What is financial wellbeing? How to reduce stress by looking after your financial health
Disclaimer: We aim to provide accurate information, but we’re not accredited financial advisors. We recommend you consult with a financial professional before making any serious decisions.
Why do I feel so stressed when it comes to my finances? How can I keep on top of my debt? How do I stay on track to reaching my financial goals? These are just some of the common questions a lot of us ask ourselves when we think of our money.
Hear from Groov’s VP Clinical, Dr Fiona Crichton on the brain science, and Spring financial educators and Co-founders, Dana Gray and Cyma Parbhu on practical steps to keep your finances in check.
We all know the impact financial stress can have on our mental wellbeing. So it’s important to understand and build as much knowledge as we can about how to best manage the different financial situations we might find ourselves in.
Research tells us that anxiety around finances is linked to triggering our amygdala, causing our brains to go into fight or flight mode. This stress response makes it harder to make decisions about money when an issue arises. Some of us might want to tackle our money issues fast without taking the time to clearly consider options, whilst others might want to sweep them under the rug (out of sight, out of mind, right?).
But, being comfortable to have conversations about our money and having someone demystify and simplify it all for us, can really help to reduce stress and anxiety, making it easier to think straight and make informed choices when the time comes to make financial decisions.
Ok, so what does financial wellbeing really mean?
Financial wellbeing can mean different things to different people and may depend on what stage of life you’re at. But ultimately it’s about having the freedom to make choices you want to make on your own terms when it comes to money. It means you don’t feel controlled by your finances, and being able to take more control over your finances can lessen feelings of anxiety. It’s also about building healthy habits and behaviours around money, and ensuring those habits and behaviours are maintained long-term.
How to reduce financial stress
1. Ask questions
Ask yourself the following:
Where did my money values come from?
Where did I learn my money skills?
What's the first word that comes to mind when I think about money?
The answers to these key questions may have been shaped by our parents, our education, or the culture in which we live. We could have picked it up through schooling, from the way our parents and grandparents managed and talked about money, or by teaching ourselves through research. To find out what kind of relationship you have with money, read Your relationship with money from Spring.
2. Make it a conversation
Talking about money is not everyone’s cup of tea, and not everyone may feel as comfortable bringing it up in casual conversation. But, allowing these conversations to happen can have a positive impact on our own mindsets and can help influence how others can make better decisions involving money. Why not try raising it when sitting down at the dinner table in the evenings with your family.
It’s a great way for your kids to learn the basics and become more aware of how to manage and make good choices around their own money in the future. Talk about things like how to set up a bank account, or how to use credit cards more efficiently. Wherever you choose to start, these sorts of conversations can make a huge difference.
You can discover your money personality and other helpful tools at Sorted.org.nz - a great resource to help familiarise yourself and your loved ones with what’s what when it comes to finances.
3. Understand your spending habits
A key part of maintaining a healthy relationship with money is to really understand how you spend your money. Take the time to look at bank statements to keep track of where your money is going.
Try breaking your spending down into categories to see where the trends for higher spending are. Understanding where these higher spends are occurring can help you to adjust your spending and your budget accordingly.
Not sure where to start? Read Understanding your spending habits to get helpful tips for how to set a budget and reach your financial goals.
4. Have an emergency savings fund
You may have heard the term financial resilience at times, but what does it actually mean? Being financially resilient is about being able to set yourself up and plan for the future and any unexpected expenses that might come up due to something out of your control. It’s also about having the knowledge and understanding around how to make better financial decisions.
We all experience difficulties from time to time when it comes to money, but having the skills and strategies to manage and mitigate unplanned financial circumstances is a really good thing. Having a safety net, and saving for a rainy day can really help when you need it most. A general rule of thumb is to aim to have around 3 - 6 month’s worth of expenses saved up in an emergency savings fund. Find out how to build your emergency fund, by reading How much should your emergency savings fund be?
But how do you stop yourself from dipping into that emergency fund? The secret is to make it non-accessible. Try these useful tricks, if you feel the temptation to dip into your funds:
Set up a supersaver account, where if you withdraw money from the account, you’ll be charged a withdrawal fee. This can be a good incentive
Transfer your funds into an account you don’t see all the time - opt to hide your savings account in your banking app so that you can’t be tempted to view how much you have available in savings.
Remind yourself of your financial end goal. This might be taking a long overdue trip, or purchasing that new pair of shoes you’ve had your eye on. This can be a real motivation to not dip into savings.
So, how do you set financial goals?
It may seem daunting to plan ahead sometimes. But, whether you’re thinking about next month or 3 years from now, it’s good to plan for what you want your finances to look like. Future proofing your financial plan can help you avoid building up debt, reduce unnecessary stress in your life, and set you up to be more financially prepared and resilient. Consider setting yourself some SMART goals:
S: Specific - make your goals specific for more effective planning
M: Measurable - define how you will measure progress toward reaching your goals
A: Achievable - make sure your goals align with your values and are attainable
R: Realistic - ensure your goals are within reach, realistic and relevant to your long-term objectives
T: Timebound - set realistic end dates for each task that will help you reach your goals
As much as it is important for your goals to be SMART, so is it important to make sure they are fun. Maybe your goal is to go traveling around the country, or to purchase your first house? Whatever your goal, make sure it’s fun and motivational. Set up some tasks that can help you get there. It can be as simple as cutting back on your daily coffee or lunch purchases, or putting a little extra aside each payday to tackle your debt faster.
Finally, it’s important to understand your relationship with money and your spending habits. Making sure you have realistic goals, and a plan in place to reach those goals can help you get there just a little bit easier. Remember to make the process fun, exciting and something to look forward to. And, hey, it’s ok if you don’t reach your goals in the timeframe you’ve set out - budgets and goal posts can change at any time. Life is fluid and things can change unexpectedly, so go easy on yourself, have a contingency plan in place to help you get back on track, and don’t be afraid to talk about your finances and ask for advice if you need it.
To get access to some helpful resources from Spring, head to the ‘Your financial wellbeing collection’ in the Groov App for more information.
If you need immediate financial help and you’re in New Zealand, you can call the free financial helpline Money Talks on 0800 345 123 or text 4029. Money Talks connects people and whānau with their local foodbanks, helps them find their way through Work and Income processes and entitlements and supports people to manage their money.
In Australia, you can speak with a financial counsellor by contacting the National Debt Helpline on 1800 007 007. This free hotline is open from 9:30am to 4:30pm Monday to Friday.