Money can play such a central part in our lives, so it’s no surprise that so many people worry about their finances, often regardless of how much money they have. As it’s mental health month, I wanted to take the opportunity to discuss typical money concerns, how they impact our state of mind and what we can do to alleviate the stress we feel when dealing with our finances.

Managing debt – changing our mindset and taking small steps to address issues

The financial issue which typically causes people the most stress is debt. Many of us have been taught from a young age to be cautious with debt and to avoid it where possible. Most of us feel uncomfortable when we owe people something, even if we are comfortable managing it. To get past this angst, we must change our mindset to see that debt is a tool which can enable us to better our lives helping us to buy things we could never pay for upfront for. A lot of us could benefit by simply revising any negative connotations of debt we may have and having a more positive outlook of it.

However, if we don’t feel in control of our debt, then this is where feelings of anxiety are completely understandable. It’s important to remember that while we might not be on top of it, it doesn’t mean that it’s on top of us and we can regain control by taking small steps to address it.

Firstly, we need to understand what debt we have and what interest we are paying.

Then prioritise paying off debts with the highest interest rates, paying more than the minimum where possible.

And finally, look to improve our credit score as this help us to get better interest rates on our debt. 

For some, trying to understand and prioritise debt can feel really overwhelming and speaking to a debt charity can often be a great first step.

Budgeting – reduce feelings of guilt

For a lot of people, day-to-day spending creates feelings of anxiety. Sometimes it can feel like we are constantly spending money and the fretting that can come from buying even essential items, is something that can really impact us. Many of us can also feel guilty spending money on anything that may be perceived as a “treat”.

Having a budget can help with these feelings. While some like knowing where every penny goes, for others (including myself) this only leads to over analysing and angst. As such, I’ve benefitted from having a simple budget which has only 3 parts: 1. my regular saving; 2. my essential expenditure; and 3. my discretionary expenditure - differentiating between the 3 through the use of separate bank accounts.

My perspective is that as long as I pay my bills and save regularly, whether I spend my discretionary budget on a clothes shopping spree, coffees and avocado toast or going to an event, it doesn’t really matter and isn’t worth worrying about. Doing this removes any guilt I have in treating myself and means I have financial security without overthinking things. A big part of managing our finances is mastering our emotions when it comes to spending.

I hope you find these tips useful to help you overcome the money worries that many of us are currently going through. Check out part 2 where I explore two other key concerns many of us have – saving habits and investing.

The information here is for general information purposes only and should not be regarded as financial advice. It should not be considered a substitute for regulated advice on specific circumstances and objectives.