4 Ways to Minimize Financial Anxiety During a Crisis
It is only natural for us to worry about our finances, especially during a crisis such as a pandemic, as it affects so many facets of our everyday lives. Nevertheless, financial stress is a big deal - no matter the cause - and needs to be addressed.
Money-driven anxiety is also becoming a growing concern for the younger population - even before the onset of this epidemic. Millennials are taking out larger student loans than ever before and facing an increasingly fluid job market. A recent study from Northwestern Mutual indicated that “more than a quarter of Millennials say financial stress affects their job performance, over twice the rate of the general population”.1
However, sticking our heads in the sand and ignoring our finances entirely is not the solution, especially when coronavirus concerns are causing the markets to change drastically on an almost daily basis. Nor is fretting daily over every aspect of our finances. So what can we do to ease the burden of financial anxiety?
Here are a few tips:
1. Stop comparing your financial situation to others.
Living in comparison to others simply breeds negative emotions. When we browse our friend’s social media profiles, it is common to see only the best versions of their lives. Do not let a 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 well being to present a skewed image of your own lifestyle.
Simultaneously, there is a private element of our finances that goes unnoticed. We don't necessarily see the time and commitment that some of our most successful friends put into their professional careers. At the same time, there may be plenty of debt behind the scenes that is being used to support this supposedly successful lifestyle.
A far easier choice is to understand your own budget and goals and what you need to be happy. Create your own measuring stick and use that to assess your goals.
2. Establish an emergency fund.
Often, our financial stress stems from envisioning the worst-case scenario in our lives.
If I lost my job today due to COVID-19, 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 in helping you prepare for the worst. Preparing an emergency fund can ease the stress of an unforeseen emergency. Tying this fund into your monthly budget on an ongoing basis creates a safety net - you now have something to lean upon should something unexpected (like COVID-19) pop up!
There are multiple places to save, but whether you are using a simple savings account or a Bank On Yourself® policy, you can rest assured that the money will be there for you when you need it, which will help relieve much of your financial stress in times like these.
If you don't have an emergency fund yet, and can't start one today due to job uncertainty, make a commitment right now to start one as SOON as you are back on your feet! Let this current economic instability be a reminder to you of how important it is to have a safety net in place for the future.
3. Spend socially, not materialistically.
Materialistic spending is a plague that affects many young adults today. Psychology professor Catherine Sanderson notes that “accumulating things rarely leads to happiness”.2 We acclimate to our possessions. They become old, we want something new. The cycle repeats.
Instead, spend your money on experiences with people that you care about! Even when you are social distancing, you can connect with others virtually. Our close relationships with others are what ultimately bring us the most happiness in life.
4. Educate yourself & meet with an expert.
A financial professional can review your entire financial picture or provide help in a specific area of concern. Use this resource to your advantage! Many advisors will offer a complimentary "no-obligation" meeting to discuss the basics of your financial plan - which is a great first step towards lessening the load of money anxiety.
Continue to educate yourself on an ongoing basis. 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. Be sure to ask questions of your advisor whenever you meet with him/her to make sure you understand the pros and cons of each investment or financial strategy in your portfolio and how it supports your short and long-term financial goals.
Following these 4 tips can help to minimize your financial anxiety and stress - not just today, but also during any crisis that may arise in in the future.
Remember, the future is unpredictable - but your financial plan should not be!
If you don't currently have a solid financial plan in place, please contact our office today to schedule a FREE initial strategy session and learn about your options for growing and protecting your financial future.
1. https://www.marketwatch.com/story/millennials-say-anxiety-about-money-is-literally-making-them-sick-20 17-09-01
General Disclaimer: Information provided on this blog is for educational purposes only and should not be considered financial advice. For guidance on your personal financial situation, you should consult with a qualified financial advisor.