4 Ways to Minimize Financial AnxietySubmitted by Robert McEachern & Scott McEachern on October 24th, 2018
If you have woken up in the middle of the night to a money-related panic attack, do not worry - you are not alone. It is natural for us to worry about our financial situation as it dictates so many facets of our everyday life. Nevertheless, financial stress is a big deal and needs to be addressed.
Money driven anxiety is also becoming a growing concern for the younger population. Millennials are taking out larger student loans than ever before and facing an increasingly fluid job market. Northwestern Mutual’s study indicated that “more than a quarter of millennials say financial stress affects their job performance, over twice the rate of the general population” . 1
Ignoring our finances entirely is not the solution. Nor is fretting daily over every aspect of our finances. So what can we do to ease the burden of financial anxiety?
Do not compare your wealth to others
Living in comparison to others simply breeds negative emotions. When we browse our friend’s social media profiles, it is common to post the best versions of themselves. Do not let this facade of vacations, dining out, and flashy cars fool you into thinking this is how we should live everyday life! Keeping up with the Joneses’ will only go so far - don’t stretch your financial wellbeing to present a skewed image of your own lifestyle.
Simultaneously, there is a private element of our finances that goes unnoticed. We do not see the time and commitment some of our successful friends put into their professional careers. At the same time, there may be plenty of debts in play aiding this supposedly successful lifestyle.
A far easier choice is to understand your own budget and what you need to be happy. Create your own measuring stick and use that to assess your goals.
Establish an emergency fund
Often our financial stress stems from envisioning the worst case scenario in our lives.
If I lost my job today, how do I pay my bills? What if a family member becomes sick or injured? Can I afford to fix my car if I get into an accident?
Although fixating on the worst possible situation is unhealthy, being aware of it can be constructive. Preparing an emergency fund can ease the stress of an unforeseen emergency. Tying this fund into our monthly budget creates a safety net - we now have something to lean upon the moment something pops up out of the blue.
Spend socially, not materialistically
Materialistic spending is a plague that affects young adults. Psychology professor Catherine Sanderson notes that “accumulating things rarely leads to happiness” . We acclimate to our 2 possessions. They become old, we want something new. The cycle repeats.
Spend your money on experiences with people that you care about! Our close relationships with others is what ultimately makes us happy.
Educate yourself & meet with an expert
Financial advisors can review your entire financial picture or provide help in a specific area of concern. Use this resource to your advantage! Many advisors (like us!) will offer a ‘no obligations’ meeting to discuss the basics of your financial plan - a great first step towards lessening the load of money anxiety.
Continue to educate yourself. Listen to your advisor’s advice, but do your own research as well! At the end of the day, it is your money. It is a far more comfortable feeling when you understand where your investments are diversified and how your retirement savings are shaping up.