Five effective ways to reduce your financial stress

World Mental Health Day takes place each year on 10 October and aims to raise awareness of mental health issues and promote efforts to support positive mental wellbeing. So, it’s an ideal time to learn how to tackle any anxieties you might feel about your finances.

Money worries could affect your mental health and your ability to manage your wealth effectively.

What’s more, anyone can experience financial stress. Whether you’re worried about saving enough for your retirement or providing for your family if you become unable to work, staying in control of your wealth could feel overwhelming at times.

These concerns may be particularly apparent in the current climate. While inflation has begun to fall, the ongoing cost of living crisis is putting pressure on many households. Research by the Mental Health Foundation has revealed that financial concerns were the most common cause of anxiety among adults in the UK in 2023.

Read on to discover five effective ways to reduce financial stress and boost your wellbeing this World Mental Health Day and beyond.

• Review your budget

Understanding how much money you have coming in and going out each month could help you feel less overwhelmed by your finances. It’s also the first step towards creating an effective plan for managing your money.

By reviewing your budget, you might also be able to identify opportunities to cut back on spending or save more. This could help you feel more in control and reduce feelings of stress.

Of course, to enjoy these benefits, you need to stick to your budget once you’ve created it. Setting short-term goals and using mobile phone apps to monitor your spending and saving, could help you stay on track.

It’s also important to regularly review and update your budget in line with your current needs. For example, if you receive a salary increase you might decide to put more into your savings account or pension each month. Conversely, if you become unable to work, you may need to reduce non-essential spending.

Having a solid grasp of your finances by budgeting in this way could help to reduce feelings of uncertainty and stress.

• Build an emergency fund

Having to find money for an unexpected expense can be extremely stressful. Unfortunately, you’ll likely face one or two unpleasant financial surprises at some point in your life, be they medical emergencies or unexpected home repairs. 

Having an emergency fund set aside to cover such costs could provide valuable peace of mind. If an unexpected expense arises, you’ll be less likely to experience financial difficulties or accumulate debt, both of which could contribute to stress.

As a rule of thumb, it’s a good idea to keep three to six months’ expenses in your emergency buffer. However, you’ll need to consider your individual circumstances when deciding how much to put by. For example, you might need more if you’re self-employed or solely responsible for dependants.

• Put appropriate protection in place

Life is full of ups and downs that are impossible to predict. Without a safety net in place to catch you if the worst happens, this uncertainty could be extremely stressful.

What would you do if you became ill and were no longer able to work? How would your family cope financially if you passed away suddenly?

You might not like to think about such matters, but being prepared for such eventualities could help you sleep better at night.

By putting appropriate protection in place, you can feel reassured that you and your loved ones will be provided for financially if your circumstances change.

• Adopt a positive money mindset

Your “money mindset” is your default set of beliefs and attitudes about money, probably developed in childhood.

Your attitude to money could predispose you to financial stress. For example, a “scarcity” mindset could mean that you’re constantly worried about running out of money. What’s more, this mindset could drive unhelpful financial behaviours that may lead to more stress, such as excessive borrowing or being too fearful to invest and build your wealth.

You could create a more positive mindset by:

• Challenging negative self-talk about money
• Avoiding comparisons with others
• Working with a financial expert to create a long-term plan.

Changing how you think about money in this way could help to reduce financial stress.

• Seek advice from an expert

Financial stress is often grounded in feelings of uncertainty and overwhelm.

According to research reported by IFA Magazine, nearly half of all UK adults have poor financial literacy, which could contribute to feelings of stress.

If your stress stems from a lack of confidence about how to manage your finances, you might benefit from speaking to an expert.

A financial planner can provide knowledge and guidance in areas you’re unsure of. They can also help you create a bespoke financial plan that gives you clear goals to work towards and helps you feel in control.

What’s more, research by Royal London has revealed that people who work with a financial planner feel more in control of their money, more confident, and better prepared to deal with life’s shocks.

Get in touch

If you’re feeling overwhelmed by financial stress, we can help you regain control of your wealth.

Please email info@doddwealthcare.co.uk or call 01228 530913 / 01768 864466.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.