How to tame money anxiety when you aren't even short of cash
Anxiety is a word we’ve all heard a lot more over the past year, whether it’s about the coronavirus pandemic or our finances, or both.
Money anxiety is something anyone can experience at any time, not just when big financial commitments are looming or we’re short of cash.
The impact of the pandemic has heightened anxiety about money for many people.
With more than two million workers on furlough, many people have seen their finances squeezed to breaking point.
But for those people who have kept their jobs, and those with adequate savings, money anxiety can still rear its ugly head at any point – usually around 2 am when we’re trying to sleep.
It can also have other side effects, such as distracting us from daily tasks and impacting our health.
Being worried about your money is very normal, especially if it’s in reaction to something big like losing your job, a separation between partners or if you have spiraling debts.
But even people without anything obvious to worry about can have money anxiety.
Some signs include being obsessive about spending money and excessively penny-pinching, overspending to relieve stress, hoarding money and working all the time to earn more, and keeping secrets from partners about your finances.
However, it’s not something anyone should go through alone and there's a lot of help out there, whatever situation you’re in. The NHS website is a good place to start.
Here we’ve also outlined a few starting points to help.
Look after your physical and mental health
This is always important but especially now as restrictions have yet to fully lift. Getting out every day for exercise and fresh air and keeping a regular routine will help.
Cutting down on vices like excessive alcohol drinking can also be beneficial if you’re having trouble sleeping at night and generally feeling low and anxious.
Even people without anything obvious to worry about we can have money anxiety
Be open and honest with your friends and family
We all know the saying ‘a problem shared is a problem halved' but the reason we all know it is because it’s true.
So, find a trusted friend or family member, make a cup of tea and sit down and chat to them (on Zoom if they’re not in your house).
As friends, they are unlikely to judge you and as soon as you have spoken about what’s worrying you, chances are that you will feel better.
It will also open the door for them to tell you about anything they’re worried about.
Build an emergency savings fund
What do you do if you lose your job, or your relationship ends?
Or what about more mundane (but still expensive things) like when the boiler breaks, the ceiling falls in, or your car breaks down?
If you’ve got emergency savings all these scenarios are made slightly more manageable and less stressful.
Life is unpredictable, we never know what’s around the corner, but by having a little nest egg hidden away somewhere paying interest at least you know you have something to fall back on should the worst happen.
Aim for between three and six months of your salary and put it in a savings account paying the highest rate of interest you can find.
Keep on track of your spending (and saving) with a budget
Not knowing where money is going is what causes a great deal of anxiety when it comes to our finances.
If you’re getting paid a set amount each month it’s easy to work out where that money is going and by keeping track of your spending you’re eliminating one more thing to worry about.
You don’t have to write it all down either, there’s a multitude of apps available where you can track your spending and set a budget.
Your own bank may even have one to get you started.
Many apps also allow you to set short and long-term savings goals, anything from buying a new car to getting your next home.
It’s also worth setting a reminder to regularly check your credit score to make sure there’s nothing untoward there.
3 things to do right now...
A lot of people say they can’t save because they don’t have any cash left at the end of the month, so always pay some money into your savings accounts and investment products by standing order each month when you pay your bills.
Just like you wouldn’t go on a road trip without planning your journey, you need be focused when it comes to savings – so set a goal for the amount you need and the date that you want to achieve it.
Keep your savings in a different bank than your current account as out of sight, out of mind. Plus, the harder that you make accessing the funds, the less likely that you are to touch it.
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Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.