5 top practical money tips to help reduce and manage financial anxiety

Mental Health Awareness Week runs from Monday 15 May to Sunday 21 May. The theme this year is “anxiety”, an emotion that we are all used to feeling to some degree. Unfortunately, for some people, anxiety can get out of control and become a mental health problem.

From exam pressures and relationships to starting a new job or moving house, there are plenty of things in life that may cause anxiety. And it's not only big life events that make us feel anxious.

Dealing with money and matters concerning our personal financial situation can also cause us to feel anxious. In fact, a survey carried out by the Mental Health Foundation in November 2022, revealed that 34% of UK adults feel anxious about their financial circumstances.

As financial planners, we understand that issues around money can be a key factor in your mental health. The good news is that organising your finances and feeling in control of your money can be one of the best ways to support and improve your mental health.

Here are five practical steps you may find helpful.

1. Pay off expensive debts

Having high-interest debt could cause anxiety, especially if you're struggling to pay off the debt.

Restore a sense of control by making a plan to tackle the debt and prevent it from spiralling out of control.

Pay off the highest debt rates first

List all your debts in order of the rate of interest you're being charged, and use any spare cash you have to clear the debt that is costing you the most each month.

While you focus your efforts on repaying the most expensive debt first, continue to make the minimum repayments on other debts with lower interest rates. Once you've repaid the most expensive debt, move on to the next on your list, staying on track until you've repaid the debts in full.

Reduce the interest rates you're paying

Depending on your circumstances, it may be worth considering consolidating your debts.

A balance transfer may help you achieve a cheaper interest rate, or even a 0% interest rate, for a set period.

Be sure to check the small print before you sign a deal, as there's often a charge applied. Make sure that any charge you pay will still mean you’ll end up saving money.

2. Create a budget you can stick to

Draw up a budget based on a realistic view of your income and outgoings.

If you're unsure where your money goes each month, try noting down everything you spend for a month. This will help you identify where you are spending and if there’s any scope for cutting back and making savings.

You can read more about reviewing your budget and household finances in this article: 5 great ideas to help you give your personal finances a timely spring-clean, and if you’d like some extra reassurance from a professional financial planner, please get in touch.

3. Make sure you have a financial cushion and the right protection

“What if?” scenarios are a common cause of anxiety. Unexpected events that create a financial problem could cause you to need money quickly.

This is why financial experts recommend keeping an emergency fund – ready cash on hand to help deal with unexpected expenditure.

As a rule, your emergency fund should total around three months’ net income. Ideally, you should set this money aside in an easy-access savings account so it’s easily available should you need it.

Having this “cushion” of cash should help reduce worry and concern.

While an emergency fund is helpful, another worrying situation is being unable to provide for your family. There are some simple steps you can take to address this concern and put your mind at rest.

Life insurance

Considering your own demise may be difficult but it’s important to ensure your family are financially secure in the event of your death.

If something happened to you, your family would be dealing with untold stress. Having life insurance in place will give you the comfort of knowing that you’ve made arrangements to ensure that money is one less thing to worry about.

Make a will

Another step you should take to ensure that your family is looked after when you pass on is to write a will. This can help ensure that your assets are distributed promptly and according to your wishes.

To help make things easier, we offer an online Will Writing Service to all our clients. With more than a century of experience behind them, Gosschalks will provide you with all the advice and direction you need to make the entire process as easy and hassle-free as possible.

Income protection

The final step to help reduce anxiety around protecting your loved ones, and your lifestyle, is income protection.

Income protection will ensure that, in the event of you being incapacitated and unable to work for an extended period, you’ll receive a regular income to help cover your day-to-day spending.

4. Take advantage of workplace perks

If you’re employed, your employer may provide benefits that can make a difference to your financial wellbeing.

For example, pensions are a mandatory benefit in the UK and, if you're eligible, your employer must auto-enrol you into the workplace pension scheme. So, make sure you’re enrolled in your workplace pension and that you are receiving the mandatory contribution from your employer.

On top of this, remember that you will also receive tax relief from the government.

Read more: What do your pension contributions mean for you?

Find out if there are other work perks that could give you a financial boost. These might include corporate health cash plans that can help with costs such as optician or dental treatment, along with other health-related services.

More businesses are now offering free counselling, too. If you are suffering from anxiety, over money or anything else in life, talking to a qualified therapist could help.

5. Work with a financial planner

A financial planner can help you plan for your future. Knowing that you are in control of your financial health could help improve your mental health and reduce any financial-related anxiety.

Having a clear idea of your future plans can help put your mind at rest and give you the confidence that you’re on the right track.

With a bespoke financial plan in place, it's a good idea to review it as your circumstances change. This regular “check in” can help provide reassurance that you’re in control. Your financial planner will review your plan regularly and help you keep on track.

Get in touch

If you’d like to find out more about how we can help you take control of your finances, and reduce your financial anxiety, please get in touch.

Email info@lebc-aspira.com or call us on 01454 632 495.

Please note

The information contained in this article is based on the opinion of Aspira and does not constitute financial advice or a recommendation to any investment or retirement strategy.

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