How to tackle financial stress
Worried about money?
According to a survey we ran in April 2023(1), the current cost of living is impacting Kiwis’ mental health, with 42.3% talking about increased stress levels. And unsurprisingly, mortgage costs, food costs and general costs are their biggest financial worries.
The reality is, it’s hard to feel positive when you are experiencing anxiety about your income and expenses. That’s what financial stress is all about: a feeling of anxiety, fear or worry about your finances that can sometimes lead to physical symptoms, like not being able to sleep or headaches.
For example, not having enough money in your emergency fund may leave you feeling vulnerable and exposed. Or you may be worrying about not having enough saved for retirement. But in these and other cases of financial stress, there are key steps you can take to help.
Anecdotally, the biggest driver of financial stress is not being in control. To get your stress levels under control you need to get your financials under control or at the very least create a plan to get them under control.
What’s happening? Define the problem
The first step is to define the problem, so consider the Why, What, When and Who of your financial stress. It might help to do a brainstorming session as writing things out can help you process your thoughts. Or you can take inventory of your finances by listing out all your sources of income, all your spending and your debt, looking out for the triggers of your stress and anxiety.
Budgeting: Get back in the driver’s seat
The next step is to make a budget – check out these three popular budget strategies to get started. Having a realistic budget means getting back in the driver’s seat of your finances, so that you can use a plan of attack. And remember, it’s important to keep budgeting regularly and stick to your limits.
Goal-setting: Think about today and tomorrow
If you think about it, you can’t plot a course to where you want to go, if you don’t know where you are today. So, there are essentially two timelines that you will need to think about at the same time:
- 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.
By assessing where you are currently, you should also be better positioned to plan for the future. The key thing is not to focus just on your immediate financial goals, but also on the bigger goals and milestones you have set for yourself.
That is where goal-setting becomes the heart of the matter. As we explained in this comprehensive guide, setting goals can help you focus on what’s important to you. To make it work, you have to understand what makes you ‘tick’ (the source of your motivation), and your goals don’t just need to be realistic but also SMART: Specific, Measurable, Attainable, Relevant, and Time-bound.
If have big goals in mind, it may be worth breaking them down into smaller, more achievable steps, to keep momentum going.
Saving and avoiding debt for everyday expenses
Everyone’s financial journeys are different – so are their goals. But there are two proven behaviours that are likely to lead to better financial well-being: actively saving and not borrowing for everyday expenses.
Some steps you can take include (but are not limited to):
- Building 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 hopefully can deal with the unexpected without taking on debt.
- Taking out appropriate insurance – Whether it’s life, health, or income protection insurance, there are ways to safeguard what you value most and protect your financial future. What’s appropriate will depend on your unique situation, so we recommend seeking advice from a professional insurance adviser for your own peace of mind.
- Thinking about your KiwiSaver account – Ideally, you would have started saving for your retirement yesterday. The next best time is now. You can use our digital advice tool to look at the current settings of your KiwiSaver plan to figure out if it will give you the kind of retirement you would like. If not, then see what needs to change.
Talking about it: With friends, family, or your adviser
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 adviser or from a community service such as MoneyTalks, which provides free financial mentoring. It’s also important to talk about what’s going on with you with people you trust – family or friends – to get a different point of view.
Looking after yourself: It’s all connected
While dealing with 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 likely benefit you. And simple activities like going for a walk outside, listening to relaxing music, or using a meditation app can be soothing for a worried mind.
Avoiding comparisons: The grass isn’t always greener
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. But 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 practise gratitude through tending to your wellbeing and being appreciative of the big and small milestones you have achieved. And remember: overcoming financial stress is a journey that requires ample amounts of patience. But it’s worth the effort. So make sure you don’t put your feelings on the backburner and, if you encounter a setback along the way – don’t give up. Progress can be made, one goal at a time.
References:
1. See the key findings of the 2023 kōura Financial Resilience Survey here.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
