mind when going back to work in order to rebuild your savings, “said Klenotic.

Paying off debts immediately is unrealistic, says Klenotic.

“Especially for ‘good debt’ – debt that is used to pay off something that has long-term value – like student debt,” she said.

Budgeting and Saving Steps are first steps to tackling debt.

“There are also options to manage more specific types of debt, such as negotiating a lower credit card interest rate on credit card debt or refinancing your student loans for student debt. Look at your options, you will be surprised at what is available to you, ”said Klenotic.

While stories of people who seem to have achieved financial well-being by getting rid of all of their debts or paying off a large loan are easy to find online, she notes, “It’s always good to remember that financial well-being is a personal one Travel is and everyone will be different. ”

While talking about finances is taboo and awkward, Astle says discussing it is a path to financial wellbeing.

“When you are having problems with your financial wellbeing, be it knowing more about your money or making good decisions about financial behavior, or experiencing internal psychological emotional stress and having no way of connecting with others They really feel alone and make it a lot harder to climb this mountain, ”he said.

Reaching out to others for help is one path to success.

“Getting people into your corner can look like talking to family and friends, or getting professional help from a therapist, financial advisor, or financial planner,” said Astle.

There are also nonprofits that offer customized financial advice, such as GreenPath and Advantage Credit Counseling Service.

“Trying to do it alone is difficult. There are resources out there to build that circle of people who can help you get to a better place, ”said Astle.

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