Money is one of the biggest sources of stress for Americans, according to a 2023 report from the American Psychological Association. This sentiment has intensified since the COVID-19 pandemic, primarily affecting parents and singles who are dealing with various financial pressures.
Even with apparent economic stability, high inflation and the rising cost of living are putting pressure on budgets, causing even people with good salaries to live on the edge. It is in this scenario that experts point to the need for a change in behavior for a healthier relationship with money.
Check out the tips from experts interviewed by Time Magazine to help you rethink your spending and build a more positive relationship with your money:
1. Understand Your “Financial History”
Before creating a budget, analyze how money has always been present in your life. Think about the relationship your parents had with money and how you learned to deal with it. Identifying patterns of excessive or restrictive spending is the first step towards change.
“It’s not about personality, but how you were financially educated,” says Jack Heintzelman, a certified financial planner. “Recognizing these patterns gives you a new perspective.”
Additionally, financial psychotherapist Traci Williams suggests identifying your emotional triggers related to spending. “What does money represent to you? Security, pleasure, self-esteem? Understanding these factors is crucial,” she explains.
For those who tend to save excessively, Williams emphasizes that spending doesn’t have to be the villain. “There are other ways to feel good, like being with loved ones, cooking with family, or engaging in physical activities. Spending can be pleasurable, but you need to seek healthy alternatives.”
2. Define Your Financial Goals
To create an effective financial plan, it is essential to consider your desires, needs, and lifestyle. Some people visualize their expenses better through banking apps, while others prefer to highlight statements or write everything down manually.
Heintzelman suggests the 50-30-20 method, which divides the budget into 50% for basic needs (rent, food), 30% for desires, and 20% for savings. But the expert emphasizes the importance of adapting this model to your personal goals.
“Don’t compare yourself to anyone. Chart your own path and feel comfortable with it,” he advises. The idea is to create an automatic reserve, making saving a natural habit.
3. Recognize the Need for Support
Although financial stress is common, only half of Americans feel comfortable talking about the subject. However, experts recommend discussing your financial plans, concerns, and goals with your spouse, friends, family, or even a financial therapist.
Having different perspectives and sharing the anxiety can be a great relief. Additionally, approximately 35% of Americans seek financial advice to maintain discipline in their spending.
“A financial therapist works at the intersection of your finances and your mental health,” explains Williams. “If money worries are interfering with your work, relationships, or self-care, it’s a sign that you need help.”
Talking about money can be uncomfortable, but breaking this taboo is essential to building a healthy and balanced relationship with your finances.
Changing your mindset towards money is a process that requires discipline and self-awareness. By implementing the tips suggested by the experts, you will be on the right path to a more peaceful and less stressful financial life.
Remember:
- Break the impulse cycle: Avoid impulse purchases. Take a deep breath, analyze if you really need that item, and research more advantageous alternatives before finalizing the purchase.
- Have a Plan B: Unexpected events happen. Maintain an emergency fund to cover unexpected situations, avoiding unnecessary debt.
- Celebrate your achievements: Recognize your effort and celebrate each step taken towards your financial goals. This will motivate you to keep going.
This journey towards a healthy financial life may be long, but with the right strategies and determination, you can achieve the much-desired financial stability.
