Financial Stress: Take charge of your financial well-being

By Nadja Conaghan

**Disclaimer: I am not a financial adviser nor do I claim to be a financial expert or genius. This article is meant for readers who wish to assess and re-think their relationship with money. If you suffer from severe financial problems and hardship, you may wish to seek financial advice and professional help.**

FINANCIAL STRESS - ONE OF TODAY'S BIGGEST STRESSORS

Mortgage. School fees. Medical bills. Electricity bill. Buying a new car. Planning an overseas holiday. Unexpected bills... How does that make you feel? Anxious? Overwhelmed? Tense? Uneasy? Nauseous?

Financial stress is one of the biggest stressors in our society. According to the Northwestern Mutual’s 2018 Planning & Progress Study[1], money us the number 1 cause of stress among Americans (44% percent of the respondents) which is a bigger problem than personal relationships (25%) or work (18%). Alarmingly, 59% of Australians report losing sleep over their financial situation.[2]

If you feel stressed about finances, you are not alone. That’s the good news. So what do the people that don’t feel stressed do differently? Do they have more money? Not necessarily. Most people have the same or even less money available and seem to be happier. How often have you heard of stories that someone won the lottery and then went broke within a year saying they were happier before the lottery win? So having more money is not (always) the answer. There seems to be some truth to the phrase "More money, more problems."

Financial well-being is not purely determined by the amount you have available. It is more about your relationship with money – i.e. what think about and how you manage your finances. In other words, it is about you’re your mindset, beliefs and financial habits.

WHAT IS YOUR RELATIONSHIP WITH MONEY?

1. Explore your current limiting beliefs and mindset, and re-program yourself.

“If you accept a limiting belief, then it will become a truth for you.” Louise Hay

Some common limiting beliefs about money are:

“Money is evil.” Some of us have the belief that money is bad and do not want to deal with it. The truth is that our world operates in currency – money in the exchange for goods and services. If you want to be part of this world, you need participate in the system.
“I am not good with money and budgeting.” This limiting belief sets you up for failure. How you spend and budget your money is a choice and your decision. Be good with my money and budgeting means that you find a system that works for you.
“I will never have enough.” This is belief is a self-fulling prophecy. If you believe that you never will have enough, you never will. Explore what enough means to you. What is enough (is there a number?)? And enough money for what?

What are your limiting beliefs when it comes to money? Identify and questioning them and replace them with healthy ones.

2. Explore your goals, priorities and values

“Not everything that can be counted counts, and not everything that counts can be counted.” Albert Einstein

Ask yourself the following questions:

What are your goals in life? Note: These are goals in general and are not limited to financial goals.
What are your financial goals?
What is important to you? Note: This is to explore your values and priorities in life.
What lifestyle do you aspire and why? Note: This is to explore your expectations and standards.
What things won’t you compromise on? Examples: quality time with family; time for hobbies; health

Becoming aware of your goals, values and priorities in life will give you clarity and a guide how to manage your finances that work for you.

WHAT ARE YOUR CURRENT FINANCIAL HABITS AND WHAT DO NEED TO CHANGE?

1. Analyze the status quo of your financial habits

“The analysation of your spending habits is key to your financial success” Neala Okuromade

Explore your current financial habits and strategies by asking yourself the following questions:

Do you currently have a system in place to manage your finances? And if so, what does it look like?

Spending behaviour and criteria
Budgeting
Tracking
Saving and investing

What current strategies and habits work? What doesn’t work for you?
Where does your money come from? (salary/wage; investment returns)
Where does your money go?

The first step for change is becoming aware what needs to change and what doesn't. Become aware how you manage your finances, and what works and what doesn't.

2. Financial strategies

“To change any behavior we have to slow down and act intentionally rather than from habit and impulse.” Henna Inam

There are two main strategies to reduce financial stress:

A. Increase your income. Asking for a raise or finding another job that pays better. However, this strategy does not always work. Also – when getting another job, evaluate if your new role is aligned to your goals, values and priorities.

B. Work with what you have and manage your spending and saving behaviours. This includes budgeting, monitoring your expenses and saving up. The good news is that you are in control of how you spend and manage your finances.

On a personal note: I know of people who did only focused on strategy A. However, when they got the aspired monthly income they think they need to be stress-free, they are still "broke" at the end of the month. In other words, if they have the money, they spend it; and they will probably always feel financially stressed no matter how much money they have. If you are in this category, you should consider strategy B the solution.

If your current spending is more than your current income, then you can increase the input and/or decrease the spending to reduce you financial stress.

3. Have a solid financial strategy and plan that works for you and stick to it.

“A goal without a plan is just a wish.” Antoine de Saint-Exupéry

You do not need to be a financial genius or read thousands of books written by financial experts and investors.

I am not saying that books are all bad. There are some fantastic books out there that can help you to find great strategies and tools. However, the best strategy is useless if you don’t stick to it. It is all about finding what works for you and establishing new thinking and routines.

More importantly, find a system that works for you. Everyone is different and has different needs and wants. Find what works for you. The strategy doesn’t need to be complicated. The simpler, the better.

SMALL TWEAKS IN YOUR THINKING AND BEHAVIOR CAN HAVE A MASSIVE POSITIVE IMPACT

Here are a few strategies that may help you to become more aware of your thinking and to create new habits:

Try to pay in cash. Give yourself weekly pocket money – i.e. cash that you can spend. Only use your card for a real emergency. This makes you more conscious of how much you spend. Tip: Remove your card from your wallet and place somewhere locked up at home.
Start a spending diary where you track every purchase that you make – also track the automated monthly payments in your diary. This is to make you aware where your money goes and to become aware of upcoming payments. You can also use simple Excel spreadsheets to track income and spending, and budget (you do not need to be a Excel guru - there are free templates available online).
Once you become aware where your money goes, put the expenses into clusters and determine the non-negotiables (e.g. gym membership) and nice-to-have’s (e.g. daily coffee). When you do this on a regular basis, you will train your brain to automatically think in these categories and make a quick decision where you invest your money into. Again – it is about becoming conscious and align your spending behaviours according to what budget you and what you really is important and non-negotiable to you.
Every time you get a 5 dollar note as change (or whatever change works for you – so it could be coins) put it in jar. You will be amazed how much you will save. I know of people who could afford a nice holiday with their jar money. Note: Yes – you will need cash for that.
Every time you usually would buy a coffee (e.g, Friday mornings), put 5 dollars aside and drink alternatives, like the instant coffee from the office. This helps you to become aware how much you can save by making a minor tweak in your spending habit.
Every time you get the impulse you want to buy something unplanned and costs more than $5 (or another amount), ask yourself if can afford it and if you really need it or just want it. Ask yourself if you would regret the purchase in a week’s time. If you are still on the fence, sleep over it to make a decision. Again this habit will help you to become more conscious of your spending behaviour automate your thinking.
When you get paid, transfer most of your money straight into a saving account and (if applicable) to a monthly bills account and only leave a small amount for everyday expenses in your everyday account. You may even consider creating a saving accounts for a specific purpose, e.g. "Europe Trip". Tip: Consider automating the transferring your money into saving and bills accounts.

In a nutshell, there is no one right way to achieve financial well-being and become stress-free. Find a way that works you. Be financially aware and mindful. Have a plan in place. Develop new habits if you need to and stick to them.

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[1] https://news.northwesternmutual.com/planning-and-progress-2018

[2] https://www.finder.com.au/financial-stress-keeping-australians-awake-at-night