Danetha Doe shares her tips for coping with financial stress
“I regularly feel the impact of financial stress. Sometimes the thought of money keeps me awake. Before the pandemic, I was doing well financially. I couldn’t live extravagantly, but I was able to save a little bit of money each month and occasionally treat myself and my daughter. Now, after the pandemic, money is a constant stress. ”
– Small business owner in Oakland, California
Unfortunately, the experience shared by this small business owner is not uncommon.
According to a Morgan Stanley poll, 78 percent of those polled reported feelings of financial stress. The pandemic has only exacerbated this problem as it has amplified massive inequalities in the United States.
To dramatically reduce – ideally eliminate – financial stress requires a complete overhaul of public policy and a significant change within American business.
While we all wait for this overhaul to happen, there are steps you can take as an individual to restore your financial health in the face of dire circumstances.
I call these stages financial well-being. Please note that these steps are not intended to minimize racist, sexist and other inequalities. Instead, these financial wellness measures are meant to offer encouragement in the midst of despair.
My favorite definition of financial well-being is “concrete steps you can take to improve your financial health.”
Financial health, as defined by the Financial Health Network, is “the dynamic relationship of one’s financial and economic resources as applied or impacted upon the state of physical, mental and social well-being.”
There are three categories of financial health:
In August 2020, the Financial Health Network released its annual trends report. The report showed that nearly two-thirds of people in the United States were either managing financially or were financially vulnerable. These people find it difficult to spend, save, borrow, or plan in a way that allows them to be resilient and seize opportunities over time.
Many of us don’t need the research to prove that financial hardship affects your financial health and creates financial stress. We also don’t need research to prove that financial hardship, and therefore stress, has a direct impact on your physical, mental and social well-being.
However, researching financial stress and its impact can help you feel more validated when navigating difficult financial situations.
The Financial Health Institute defines financial stress as “a condition which is the result of financial and / or economic events that create anxiety, worry or a feeling of scarcity, and which is accompanied by a response. physiological stress ”.
New research links financial stress to mental health. A 2014 study from Yale University explores the idea that some “mental health problems” are in fact money problems.
Annie Harper, PhD, the anthropologist and researcher behind this study, noted that the majority of participants were in debt and very stressed about it. Debt has a big negative impact on mental health, and she suggested that if a person’s financial issues were resolved, other issues could be resolved as well.
Day-to-day financial stress can negatively impact your financial decisions. This can lead to excessive or insufficient spending. Similar to food where one can eat emotionally or severely restrict eating due to stress, the same effect occurs with money.
An individual may find solace in “retail therapy” – mindlessly spending on nonessential items – or find relief in limiting spending to the point of going without basic necessities, limiting food intake to save money. money. However, in the long run, both extremes can be harmful.
As stated earlier, top-down changes absolutely must be made to reduce the stress caused by expensive healthcare, predatory student loans, stagnant wages or salaries, and the ever-increasing cost of living.
But what can you do to change your situation while the ivory tower people filibuster for change? How can you take back the power to reduce your financial stress, improve your financial health, and feel good about your financial situation?
My suggestion is to integrate financial well-being into your life. Just as you read Healthline for tips on physical and mental well-being to influence your overall well-being, there are steps you can take to build agency over your financial health.
If you work for an organization, the first place to start is to ask your team of people and culture (sometimes referred to as human resources) about the benefits of financial well-being.
These benefits may include the following:
- Access to earned wages. This is the ability to access your paycheck or paycheck before your payroll so you can pay for an unforeseen expense.
- Financial coaching. Some employers reimburse the cost of financial coaching.
- Short-term loans or grants for hardship. Some employers offer access to loans or grants for unforeseen expenses that exceed coverage for access to earned wages. These are either given in the form of grants that you do not need to repay, or in the form of a loan with a very low interest rate, below 5%.
Beyond these benefits, and if you are self-employed, there are some financial wellness steps you can take on your own to change your situation.
These steps may include:
Negotiating Credit Card Debt
This can be done through consolidation or simply by asking to reduce your rate. You can consult a company called Hello Resolve which will help you consolidate your debt for free. Company co-founder Michael Bovee also has well researched and informative YouTube videos on how to consolidate credit card debt on your own.
Practice mindfulness about money
Mindfulness of money is the practice of being aware of financial decisions. Overspending and many forms of financial anxiety are the result of unconscious financial choices.
To practice mindfulness about money, I recommend taking three deep breaths before making a financial decision. Becoming aware of your financial choices will reduce expenses you regret later and help you regain a sense of calm in the face of frightening financial decisions that seem beyond your control.
Have a silver date
Money date is a weekly wellness practice that I recommend to all of my Money & Mimosas readers and paying members. Consistency in this practice teaches you to be aware of all financial decisions and take a break to celebrate wins, regardless of their size.
Your financial health has an impact on your physical and mental health. The data proves it, and soon policymakers and business leaders will take it into account.
However, I know it can be frustrating to wait for others to change to eliminate social inequalities. In the meantime, I hope these financial wellness practices give you the tools you need to regain your independence throughout your life.
Danetha Doe is a financial wellness educator and founder of Money & Mimosas. She has been recognized as an expert in personal finance by the Wall Street Journal, TIME and Fast Company. Learn more about Danetha by visiting her website.