Part two: Dealing with financial stress
Earlier this year, we explored some tips when dealing with financial stress. This is a topic that is so relevant as we continue to deal with the fallout and ongoing challenges of recent times. As such, we’re created a follow-up blog containing additional solutions when looking to mitigate money worries. Here are 3 further ways to reduce financial stress.
Automate your savings
Automating your savings is a straightforward way to ensure that you're consistently setting money aside for your future, emergency fund, or specific financial goals. Here's how to go about it:
Assess Your Finances
First, review your income and expenses to determine a realistic amount that you can save each month. If you've already created a budget, this step will be easier.
Choose the Right Savings Account
Select a savings account with a competitive interest rate and low fees. You might opt for a high-yield savings account, a tax-free ISA (Individual Savings Account), or a specific account geared towards your savings goals.
Set Up Automatic Transfers
Most banks offer the option to set up automatic transfers from your current account to your savings account. You can usually choose the frequency—weekly, bi-weekly, or monthly—and the amount to be transferred.
Link to Your Payroll
Some employers offer the option to divide your paycheck between multiple accounts. If this is available to you, you can designate a portion of your salary to go directly into your savings account.
Create Separate Pots for Specific Goals
Many modern banking apps allow you to create 'pots' or 'envelopes' within a single savings account. You can automate transfers into these pots for specific goals like holidays, a new car, or home improvements.
Invest Automatically
If you're comfortable with a bit more risk for the potential of higher returns, consider setting up automated contributions to an investment account, like a Stocks and Shares ISA. Many platforms offer the option to set up regular deposits.
Round-Up Purchases
Some banking and investment apps have features that round up your everyday purchases to the nearest pound and automatically save or invest the change for you.
Re-evaluate Periodically
As your financial situation changes—due to a new job, a pay rise, or changes in expenses—revisit your automated settings and adjust as necessary.
Automating your savings can make the process much more effortless, enabling you to build up funds without having to think about it actively. It's one of the most effective ways to ensure you consistently meet your financial goals and therefore reduce stress.
Reduce alcohol consumption
Reducing your alcohol consumption can reduce stress in a number of ways.
From a physical health standpoint, reducing alcohol can improve your quality of sleep which has a significant impact on stress. In addition, alcohol has a negative impact on your gut; another big area in relation to mood regulation and stress levels due to the link between gut and brain health. Less subtly, alcohol is a depressant, leading to increased susceptibility to low mood and anxiety. Your cognitive function and decision making is also affected by alcohol; leading to a higher risk of making poor financial decisions and therefore adding to the stress cycle.
Aside from physical consequences, alcohol can also be expensive. You’ll also likely perform better in work through reducing alcohol consumption. Reduced drinking can improve your concentration, punctuality, and overall job performance, which could lead to less workplace stress.
Talk to someone
There remains a cultural stigma in the UK that people have a ‘stiff upper lip’, and may avoid talking to people about how we’re feeling and the challenges we’re facing. This is compiled by the idea that sex and money are considered to be our main ‘taboo’ subjects. You may feel uncomfortable about sharing your income or outgoings, feel guilty about past errors you’ve made, or embarrassed about not being able to provide for your family. However, suffering in silence tends to exacerbate the problems. In the UK today, many people are struggling through no fault of their own and you may be surprised how receptive people can be.
You can talk to financial advisers in order to navigate the problem, however not every person you talk to has to be able to fix your problems or offer financial help. To ease your burden, they just need to be willing to talk things out without judging or criticising. Be clear about what you’re going through and the emotions you’re experiencing. Talking over your worries can help you make sense of what you’re facing and you may obtain new insights that you may not have arrived at on your own.
Closing thoughts
By addressing these areas, you can build a more secure financial future and significantly reduce stress associated with money matters. There is always support out there and people willing to listen. We are here to offer financial advice from a professional standpoint, and in addition to our expertise are proud to offer approachable and personable support.
Approved by In Partnership FRN 192638 November 2023