The saying goes, ‘money can’t make you happy’ but it can certainly affect your mental health. Financial challenges can cause a huge amount of stress and worry when you’re experiencing them.
Financial concerns are something most of us have experienced at some point. However, it’s still difficult to deal with. With so many of life’s essentials depending on money, not to mention those things that bring satisfaction and fulfilment, it can seem impossible to overcome financial challenges.
Research from SilverCloud Health looked at how debt impacts the mental health of young adults. The study found that 24% of 18-24-year olds say they have experienced financial difficulties or debt. Of these:
- More than eight in ten said financial difficulties have negatively affected their mental health
- 84% said it had caused general anxiety about their future
- 73% have experienced low mood or feelings of hopelessness as a result
Worryingly, those surveyed didn’t see the financial situation of Brits overall improving. In fact, six in ten believe that the number of people struggling with personal debt in Britain will increase in five years.
Money worries are by no means limited to the younger generation either.
Past research from the Money Advice Service (MAS) found nearly two-thirds (63%) of UK adults have been concerned about someone’s mental well-being due to money worries. Furthermore, 55% of adults have experienced concerns over their own mental health because of financial difficulties at some point in their life.
What can you do to alleviate money worries?
Often when you’re experiencing financial difficulties, it can seem like a hopeless situation. However, there are steps that can be taken to reduce the stress you’re feeling and help set you on the right path. Taking a proactive approach to managing your money and improving your financial well-being can help to give you a greater sense of control too.
Among the actions to take if you find you’re worried about money are:
1. Set aside time to create a budget and keep track of your spending
If you’re worried about money, budgeting is the key task you should be spending time on. Delving into your financial situation can be daunting but getting an accurate picture of where your finances are is important.
Understanding how your income and outgoings match up is crucial. Create a budget and stick to it. Keeping track of how much you’re spending, and what on, can help you align your finances.
2. Prioritise your debt
If you’re at a stage in your life where you have debt, it can be a major cause of worry. MAS research found that 38% of people said the biggest financial issue linked with well-being was debt. This was a particular concern for the millennial generation; 46% of those aged 18-34 said this.
Prioritise paying off high-interest debt as much as possible. If you’re using a credit card or short-term loans, a significant portion of the minimum payment is likely to be interest. Overpaying as much as possible can help reduce the overall amount you’ll pay out.
Paying off high-interest debt as quickly as possible may mean making some sacrifices. But just think of how much better you feel once it’s been cleared and you have extra disposable income. It might be tempting to put a purchase on a credit card but when you consider the long-term stress it can cause, it may be less appealing.
3. Start to build up an emergency fund
The fear of the unknown can be a huge cause for stress. Do you know how long you could pay for the essentials if you were to lose your income? Or where the cash for an expected bill would come from?
An emergency fund can act as a buffer during such times, helping to give you peace of mind. Despite the recommendation of having three to six months salary in a rainy day fund, not many UK adults do. According to MAS, four in ten UK adults have less than £100 in a formal savings account.
Building up an emergency fund can seem like a huge task. But you’ll be surprised by how quickly it grows once you get into the habit of making regular contributions.
4. Set out your short, medium and long-term goals
When you’re worried about money, it’s often the case that you focus on the immediate. But planning goals with varying timeframes can be beneficial. It means you know smaller steps are taking you closer to your aims overall.
Perhaps your short-term goal is to clear remaining credit card debt, while in the medium term you want to build up enough savings to put a deposit on a property. Your long-term focus is to have enough to retire five years early.
5. Keep coming back to your plan
Once you have a budget and financial plan in mind, make sure you keep coming back to it.
Over time your aspirations, priorities and financial situation will change. Your financial plan should reflect this. If you’re keeping track of your spending, it should be relatively easy to see where short-term adjustments can be made. However, bigger changes to your finances or life, such as receiving a pay rise at work or planning to start a family, should mean you take a closer look.
6. Spend time doing the things you enjoy
Don’t let money concerns take over your life. When you’re feeling worried about cash, it can be tempting be easy to focus on nothing else. But for your well-being, it’s important to make time for the things you enjoy, from meeting friends to getting active.
7. Seek support
If you’re facing genuine financial difficulties, don’t bury your head in the sand. Seeking support can help put issues you have into perspective and create a plan to move forward.
Family and friends may be able to help here but there are also plenty of other organisations you can turn to as well, such as MAS. Creating a support network can be invaluable for getting through money concerns and your mental health.
There are times when speaking to a financial adviser can help you see the options available to improve your financial situation. There may be some that you hadn’t even considered, and they’ll be able to help you understand how choices you make now will impact your future.
If you’re struggling to get a handle on your finances, please contact us. Whether you’re looking for a way to release cash from assets or want to understand how your money habits will affect your retirement income, we can help you get a grip on your finances.