Money Management

Change These Three Things to Reduce Financial Stress

By  Karen Banes

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If you want to reduce financial stress, you might be focusing on reducing your outgoings, increasing your income, and paying down debt. All admirable aims, but in the long-term, some of the things that will reduce financial stress involve your mindset and emotions, as much as what you actually do with your money.

Build Your Confidence

Many of us will admit, we spend money to impress other people, often on a daily basis, and usually to make us feel better about ourselves. In a society driven by advertising and aspirational social media posts, we spend on designer goods so others will judge us as cooler or better than we feel. We splash out on exotic vacations, primarily so we can post our pictures on Facebook. We buy a car we can’t afford purely to impress neighbors, who we probably rarely speak to.

As Ben Le Fort points out in this article, it takes confidence to be frugal. Only the truly secure among us feel that we are ‘enough’ exactly as we are. The less self-confidence we have the more likely we are to wrap ourselves up in the security blanket of expensive clothes, up-to-date gadgets, fancy cars, and big houses.

The truly wealthy don’t feel like this, of course. There’s a reason why so many millionaires don’t feel the need to indulge in conspicuous consumption. They’ve learned to have confidence in themselves and their values. They spend money on what they want, not what society tells them they should want, and often it’s something that isn’t obvious to the rest of the world.

Studies show that things that boost confidence include a sense of achievement and mastery, exercise, and volunteering, and none of these need to cost money. So confidence is free. And you could argue that confidence saves you money because as your confidence grows your need to spend on things you don’t need may well decrease.

Define Your Values

Ask someone what they value in life and they’ll probably say things like family or health. Yet there’s evidence that families are spending less time together than ever, and American workers often make work top priority, even when they’re sick.

Once you really know what your values are, you can adjust your spending to reflect them. Value-based spending helps you feel more in control of your money, simply because you have to reflect and assess what a purchase really achieves before you splash out on it. Done properly it can really help with financial stress, by reducing impulse spending and eliminating buyer remorse.

You’ll still need a monthly budget of course. But it can be a value-based budget. Everything on it should be contributing to, supporting, or expanding on what matters most to you. Defining your values and then drawing up a budget based on them can actually be a life-changing experience. You may find yourself dumping your subscriptions to Netflix and Hulu to budget for new hiking gear. Or even quitting smoking to save for a family vacation. If reflecting on your spending is a problem for you, consider keeping a financial journal.

Love Your Money

Bet you heard somewhere that the love of money is the root of all evil. It can be if loving money causes you to put making money ahead of all else, but that’s not what we’re talking about here. We’re also not talking about developing a love of spending. That’s likely a part of what’s causing you financial stress. To reduce financial stress you have to love money in a different way.

Financial self-care means learning to care about your financial situation and your money. It means learning to love earning it, saving it, investing it, and using it wisely. It means learning to set fun, inspiring, meaningful financial goals. If you really love something, you don’t want to part with it for no reason. You want it to go out into the world and do some good. Many of us have a difficult or unhealthy relationship with our money. Changing your money mindset, and learning to love it instead, can be a step towards reducing financial stress.

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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