Smart Money Management is Good for Your Wallet and Mental Health
You know that, by and large, it’s a good thing to be smart with your money. Yet despite this head knowledge, you continue to drown in debt, put off saving and investing, and refuse to break your bad habits. But what you may not know is that constant exposure to irresponsible financial behaviors could actually be negatively impacting your mental health.
The Relationship Between Money and Mental Health
For centuries, mental health has been a taboo topic that few have been willing to tackle. But in recent years it’s gained more exposure and mainstream recognition. Along the way, we’ve found that poor money management is actually closely connected to mental health.
Depression and anxiety. After sifting through more than 65 studies on the topic, researchers at the University of Southampton in England found a strong correlation between financial problems and depression and anxiety. Naturally, it follows that excessive debt is related to an increased risk of drinking and drug use.
Research out of the University of Iowa suggests that financial stressors like debt are highly correlated with marital problems and cases of domestic violence(emotional and physical).
Blood pressure. Stress isn’t just an emotional issue. It has plenty of physical side effects as well. When debt is high, money is tight, and finances are in the dumps, research shows that it leads to a direct increase in blood pressure. Over time, this can increase an individual’s risk of hypertension and stroke.
Sleep. Studies show that 65 percent of Americans lose sleep because of financial worries. With lack of sleep directly impacting emotional stability, this can be a serious problem.
How to Practice Smart Money Management
There’s clearly a connection between poor money management and mental health. The question is, how can you be smarter with your personal finances? Here’s where to start:
Develop a Budget
You can’t be smart with your money if you don’t know how much you’re making and spending. You need a budget – there’s no other way around it.
Budgeting might sound challenging or nerdy, but it’s actually quite simple and empowering. You can use any number of apps and online tools to streamline the process for you.
Get Out of Debt
With a budget in hand, you can start to tackle the source of your financial stress: debt. Compile a spreadsheet of all your debts and list them of smallest to largest. Be purposeful with how you spend and start to knock them out in this order. You’ll feel the momentum build and the process will become exciting and motivating for you.
Part of smart money management is knowing where to spend your money and what to spend it on. Comparison shopping will help you make financially savvy decisions.
Take cable as an example. There are lots of cable TV plans. Some can be purchased for as little as $30 per month, while others cost hundreds. Shopping around for deals may allow you to save some serious money.
Build Up Savings
Once you have your debt and spending somewhat under control, you’ll find that you have extra money lying around. Use this cash to build up some savings – an emergency fund, per se. There should be enough in this account to float you for a few months (should something go wrong).
Learn to Say No
Discipline is a key factor in being smart with money. Not only do you need to possess a firm understanding of the difference between a need and a want, but you also have to make a habit out of saying no. The more you learn to say no – to yourself and others – the less prone you’ll be to making emotional and foolish purchase decisions that sink your budget.
Set Yourself Up for Success
You can’t control all of the independent variables in your life. Things will happen that you simply have to brace for and accept. But personal finance and money management is, to a large degree, within your sphere of influence. By taking smart steps – like developing a budget, getting out of debt, and building up savings – you can establish a new trajectory for your life and improve your mental health in the process. Are you willing to give it a shot?