Times Are Tough. Read Our Six Suggestions To Feel More In Control Of Your Finances
Right now, times are a little difficult. Weekly price hikes appear to be taking place, and a recession is frequently mentioned. Stress or worry about what this all implies for you and your family is a perfectly reasonable reaction.
Your mental health and money are inextricably intertwined. More than we probably realise, the feeling that we are losing control of our financial situation can cause us great stress and anxiety. This stress and pressure can spill over into other areas of our lives, such as our work, sleep, social life, or relationships.
There are a few actions you can do to feel more in charge of your money, even though it might seem like we have little control over the economy or rising prices. Here are some of our top suggestions for improving your financial situation and mental health in light of this.
Have open dialogue about money
Have frank discussions regarding money with your loved ones or friends. Even though discussing money might be difficult at times, when we share our struggles (or successes) with others, we spread knowledge and get insight from people around us.
Know your financial situation
Many of us may have a reasonable understanding of our money coming in compared to going out, but we may not have formalised a plan of action. Knowing the fundamentals, such as -
• How much you earn
• How much money is being spent on necessities (such as rent or mortgage payments, energy, insurance, and food);
• How much money is left over
Once you have this knowledge, you may begin to set some short-, medium-, and long-term objectives. Lack of a plan might result in poor outcomes and the eventual loss of attainable financial objectives.
Set goals, and plan for the future you want
An excellent method to stay motivated and on track is by setting realistic and doable goals.
Minimise short-term debt
Sometimes, short-term debt (like a credit card that you pay off every month) can be acceptable. However, short-term debt carries a high interest rate, and if we fall behind on payments, it could start to work against us.
Having a "buffer" account for emergencies
The best amount to have saved up is three months' worth of living expenses, but anything is better than nothing. Having some money set aside helps you be prepared for the unexpected and lessens stress if an unexpected payment comes up. By setting aside a particular amount each week in a different bank account, you could start to accumulate this money.
Monitor your mood + money habits
Even if we are unaware of it, a lot of our shopping decisions might be influenced by how we are feeling. Even though purchasing something new can temporarily make us feel good, it may be adding to our general uneasiness about money. Thinking about your spending and emotions could be helpful if you want to start better understanding your spending habits and trends.
As with most issues, the best way to begin addressing a worry is to communicate it, lessen the burden, and then establish goals and a strategy to work towards them. Taking things one step at a time is a great way to help you stay in control and learn excellent skills for long-term success.
If you would like professional advice on your situation, or if you are interested in planning some long term financial goals, please complete one of our quizzes below, or you can reach out to us if you need assistance; we are happy to help.
Compound Wealth is a KiwiSaver, Retirement and Private Wealth Financial Advice Firm based in Mount Maunganui, Bay of Plenty.