May is Mental Health Awareness Month. Here are 6 Ways to Reduce Your Financial Stress

By Kelly Gallimore, ChFC®, CES®, Wealth Manager and Culture Officer, Merit Financial Advisors

May is Mental Health Awareness Month, and there’s little doubt that financial stress can greatly impact your well-being. According to a survey from Bankrate, 47 percent of adults in the United States identified money as negatively impacting their mental health, with women being more affected than men. Luckily, there are many steps you can take to lessen the impact your finances have on your and your family’s mental health.

How Personal Finance Impacts Your Mental Health

Finances touch almost every aspect of our lives, from buying the food we need to survive and the roof over our heads, to funding our emotional goals like retiring comfortably or creating generational wealth.

When everything is working in sync, strong financial wellness provides us options, allowing us to live our daily lives as we prefer. Conversely, a lack of options can lead to problematic issues, like a breakdown in relationships or inability to provide for yourself or your family the way you want.

Many common financial stressors unite us, and most are driven by three primary emotions: fear, insecurity, and uncertainty. We see this evidenced in the breakdown of relationships between spouses or blended families, where an inability to navigate turbulent times or difficult situations leads to a complete unwinding of a family unit due to inadequate income, high levels of debt, or a lack of proper retirement planning.

Without a support system or readily available tools to help manage these emotions, you can quickly find yourself in a negative mental state that can be difficult to crawl out of. Addressing it head-on and comprehensively can help build mental stamina and set an excellent example for future generations.

Identifying Your Season of Life

Mental health challenges are nothing new, but the topic has become less taboo to discuss in recent decades. Different generations face different stressors, but we all move through similar cycles throughout life.

When you first enter adulthood, you are learning to manage a job and a budget; you’re likely also worried about earning enough to pay down student loan debt and afford daily expenses.

In your development phase in your late 20s and early 30s, you likely have a steady job and are considering buying a house or starting a family. Here, the mentality begins to shift to protecting and building wealth. Common stressors include identifying and purchasing insurance, estate planning, and fortifying retirement.

When you reach your 40s to late 50s, you’ve entered the accumulation phase, where your earning potential is typically the greatest, but your resources are the most strained. You’ve either entered or are firmly in the sandwich generation, responsible for children with high education goals and aging parents with health demands. This generation is pulled in many different directions, and financial stress is high.

Finally, once you enter retirement, the distribution of your wealth becomes the main point of concern, as you want to ensure it is done efficiently and that it will last a long time.

Six Ways to Improve Your Mental Health

1. Understand Your Relationship with Money. Regardless of what season of life you’re in, we all have unique approaches to money. Some of us are savers, and some are spenders, but our approach to money usually goes deeper than that. Start by asking yourself some questions. What was your experience with money as a child? What drives your decision-making processes and fuels any compulsions today? Are your reactions positive or negative? At Merit, we use a tool called Financial DNA to help you understand this. We have all new clients take this assessment, and then we review the findings together. If you’re in a relationship, encourage your partner to also take the survey and have an open discussion about the results. If you’re curious about your Financial DNA, you can take the assessment here.
2. Practice Self-Awareness. Now that you understand your Financial DNA, it’s time to understand how it impacts your spending and saving decisions and what triggers you. Self–awareness of your and your partner’s innate approach to money is invaluable. Lack of alignment in this area is a surefire way to deteriorate the strong foundation you have built or are working to build. We all have strengths and weaknesses, so understanding where you make wise choices and knowing your blind spots is essential to upholding your financial wellness. Observing your habits and journaling about them can help. You may also want to ask your loved ones to help.
3. Create a Budget. If you don’t have one already, create a budget to track your expenses and manage your cash flow. Pay attention to any trends and identify if there are any areas where you might need to make adjustments. There are some excellent budgeting templates available via Google and Microsoft.
4. Don’t Bury Your Head in the Sand. Be willing to examine your own money approach and ask tough questions, like how much debt you have, if your current income matches your lifestyle, and what your runway to retirement savings looks like. Burying your head in the sand is a quick way to spiral further into financial stress. You can avoid this by scheduling time monthly or quarterly to review your finances and ensure you are on track. Make sure to do this with your partner if you are married or in a serious relationship.
5. Automate Your Savings. Once you have a firm grasp of your spending habits and budget, I suggest automating your savings to ensure you are paying yourself first. This is a fool-proof way to quickly build up an emergency savings or save for other goals. Having three to six months of living expenses saved to cover housing, food, and utilities if you lose your job or need to pay an unexpected bill can make all the difference. If your company has a 401(k), I suggest contributing to that as well. Contribute as much as you can to start, and then increase your contributions over time. If your employer has a company match, try to put in enough to earn that – it’s free money!
6. Work With a Professional. Reaching out to a financial advisor to help organize your finances and plan for your future is a smart way to support your comprehensive mental health goals. A good advisor will easily pick up on your unique stressors and create a financial plan to soothe your mind. By identifying your season of life, they can hone in on the best place to start tackling these issues, like ensuring you are taking advantage of your 401(k), able to support your elderly parents, or having an estate plan to properly identify how you will build and protect your growing wealth.

By committing to understanding your financial behaviors and triggers, you can significantly reduce the mental stress related to your finances. The six steps above can help untangle your complicated relationship with money and set you up for success

If you’re interested in learning more about your Financial DNA or speaking to an advisor, reach out for a complimentary consultation today.

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