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Self-Care September: Financial Self-care

A recent study conducted by Research Now found that 37 percent of the study’s respondents reported feeling “not very” or “not at all” financially secure, while 54 percent called themselves “somewhat secure.” Nearly half of respondents reported worrying about money at least once a week, and one third worry about finances daily. The study respondents said they worried about money more than they worried about their health, their careers, or their love lives. One third of those who participated in the survey shared that money has had a negative impact on their mental health. Participants cited money worries as a trigger for stress, impaired social lives, and frayed marriages; they said financial concerns led to anxiety, headaches, difficulty sleeping, and nausea.

Studies such as these demonstrate the need for a regular practice of financial self-care. The goal of financial self-care is to provide clarity, empowerment, and a plan when navigating the financial waters of one’s life. I have heard individuals and clients say again and again, “I don’t even know where to start.” Often the uncertainty of their financial future is what leads to significant stress and anxiety. As with anything in life, having a “written plan” that is used as a roadmap is critical to financial success. This “Life Plan” can give great comfort and force disciplines that give people the ability to remove uncertainty, not make critical mistakes (people don’t know what they don’t know), and achieve important goals/objectives.

There have been many additional studies that have closely linked financial uncertainty to many other health issues. According to the Stress in America survey published in November 2017 by the American Psychological Association, 62 percent of Americans report being stressed about money — and that stress could put them at a higher risk for lower-quality health. "It physically hurts to be economically insecure," write the authors of a study on the effects of financial instability on the body. Their research, published in April 2016 in the journal Psychological Science, found that those with unstable finances reported higher levels of physical pain. In a study published in the journal Diabetes Care, Finnish researchers found that people who reported stressful work or money-related events had an increased risk for having metabolic syndrome, a group of conditions that puts you at risk for heart disease, diabetes, and stroke. And the risk was increased if people reported several episodes of stressful money-related events. “Financial stress can be one of the most difficult kinds of stresses, particularly because people can adopt unhealthy coping mechanisms as a result,” says Nancy Molitor, PhD, clinical assistant professor of psychology and behavioral sciences at the Northwestern University Feinberg School of Medicine in Chicago. Your finances and the amount of stress you feel as a result can cause you to engage in a variety of unhealthy behaviors, from overeating to smoking to experiencing feelings of hopelessness and depression.

Another study I came upon was one that just seems intuitive. “The most valuable lesson from our studies is that juggling the everyday challenges of financial uncertainty imposes substantial demands on cognitive capacity, leaving ’less mind‘ for other tasks, and plans, and successes,” says the author of the study, Eldar Shafir, PhD, Class of 1987 professor of behavioral science and public policy at the Woodrow Wilson School of Public and International Affairs at Princeton University in New Jersey. That just seems right, and is one more reference point which illustrates why using negative energy on financial uncertainty takes away from other priorities.

I found in other studies that retirees even with a nice net worth (7 figures +) often felt like they aren’t prepared for a quality retirement, or at a minimum didn’t know. I hear this kind of feedback on a regular basis.

So how does one reduce stress, anxiety, and control their mental help, when feeling financial pressures? Advisers can help individuals by putting together a Life Plan that starts with a “gap analysis” of a client’s retirement readiness. Project how much income a client can expect in retirement based on current savings habits and at full retirement age social security, and determine if there will likely be a shortfall given expenses and lifestyle expectations. In some instances, the analysis may determine a client is worrying unnecessarily. But if a shortfall exists, the Life Planning will come up with disciplines that can be implemented to ensure success and how to close the gap. Additionally, a Life Plan will cover all those areas that come up (such as healthcare, social security, Medicare, tax planning, estate planning, insurance planning, company plans, cash flow management, money management, etc.) as we enter different phases of one’s life. A good financial plan will always be a dynamic “working plan,” that changes as necessary to give a high probability of success.

There is definitely hope — “most people in their lives have periods of financial stress, and everybody’s had these things happen,” Dr. Molitor says. “What makes it worse is to do nothing. Don’t panic. Take a step back, breathe, make a Plan, and ask for help when needed.” I couldn’t agree more: a plan provides clarity.

Molitor recommends taking the following four steps:

1. Assess your current situation. What spending steps got you to this point? Most often, there are several occurrences leading up to the event. This is not to cause increased guilt, but instead helps to identify behaviors that can be changed to improve your future.

2. Identify your relationship with money. If you have a partner, discuss your relationship with money. This could be part of a search for comfort, luxury, love, power, or something else. Identifying your deeper relationship with money and recognizing that it does not guarantee happiness or security can allow you to move forward.

3. Ask for help. A trusted friend, financial advisor, senior center, church, community agency, or even your bank can be useful resources for those in financial need.

4. Make a budget and follow it. While just thinking about the B-word can be stressful, Molitor says that a budget can often be empowering. The most important thing is to make it a realistic budget. Just as it took time to get to this point, it will take time to get out of it. But that doesn’t mean you should stop trying.

Like with anything, “doing nothing” usually never solves a complex problem. Get some help, put together a plan, work your plan, and stick to your plan. Having financial clarity can do wonders for your wellness.

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