Whether it’s stress related to your finances, personal life, working remotely, supervising kids learning remotely, or any number of things, many of us can agree that 2020 has been an exceptionally tense year thus far. While we agree that money can’t “buy” happiness, researchers have noticed there is a high correlation between financial stress (typically related to debt) and mental and emotional difficulties such as depression and anxiety.
Improving your money habits can play an important role in the quest for positive emotional and physical health; not to mention, it also would be a great task to focus on while you are stuck inside. Below are three steps that may help ease some financial worry:
If you’re looking for ways to improve your financial picture, there are two, fundamental actions you should consider taking: increase your income or curb your spending (or a combination of the two!). While it may seem unrealistic this year, you can try to re-negotiate your salary, look for a higher-earning job, or turn a hobby into a side hustle to help boost your income.
If increasing your income feels too daunting right now, you could instead focus on ways to decrease your expenses. The first step to decreasing your expenses is to get a better understanding of what your expenses truly are. Try tracking your historical spending for the last few months. Is all your money going where you thought it was? Once you have a better idea of where your spending is going, you can more easily target specific categories in which you want to minimize your spending. For example, if your Amazon bill is sky-high, try cutting back on the number of items you purchase each week. A trick is to leave the item in your “basket” and wait until the next day to revisit it. The compounding effects of saving small really add up over time.
To put it into perspective: if you cut back $100 on Amazon purchases a month and instead saved that $100, over 30 years you would have saved $36,000. Now, if you chose to invest the $100 each month in the market and it earned a 6% annual return, after 30 years that $36,000 would be worth $101,500. Wow! While $100 a month doesn’t seem like much, remember that it adds up over time and cutting back on spending ever so slightly can make a big difference.
Stress is your body’s physical response to the constant mental demands you face. Not only does stress impact your mental health, but it also affects your physical health. Luckily, there are many healthy habits you can develop to ensure you are taking care of both your mental and physical health.
The first step is to focus on eating a healthy diet and getting plenty of exercise. From there, it’s important to focus on and put energy toward the things that make you happy: relationships, hobbies, taking time for yourself, or giving back. The more effort, attention, and energy you put toward developing your personal relationships or your favorite hobbies, the less time you will spend stressed.
Research has shown that the power of generosity can put a smile on your face as well. This year, we think it’s important to remember that there are many ways to be generous to those you love besides giving something physical — such as giving your time, energy, (socially distant) affection, or even a nice note to let someone know you are thinking about them. It’ll brighten their day and yours, too!
Once you identify your financial stress points, it’s time to make a plan. While 2020 has been taxing for many reasons, it has also provided us a rare opportunity to slow down, create new habits, and reflect on things we want to accomplish as many of our routines have been disrupted.
If financial worry is top of mind for you, now could be a great opportunity to take steps to lessen that stress. While creating a budget or a financial plan might not seem sexy, the process will alleviate some of your stress right off the bat because you’ll be able to create a roadmap for the future. Once you have a plan in place, keep track of your progress every month. Sticking to your plan takes time and dedication, so hold yourself accountable and reward yourself when you hit certain milestones. It also may be helpful to include your spouse, a family member, or a friend in your plan and ask for their help to keep you on track — and celebrate with you when you do!
Over 62% of Americans report feeling stressed about money, and this year has been a difficult year for many. Remember that you aren’t alone if you worry or have anxiety related to your financial picture. If you or someone you know could benefit from speaking with a financial advisor, Garrison Point Advisors is here to help. We offer individualized planning that can get you on track to reach your long-term financial goals and align your finances with what is most important in your life. Please get in touch.
To read our recent article, “How to Feel Confident Your Personal Finances Are in Check,” please click here.
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