Money and Mental Health: Four Steps to Gain Financial Control 2023

Financial issues can be a significant source of tension, to the point where they can negatively impact your mental health.

Frequently, there are legitimate causes for concern. It can be difficult to meet all of your financial obligations if you are not earning a living wage, are raising children on your own, or are a victim of the wage disparity between men and women and earning less than your worth.

Despite the fact that systemic issues contribute to financial stressors, many individuals can take charge of their finances. By adhering to these four steps, you can make money management easier, which may help alleviate anxiety and better your overall mental health.

Establish a budget

In spite of the fact that many people view budgeting as a burdensome task in and of itself, it is essential to create a spending plan in order to gain financial control and stop fretting so much about money.

Unless you have significantly more income than you need, which is not the case for the majority of people, you must choose where your money goes.

A budget enables you to make deliberate decisions so that you spend your hard-earned money on the things that matter most. If you don’t budget and make decisions on the run, you may develop spending patterns that are inconsistent with your values.

The good news is that various budgeting methods exist. If you detest creating detailed budgets, use a 50/30/20 budget instead.

Invest 20% in savings, 50% in fixed expenditures, and 30% in discretionary expenses. If you want more control and don’t mind a little extra work, assign each dollar a specific purpose so you know precisely where your income will go.

Set comprehensive financial objectives

Setting financial objectives is another necessary step in gaining financial control. You should have both long-term and short-term objectives, such as saving for retirement and a new vehicle, vacation, or home down payment, respectively.

It is ideal to be specific about your objectives.

If you set a timeline for when to achieve each goal and know the precise amount of money you’ll need, you can determine how much you’ll need to contribute each month to achieve each goal on time. This allows you to incorporate that amount into your budget so that you have the necessary funds.

Automatize your saving and investing processes

When you have a budget and financial objectives, you will know what to do with your money. You can easily execute your plan by automating it.

Set up automatic transfers of your money into your 401(k) or brokerage account, your savings accounts, and your creditors if you’ve decided to invest $500 per month in a retirement plan, $100 per month in various short-term savings accounts, and $100 per month in additional payments toward your credit cards.

Once you have automated the process of delivering your money to the appropriate locations, you will never again have to consider where a dollar should go or whether it can be spent.

Stick to a straightforward investment strategy

Lastly, investing is essential for wealth creation because it can help you obtain the returns necessary to genuinely benefit from compound growth. However, determining what to invest in can be difficult.

If you enjoy investigating different companies and want the greatest chance of earning high returns, you should probably invest in individual stocks. But even if that’s not your passion, you can still invest without much financial hardship or effort. Simply invest in an index fund, such as an S&P 500 index fund or a total market index fund. These funds provide investors with comprehensive market exposure, as well as generous average annual returns with low risk.

By following these four methods, money management should become simple. And removing the burden of a stressful financial existence will hopefully benefit your mental health in the long run.