It’s been an emotional, mental and financial rollercoaster the last couple of years, and it’s taken a toll on many people's well-being. From the pandemic to inflation to rising interest rates, many people are having trouble getting their finances on track.
And financial stress isn’t something that only happens when you’re trying to scrape up the money to pay your bills. Financial stress can actually take a huge toll on your mental and physical well-being, and even your personal and professional relationships. FP Canada’s 2022 Financial Stress Index found that 35% of Canadians say that financial stress is leading to anxiety, depression or mental health issues. Money problems can sneak up on you. And once you’re financially stressed, it can be hard to know how, or if you’ll get through those hardships because you may not be thinking clearly. Learning how to properly manage your financial stress can help you be a healthier and happier person, both mentally and financially.
Here are some ways you can manage financial stress.
1. Get a full understanding of your financial situation
It’s hard to get your finances on track if you don’t actually know where your money is going. That’s why you should take a look at, and record all of your income sources, assets, expenses, and any debt you may have. It’s important to include everything, such as take-home pay, insurance payments, investment income, or a mortgage. Having all the data in the beginning will make it a lot easier to create a plan you can stick to. And remember that you can come back and make adjustments as needed. This data could be entered into a financial planning software or a spreadsheet if that’s what you prefer. You could also access an app, like Winton, through a financial professional. Winton can help you break down your financial situation, and then your financial professional can create a cash flow plan to help you get on track to financial health so you can reach your goals.
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2. Spend time educating yourself on financial matters
Financial literacy is an essential life skill that will help you make better money decisions. A better understanding of your finances is crucial to becoming more financially healthy. But when you don't have a lot of knowledge about how money works, then you could end up making financial mistakes that could have a negative impact on you for years, or even decades.
For some financial decisions, such as buying a home or creating a retirement plan, it's best to speak to a financial professional before moving any money. Brushing up on financial knowledge (like the different types of savings accounts or interest vs. the cost of debt) before you go into these conversations will better prepare you to ask the right questions, and truly understand the guidance they are giving you. If there are specific financial matters you are struggling with and feel as though you don't know much about, then get educated. Find practical lessons that you can use and apply to your financial situation. Winton, for instance, has a variety of lessons on different financial topics, from setting goals to paying down debt to starting an emergency savings account, which could help you as you try to learn more about financial topics that are relevant to your situation.
3. Find a financial professional you trust
Connecting with a financial professional can be an important step to controlling your financial health. Sometimes it's best to have someone with expertise and an outside perspective assess your financial situation and develop an action plan. And while more than 80% of Canadians may think that financial plans are all about investments, according to IG Wealth Management, that’s simply not true. Financial professionals can also create plans to help you pay down your debt and reach both short- and long-term goals, whether that’s saving for retirement, buying a house, or going on a vacation.
When you are searching for a financial professional to work with, make sure you do your research. Try to look for professionals who specialize in the areas you need help with. For example, if you are trying to figure out how to pay down debt and save for a goal, then a Certified Cash Flow Planning Specialist may be a good option. Make sure you have some kind of initial interview with the professional so you can both clarify what your goals are, and set expectations to ensure that you are a good fit. You could also try asking around to see if anyone you know recommends a financial professional who works well for them. Just remember, everyone’s situation is different and what works for one person may not work for you, so further research will still need to be done.
4. Practice self-care
When you’re stressed due to your financial situation, it can be easy to start to neglect other areas of your life. But that’s the last thing you want to do because the tension from financial stress is already enough to start taking a toll on your mental health. Financial stress can also cause you to take actions that cause you even more stress, like trying to juggle two or three jobs, or working extra hours to bring in more income.
Not prioritizing your self-care can also put you into an even worse financial situation. When we are overwhelmed with stress, we can also end up losing our motivation. So you may start to give up on fixing your financial health, and continue on with the financial habits that got you to your current financial state. So do your best to take care of yourself while you are trying to get your money back on track. Make sure you take time to do things you enjoy. Self-care doesn’t have to mean spending more money to treat yourself; this could add to your financial stress. Try to find some free or low-cost ways to practice self-care, like spending time with friends and family or dedicating more time to your favourite hobby. You could also create a routine that helps you live a more balanced lifestyle, including getting enough sleep, eating healthier, or going for a walk. These self-care activities may be forgotten when you are stressed about money.
Financial stress can seem like a never-ending cycle, but it’s always possible to get yourself into a better situation. Everyone's circumstances are different, so it’s going to take different adjustments that are based on your specific case to become more financially stable. Considering some of the steps in this post may be a good starting point for your journey to financial health. It’s not going to happen overnight, but as long as you consistently take steps to improve your financial health, you can eventually get more life from your money.
CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allow them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.
About the Certified Cash Flow Specialist (CCS) program
CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.
About the Financial Capability Program (FCP)
The FCP combines quick and practical lessons with tools, including Winton, which helps people make financial changes they can stick to. Users can apply what they've learned to their financial situation, thus bridging the knowing-doing gap. The goal of the FCP is to help people get more life from their money.