How to tackle financial stress

03 September 2020

If you’re worried about money, you’re not alone. A 2019 study conducted by the CFCC found that 36% of people aged 18-34 are embarrassed about their finances, and 59% reported some level of financial stress.

 

Being stressed about money and finances can affect your sense of wellbeing as it’s hard to feel positive when you are experiencing anxiety about your income and expenses.

You may be wondering, what is financial stress? It is a feeling of constant anxiety, fear or worry about your finances. It can sometimes lead to physical symptoms, such as not being able to sleep or headaches.

There are two common causes of financial stress in New Zealand. Firstly is when people don’t have enough money to deal with an emergency. Not having enough savings to address these types of situations can leave you feeling vulnerable and exposed. Secondly, the most common cause of ongoing financial stress is worrying about not having enough saved for retirement. This fear is highly prevalent in Kiwis, with over 60% feel they will not have enough savings for their retirement.

In both these cases, there are some simple steps you can take to help.

 

Define the problem

The first step is to define the problem. Take stock of the source of your worry. You’ll need to consider the why, what, when and who of your financial stress. It might even help to do a brainstorming session as writing things out can help you process your thoughts. Take inventory of your finances by listing out all your sources of income, all your spending and your debt. It will help you figure out the triggers of your stress and anxiety.

 

Budget

The next step is to make a budget. We’ve previously covered in our blog how to create a budget. It would be best if you got back in the driver’s seat of your finances so that you can use a plan of attack. Keep budgeting regularly AND stick to your limits.

 

Today and Tomorrow

There are two timelines that you will need to think about at the same time— your short term and long term goals. Two proven behaviours lead to better financial wellbeing- actively saving and not borrowing for everyday expenses. We’ve also talked about how to create the perfect financial plan here which explains this in more detail. By assessing where you are currently, you will also be able to plan for the future. Hopefully, you feel a sense of relief by looking at the bigger picture and breaking down goals into small steps. Make sure the goals you are setting are realistic as being able to achieve milestones will keep you motivated.

Short term- your daily and weekly incomings and outgoings will need to be tracked to make sure you are following your budget.

Long term- once you feel you’ve got a good handle of your immediate spending, it’s time to think about the bigger picture.

Build up an emergency fund: putting away even $10 a week over time can build up. This will make sure that for future emergencies, you have leeway and can deal with the unexpected.

Think about your KiwiSaver: ideally you would have started saving for your retirement yesterday. The next best time is now. Look at the current settings of your KiwiSaver to figure out if it will give you the kind of retirement you would like. If not, then see what needs to change. Thinking about it now and making the required changes will give you the reassurance you have a plan in place 

 

Talk about it

Like any significant life stress- it’s vital to talk to someone about it. You can lighten your load by getting some outside help through a financial advisor or from a community service such as MoneyTalks that provides free financial mentoring. It’s also important to talk about what’s going on with you with people you trust as it can help you, and they better understand what is happening and work out how best to deal with it. 

 

Look after yourself

In solving the feelings of financial stress keep an eye on your base levels of sleep, nutrition and exercise. Having a clear mind by making sure you are in an excellent physical state will benefit you. Simple activities such as going for a walk outside, listening to relaxing music or using a meditation app can be soothing for a worried mind.

 

How’s the serenity

Comparison can steal your sense of contentment, especially in the age of social media. It’s easy to think that the grass is greener on the other side because it seems like everyone else is having more fun or being more successful than you. It’s important to remember that in most cases a newsfeed is a curated highlights reel not reflective of everyone’s actual reality. Instead of comparing yourself against other people, try to practice gratitude through tending to your wellbeing and being appreciative of what you do have as this can lead to improved happiness.

Overcoming financial stress isn’t easy as it is a journey. Try not to procrastinate undertaking the steps necessary to address your stress as putting your feelings on the backburner will make them persist and could even make it worse.  Ample amounts of patience will be needed, and there may be setbacks along the way. But with plenty of effort, progress can be made, one goal at a time. Make sure you celebrate each small win along the way! 

 

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