Financial wellness

Mental, physical and financial wellness are three pillars of good health, and the relationship between one’s financial and mental health is a close one.

Despite the awareness that there is a lack of public knowledge (particularly in the mental health space) about personal financial management, and how financial stress can negatively affect mental health and overall well-being, there are few holistic options to address these issues. 

For many Canadians, money worries are the greatest source of stress, more than work, personal health and relationships.

With ongoing conversations about rising food costs amid record inflation in Canada, many Canadians are dealing with depression and mental health issues due to their finances.

The 2022 Financial Stress Index from FP Canada reveals that 38% of Canadians say money is the biggest concern.

There are many sources of financial stress, including:

• Managing household expenses
• Dealing with high levels of debt
• Living pay cheque to pay cheque
• Struggling to save money for short and long-term goals
• Dealing with unexpected expenses

Financial stress affects working Canadians of all income levels and age groups.

Did you know?

If you are dealing with financial stress, you are:

• Twice as likely to report poor overall health
• Four times as likely to suffer from sleep problems, headaches and other illnesses
• More likely to experience strain in your personal relationships

Financial stress can also lead to more serious health problems, such as:

• Heart disease
• High blood pressure
• Mental health conditions such as depression and anxiety

Where Should I Start?

We all have our own experience of money and economic factors, and these personal experiences drive our financial decisions, which significantly impact our lives and sense of well-being.

Some inquiry questions:

• The first step in getting control of your personal finances is to investigate and find your "Why".
• Think about your first memories of money, and if you've experienced something financially traumatic. 
• What is your financial personality; why do you spend or save in the way that you do, and what motivating factor can you use as your "Why" to keep you on track going forward?
• Do you feel guilt and/or shame around your financial habits?
• How did your parents interact with money and teach you (passively or directly) about personal finances? 
• Do a deep dive into these topics and do your best to make sense of what comes up, and bring these topics up with your mental health provider. 

You can also seek a certified Financial Therapist — an interesting emerging field of psychotherapy. The Financial Therapy Association (FTA) is an organization comprised of professionals dedicated to the integration of cognitive, emotional, behavioural, relational, and financial aspects of well-being.

Usually we already know what we need to do, but we can’t get “out of our own way”. Personal financial choices are usually about 20% logic and 80% emotion. Finding clarity on what drives you can help align your actions with your goals.

Getting Organized

The first step after a period of self-reflection and investigation is getting organized. Getting a copy of your credit report and score, having a record of who you owe and making a basic budget of your income and expenses will allow you to have a better idea of your financial situation.

Laying everything out on the table will be overwhelming, but it will also help put things into perspective.

Personal Finance Tip #1 - Read Books

If you need help with your finances but aren't sure where to start, seek financial wisdom in books written by experts.

There are many books out there on taking control of your finances, from how to get out of debt to how to build an investment portfolio. Books offer a great way to change your approach to managing money.

To boost your savings, you can buy used financial books online or borrow them for free at your local library. Consider audiobooks if you would rather listen than read or an app like Blinkist that summarizes books for you, and offers audio summaries as well.

Personal Finance Tip #2 - Start Budgeting

If you are struggling to handle your finances, then you likely need to create a budget—a plan for how to spend your money each month, based on how much you typically earn and spend. Budgeting is kind of like counting calories, practicing budgeting can help you learn what things are putting you over and ways you can save. 

To start, write down your income and all your expenses, and then subtract the expenses from the income to determine discretionary spending. At the start of each month, set up a budget to determine how discretionary money gets spent. Track the spending over the month, and at the end of the month, determine whether or not you stuck to the budget. Starting this process can be messy, but over three months you will start to get a handle on things. 

If you spent more than you made, you can fix your budget by cutting unnecessary expenses or earning more if possible. Implement the revised budget the next month to start living within your means.

Personal Finance Tip #3 - Reduce Monthly Expenses

While you may not be able to reduce certain fixed expenses, without drastically altering your lifestyle, you can reduce variable expenses, such as restaurants, clothing or entertainment.

Other Personal Finance Tips

• Practice daily positive financial affirmations. 
• Minimize restaurant spending: transfer $50 in a savings/investment account named “Europe Trip” for example, when you avoid eating out/ordering delivery. 
• Use a budgeting/money management app like Mint, check it every day to monitor expenses.
• Cancel cable and just use one streaming provider.
• Try living off the cash envelope system for a month.
• Plan a monthly/weekly menu and stick to it.
• Declutter and sell items on platforms like Facebook marketplace. 
• Try implementing some minimalist principles in your lifestyle. 
• View your budget as permission to spend, rather than restriction. 
• Budget in what brings you joy!

5 Healing Financial Affirmations:

1. Money is a tool that can change my life for the better.
2. I control money, money doesn’t control me.
3. I can use money to create a better life.
4. I am worthy of a solid financial foundation.
5. I am a very capable person that can tackle all money obstacles.

Articles:

Understanding the Psychology of Money
7 Money Personality Types
5 Books That Will Transform The Way You Think About Money

The Seduction of Pessimism

“Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.”

• “Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way.”
• “Money is ubiquitous, so something bad happening tends to affect everyone and captures everyone’s attention.”
• “Pessimists often extrapolate present trends without accounting for how markets adapt.”
• “Progress happens too slowly to notice, but setbacks happen too quickly to ignore.”
• “It’s easier to create a narrative around pessimism because the story pieces tend to be fresher and more recent. Optimistic narratives require looking at a long stretch of history and developments, which people tend to forget and take more effort to piece together.”

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Wealth Lessons From “The Psychology Of Money” By Morgan Housel (Book Summary)

You’ll Change

“Long-term planning is harder than it seems because people’s goals and desires change over time.”

• “An underpinning of psychology is that people are poor forecasters of their future selves. Imagining a goal is easy and fun. Imagining a goal in the context of the realistic life stresses that grow with competitive pursuits is something entirely different. This has a big impact on our ability to plan for future financial goals.”
• “The End of History Illusion is what psychologists call the tendency for people to be keenly aware of how much they’ve changed in the past, but to underestimate how much their personalities, desires, and goals are likely to change in the future.”
• “We should avoid the extreme ends of financial planning. Assuming you’ll be happy with a very low income, or choosing to work endless hours in pursuit of a high one, increases the odds that you’ll one day find yourself at a point of regret.”
• “We should also come to accept the reality of changing our minds.”

Source

OSR Team September Goals:

1. Understand our financial personality type
2. Read one book on money and psychology
3. Make a timeline of our relationship with money
4. Consult a certified financial therapist

We hope this post serves as a point of inspiration to explore how money affects you emotionally and psychologically, how you interact with money, and to clarify your goals and align them with your wellness plan. 

Stay well!