Money can be one of the biggest contributors towards elevated levels of stress. Worries about your finances can lead to stress and worry while, conversely, mental health issues can lead you to make poor financial decisions.
This may be particularly apparent in the current uncertain climate. Indeed, FTAdviser has reported that 56% of UK adults say their finances are now the greatest cause of stress in their lives, while 23% admit to losing sleep as a result of financial anxieties.
Each year, Stress Awareness Day aims to highlight the ways that stress can affect people and what you can do to manage your stress before it becomes a problem. So, to help you deal with financial stress, here are six practical steps you can take to reduce your money worries.
1. Get a handle on your budget
One of the simplest ways to reduce financial stress is to know exactly what you have coming in and going out every month.
If you have a better idea of your overall financial situation, you will be better equipped to make more informed decisions about your money.
Carry out an audit of your monthly income and expenses and establish a clear budget for your short-, medium- and long-term financial obligations. Doing this will help you feel more in control of your finances, hopefully reducing your stress levels.
2. Talk about the issues
While money is often seen as a taboo subject in the UK, discussing your financial concerns with your spouse or partner, family, a manager or work colleague, a confidant, or a financial expert can help you to develop a plan and feel more in control.
Talking about stress is often the all-important first step to tackling the issue. A problem shared is a problem halved and confiding in someone can feel like lifting a heavy weight off your shoulders. It can be a vital first step in beginning to address your concerns.
3. Set aside an emergency fund
Life has a nasty habit of putting financial obstacles in your path. Whether that’s a car breakdown, boiler repairs, or a period out of work, you’ll sometimes need to get hold of money in a pinch.
Having to find money for an unexpected reason can be stressful. So, one way to alleviate this stress is to prepare by putting aside an “emergency fund”. This is a pot of money in an easy access savings account that you can put your hands on if you really need it.
Most experts suggest saving somewhere between three- and six-months’ expenses, although you may need more of this if you are self-employed or your circumstances demand it.
Having a pot of money that you can access in an emergency can help you to feel more secure. It also means you don’t have to turn to expensive borrowing such as loans or credit cards to meet your outgoings.
4. Make sure you’re well protected
Insurance is designed to ensure you’re financially supported should the worst happen. Whether this is your pet or your home, it gives you valuable peace of mind.
To help reduce stress, it’s important to ensure that you protect your most valuable asset – you.
Life insurance, income protection, and critical illness cover will all provide valuable financial support if the worst should happen. It enables you and your family to meet your financial obligations, and to ensure you can maintain your standard of living.
Making sure you have the right cover means you can sleep easy at night knowing that you and those close to you are protected.
5. Put the right paperwork in place
It may seem like a boring, administrative task but ensuring that your paperwork is in order can provide real reassurance to your loved ones.
There are three key documents you should make sure you have in place:
- A Lasting Power of Attorney (LPA)
- An “expression of wish” form for your pensions
- A will.
By ensuring these three inexpensive documents are in place in can reduce stress and worry for your loved ones if you’re incapacitated, or you pass away.
6. Work with an expert
When we ask clients for feedback on the benefits of working with BlueSKY it’s rare that we hear about “the performance of their investments” or “investment returns”.
Most clients tell us they benefit most from having a trusted expert in their corner, and from the peace of mind and reassurance of working with a professional.
This bears out research from Royal London, which looked into how working with a financial planner can boost your mental wellbeing and reduce stress.
When asked, those people who worked with a financial planner said they were more in control of their finances, less anxious about money, and more financially secure and stable.
Get in touch
If you’d like to find out how working with us can support your mental health and reduce financial stress, please get in touch. Email info@blueskyifas.co.uk or call us on 01189 876655.