So, I’m getting ready for work this morning and I realized I’m stressing. Particularly, I’m worrying about how our lifestyle changes are going to impact our savings rates. I’m also worrying about how the political changes will impact our investments. This money stress is not doing me any good though. It’s not like I can really change either issue beyond what I am doing today. Yet I’m sitting there during my shower, running through our net worth numbers and investments. In my mind I’m trying to determine contingencies to fictional boogie men that could derail our financial progress. I go through the numbers, not once, but three times in the course of my shower. I was experiencing acute money stress. Apparently, I’m not alone.
Money Stress is almost Universal
According to a study in 2015 over three quarters of Americans are stressed about finances. Stress, especially consistent stress can have devastating problems on your health. In the short run it can make you feel fatigued, irritable, cause trouble sleeping, hurt your concentration, headaches, depression, or any number of other issues. In the long run there are links between stress and heart disease. So stressing is not a good thing, and yet so many of us are doing it about finances.
Not just for those in Poverty
Many articles interpret this phenomenon as due to poor finances or the widening income gap. However, I personally can tell you that neither situation particularly applies to me, and yet I find myself stressing about money during major life changes. Never mind that even if 2008 occurred again our retirement needs are so far in the future it likely would not matter. I still, if left to my natural state, stress over every detail of the what ifs until things settle out. Judging by how many blog posts from well to do financial bloggers exist on what will happen to health care over the next 4 years, it’s obvious to me I’m not alone in this respect.
Tips to Deal with Money Stress
I also realize I get this way from time to time. Lest you think it’s a new phenomenon, my lovely wife over the years has helped me devise some methods to run that stress away. Today I’ll explain some of these to you. Note, these will only help if your stress is not related to immediate financial hardship. i.e. you should already have your finances in order, have a decent savings rate, and have a emergency fund. In the absence of these you have reasons to stress and problems to solve. Putting your head in the sand like an Ostrich won’t remove your stress permanently, and may result in what occurs being more stressful then the initial situation. You need to solve the source of real stress in your life before you can address stress your mind creates. For all others we can proceed:
- Achieve Financial Independence. We talked a few weeks ago that this buys options. Options means more contingencies if something goes wrong and less legitimate reasons to worry. This is a great long term solution to some money stress. As my example shows though it’s not a cure all.
- Don’t look at your accounts except at specific times of month. Now I don’t mean start spending hog wild and be surprised by how much you spent on your credit card for the month. I do mean do not log in and look at your brokerage accounts or Net Worth sheets every day. Looking at it won’t change it, but if it’s a source of stress you’ll keep stressing about it.
- Automate Financial decisions. Decision fatigue is a real problem. Essentially after making a large number of decisions, additional ones decline in quality. They also tend to become more stressful as a result of the declining quality. Automate some of them. Setup your monthly 401K withdrawals as an easy way to automate savings. If you have excess beyond 401k limits, set auto withdrawals into a savings account or use one of those fintech apps that will do it for you. Setup reoccurring bills so that they auto pay. Remove some of those decisions for less stress.
- Setup a plan and follow it. The Boy Scout Moto is “Be Prepared”. It is important to set a plan with some basic contingencies. However, your plan doesn’t need to outline every potential disaster. I.E. you shouldn’t need a line in your plan that says if BREXIT occurs I sell all my British stock. It should be something like if the market drops by a large percent no matter the cause I will…. I’d personally say buy more but that answer might also be stand pat depending on risk tolerance. Either way sticking to the plan takes the emotion out of the moments decision which leads to better results. It also has the added bonus of removing that money stress we keep talking about.
- Reaffirm to yourself that you’ve covered the conceivable contingencies. If the above hasn’t worked thus far then perhaps take a step back. Instead of looking at the tactics of what you will do if the sky falls, ask yourself where you are financially compared to the average person. Unless you’re deep in debt, you are probably leaps and bounds ahead. Now this doesn’t mean to put other people down or to keep up with the jones. This does mean if you have a savings of mid 5 figures or higher you’re probably better off than 95% of the people on earth. Realize if those 95% can survive with less contingencies, you can at yours. After all you’re lucky to be living such a privileged life.
- Focus your mind elsewhere. I actually did this when the issue occurred this morning. I walked over to my youngest son, sat down and read him a children’s book. Problem solved and it made my son happy as well.
- Remember that life is not about Money. Your not here on this planet to become rich, buy fancy things, or even to become financially independent (though it would provide options). You’re here to enjoy the journey of life. By stressing you’re missing the boat. Focus on those things you value and bring you joy on your current journey.
- I’d be remiss with adding the final one which I briefly mentioned in the paragraph before. Have a loved one or friend kick you from time to time so you change the topic in your head.
Do you experience Money Stress? How do you deal with it?