April is Stress Awareness Month – and many of us will know that financial stress and money worries is one of the major causes of stress in society today.
With the heightened pressures of the cost-of-living crisis and with many people living pay check to pay check, we want to use this opportunity to offer insights and considerations on how to create a healthy financial future and avoid financial stress and financial worries at all costs.
What is Financial Stress?
Financial Stress is where an individual has a mental and/or physical strain over their finances.
According to a survey carried out in the UK in 2020, the most common type of stress experienced by Brits was work stress, with 79 percent of respondents saying they frequently felt this type of stress. Furthermore, 60 percent of respondents frequently feel monetary stress, while 48 percent experienced family stress.
There is no doubt about it, financial stress is a major worry for people and can come in many shapes and sizes, often causing a trail of poor mental health issues and physical health.
Each person’s source of worry and anxiety can vary, from debt related stress, worries surrounding plans for the future and if you will have adequate funds to live comfortably once retired.
What are examples of financial stress?
Financial stress can affect anyone – If you notice any of these traits in yourself, a family member or friend, it’s important to speak up.
- Feeling stressed about where you’re going to find money for certain bills or payments.
- Constantly checking your bank account balance and feeling stressed or anxious about the amount of money that you have or do not have.
- Negative or anxious thoughts worrying about how you will ever be financially stable.
- Causing arguments with those closest to you about finances.
How can financial stress affect your physical and mental health?
Financial stress can affect your body both physically and mentally. Some examples of these include:
- Some examples of these include:
- Sleeping problems and insomnia
- Relationships being affected with others
- Bad memories triggering negative situations in your brain
How do you overcome financial stress?
Overcoming financial stress can be hard – but it’s all about taking those initial steps to financial freedom. Ways to overcome financial stress can include:
- Staying focused on your daily routine and not letting money worries steer you off-track.
- Trying not to drink too much alcohol – alcohol and stress are not good partners.
- Staying active as this is a great way to boost your mental health when feeling down.
- A problem shared is a problem halved – It’s important that you speak to friends and family about the financial stress you’re facing, as they may be able to help you deal with it.
How can investors improve their financial situation?
As economic uncertainty remains high, investors may experience financial stress from many areas including market uncertainty, unexpected expenses, and debt as a result of the rising cost of living.
With April being Stress Awareness Month, this is a great reminder that financial well-being shouldn’t be taken lightly as it directly impacts investors overall physical health, mental health and quality of life.
We know that there is not a one size fits all approach to combatting money worries, but we hope to offer some guidance on how to alleviate the pressures you may be facing and improve your financial situation.
Review your spending regularly.
Analysing your spending with a fine-tooth comb can help you find areas where you may be able to cut back and save money in the long run.
Keep an eye on your budget and make adjustments to ensure that you are aware of your outgoing costs; this will enable you to adapt your spending accordingly and avoid financial worries where possible.
Ensure you always have an emergency fund.
When it comes to financial security, one of the most important things you can do is to keep emergency fund for when you need it the most. One method is to create a dedicated savings bank account that you only use for emergencies. This way, you can easily access the funds when you need them but they remain out of reach for everyday spending.
Aim to build up enough to cover between three to six months’ expenses, or as much as you can afford. The best thing to do is make room for your savings in your budget as one of your outgoings.
By doing so, it’ll help you see your savings as a must, rather than a must-do-later. If you can, set up an automated payment from your normal bank account straight into your savings bank account – that way you don’t even need to think about it.
Leave your pensions and investments be.
As many people across the country are feeling the squeeze from the cost-of-living crisis, it’s more important than ever to make sure your finances are in good shape.
One way to do this is by making sure you don’t touch your pension or investments. While it may be tempting to dip into these savings to help make ends meet in the short term, it’s important to think about the long-term impact this could have on your retirement plans.
Drawing down on your pension or selling investments could leave you worse off in the long run, so it’s important to consider all your options before making any decisions.
Consolidating your old pensions (if appropriate) into one could help you cut down on management fees and give you a better picture of how your finances are looking. Before transferring your pensions, it is essential to obtain professional financial advice.
Educate yourself on financial awareness.
With all the rapid changes in culture and technology, it can be hard to keep up with all the ways we spend our money.
Developing an awareness of and understanding concepts such as currency and investing means that you won’t be in danger of getting swept away by new possibilities like online banking and cryptocurrencies.
A good sense of financial literacy includes education in all the different ways that money plays into our lives, such as personal money management including budgeting, investing, and saving. These personal financial skills are incredibly important to make well-informed decisions with your money across all areas of life.
Your long-term financial plan is key.
It’s important to think about the long term when it comes to your finances. Making short-term decisions could jeopardise your long-term financial security and cause you to experience stress. To avoid financial stress and ensure your mental health is put first, you can discuss your situation and plans with us by clicking here. Remember, April is stress awareness month but financial stress can last all year round.
This message may contain information that is confidential or privileged. If you are not the intended recipient, please advise the sender immediately and delete this message. Kingswood, Kingswood Group and Kingswood Institutional are trading names of KW Wealth Planning Limited (Companies House Number: 01265376) regulated by the Financial Conduct Authority (Firm Reference Number: 114694) and KW Investment Management Limited (Companies House Number: 06931664) regulated by the Financial Conduct Authority (Firm Reference Number: 506600) with a registered office at 13 Austin Friars London EC2N 2HE. KW Investment Management Limited is also regulated in South Africa by the Financial Sector Conduct Authority (Firm Reference Number: 46775). Both companies are wholly owned subsidiaries of Kingswood Holdings Limited which is incorporated in Guernsey (registered number: 42316) and has its registered office at Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4LH. April 2023.
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