Personal finance knowledge is essential for every human, but the subject doesn’t always get much — if any — attention in schools. That’s unfortunate, as a lack of personal finance knowledge can contribute to increased stress, taking a toll on your mental health.
Even without a foundation of financial education, you can boost your financial confidence and your mental health. To start, you’ll need to be honest with yourself about your past, current goals, and your vision for the future. Understand that you control your money and begin making moves to improve your whole picture.
1. Acknowledge and Forgive Prior Financial Slips
Finances can often be an exercise in trial and error, especially since each person’s situation is unique. Generally, your financial habits are built based on what you see growing up. Most people model what they learned from their parents or guardians as an adult. And since there’s no guarantee that they were wise with their money, the damage is often done before you realize it.
If you already live with mental health issues like anxiety and depression, money stress can exacerbate symptoms. Strive to acknowledge prior errors, forgive yourself for them, and seek mental health treatment for issues you’ve experienced. Focus on what you can do today instead of dwelling on the past. You can right your financial ship, and part of your journey to a bright financial future starts with acceptance.
2. Regain Control of Your Finances
Now that you’ve forgiven yourself, it’s time to lay everything out there. Pull up your bank statements, credit card accounts, and savings balances. Export transactions to comma-separated-values spreadsheets so you can analyze transactions and habits over time. Identify budget overruns, average monthly income, and savings trends as you consider your next move.
Once you know where you stand, establish a budget for necessities, fun spending, and savings. You may prefer a strict balanced budget or the more flexible 50/30/20 budget, depending on your personality. In the latter approach, you devote 50% of your monthly income to essentials, 30% to nonessentials, and 20% to savings/financial goals. Review each type of budget and commit to one for at least 90 days.
With your budgeting approach in place, bring your accounts current and reach out to past-due accounts to create a repayment plan. While initially stressful, organizing your finances will give you a path forward and much-needed transparency with your lenders.
3. Prioritize Your Goals
Reviewing your total financial picture can leave you overwhelmed with all you want to accomplish. If you set too many — or too ambitious — goals, you’ll likely accomplish none of them.
Instead, list out all of your goals, including dates, dollar amounts, and outcomes, prioritizing them along the way. For example, repaying a tax debt should come before saving up a vacation fund, as unpaid taxes come with penalties. Balance urgent goals with those that fill your cup so you’ll have a source of motivation as you work through your list.
Now that you have a long list of prioritized goals choose three to five to focus on at one time. Attempting to work on more than that can result in scattered efforts and little progress. Identify short-, medium-, and long-term goals to set expectations on how long it will take for you to achieve them. Try to include a mix in your list to get motivation-fueling quick wins while making long-term progress.
4. Check In Strategically
Constantly refreshing your budget app or credit score can often lead to more financial stress and mental exhaustion. Instead, set a weekly date to check in with your money, review your budget, and take stock of your progress.
Treat this check-in like a scheduled meeting, sitting down at the computer with no distractions. Update your monthly budget, pay bills, and review trends during an hour of focused financial management. If things are off track, make adjustments to your habits before they go too far.
Use your budgeting app to set alerts for low balances, transactions over a certain dollar amount, and deposit notifications. These planned alerts can keep you informed of money moves without delving into every account. If something is out of place, address it in real-time while resisting the temptation to constantly review your accounts. When you have the proper infrastructure, you can focus your efforts on work and life instead of financial stress.
5. Celebrate Your Wins
Financial management is a long game and one that doesn’t end, even when you’ve achieved all of your goals. Keep up your momentum and motivation by celebrating wins big and small.
Give yourself a rewards structure to look forward to as you work on your plan. Treat yourself to a dinner out once you’ve balanced your monthly budget — while ensuring the dinner itself is budgeted. Reward yourself by rerouting the debt-repayment money toward a vacation fund for large wins like paying off a credit card.
Include trusted friends and family members in your financial journey. Their awareness will support your goals, and they can offer an encouraging cheer when you succeed. Keep them updated with your progress to create accountability and destigmatize conversations about money. They might well be encouraged to start their own financial wellness journey thanks to your story.
Treat Financial Wellness as Part of Your Mental Wellness Plan
Physical fitness often gets the most attention when it comes to wellness initiatives. But as mental wellness has increasingly come to the forefront, be sure to include financial wellness in your plan. Mounting credit card balances, increasing inflation, and stagnant wages add to the daily grind of modern life. Nurture your mental wellness by regaining control of your financial future, even as you navigate complicated money issues.
Total wellness is possible with consistent effort and support from professionals and loved ones. With intentional behavioral change, you can see improvement in your mental health as you gain financial control. When you see what you’re capable of financially, you’ll become more confident in your abilities in every facet of life.
Featured Image by Firmbee from Pixabay