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Finances and Mental Health: The Harsh Truth

Finances and Mental Health: The Harsh Truth

It is an unfortunate but true fact that financial health and mental health often go hand in hand. While there is an argument for whether that should be the case, here are a couple of things you can do financially to help your mental health.

A lot of managing the mental health aspect of your financials comes down to mindset. So while there are some things you can physically do to change how you approach your financials to better help your mental health, a lot is changing your mindset. Changing how you look and interact with money. Changing how it interacts within your life, and the role it plays.

1. Know Where You Stand

As with almost everything financial, the first step to managing your finances and mental health is knowing what your current situation is. For some people this may mean the creation of a budget, accounting for every penny in and out. For others, it may simply mean being aware of what you’re spending money on. How much do basic bills cost? How much do you spend eating out? Before any of those things can change you first need to know what they are to start.

So sit down for one month, look at your bank statements and assign a category to each and every transaction. Do this for every single card. At the end of it, add everything from the category together to get the total amount you spend in a month. Simply knowing this information can immediately change your financial mental health for the better. Knowing how much bills are when they’re due, and when you need to pay them can eliminate stress from your day-to-day life.

2. Prioritize

After you’ve established your baseline, and you know the state of your current financial situation you can start changing it. The first step to doing this successfully is to set your priorities. Not just for money-related matters but for your life. And when you are figuring out these priorities, try to make them as broad as possible. So rather than putting “working overtime” in your priorities put something as simple as “work”. Having these broad fields will make it so that as your life changes and more things are introduced to it you don’t need to constantly change your priorities.

To start doing this sit down with your significant other (if you have one), and think of everything you do in a day. Similar to how you assigned every transaction a category, assign each activity a priority. Doing this makes it so that when a new decision is presented to you, financially or not, you don’t have to question if you should do it. You simply look at your list of priorities and figure out where it fits in there.

For example, my priorities are Family, Work, Ryan. So if I am presented with the question of if I should change jobs. Does that affect my family? Well, yes. So it should be a family discussion. But if I am faced with the decision of do I want to buy a new Playstation controller. Does that affect my family? Not really. Does that affect my work? Not at all. That only leaves one category left, making it now a purely financial decision for myself rather than a mental challenge of figuring it out and a financial one. And while these examples are super implied you will find stuff that lands in the grey area. And having a list of priorities for your decision will help your financial and mental health long term.

3. Automate

Next is to automate. This means getting as financially automated as you possibly can.

Expenses

Have your bills auto-charge your credit card, and your insurance auto-withdraw from your account. By getting rid of the barrier to payment for these expenses and bills you will take the mental load off of yourself to have to remember it all. Rather than remembering when your internet is due, when your electricity is due, when your water is due, etc. You now just need to remember one thing. Pay off your credit card in its entirety before the end of the month. One Bill. One Amount. Simpler and easier to remember.

Savings

This is said everywhere including in my article on How to Run Your Personal Finances Like a Business, but you need to automate your savings. At first, it doesn’t matter the amount, or how often you do it. As long as it is consistent in both amount and time. Having this automatic contribution to your savings will have the unconscious effect of having you spend on what’s left, rather than spending on the whole thing. It will also subconsciously start developing the habit of saving. A habit that will save your mental health in the long run.

Nothing feels better from a financial mental health point than being able to look in your bank account after several months of saving and seeing more money than ever before in it. And the ability to keep it automated will make sure it keeps growing well into the future.

4. Find a Hobby

A lot of people, especially those struggling financially (I know from experience) are hesitant to start a hobby. After all, they all cost money, or require a large investment or membership, or are boring, and not a good hobby. But many times that is either not the case, or worth it. There are many free hobbies you could try your hand at, for a wide variety of people. Or, if you know what your hobby and passion are, just do it. The relief that it will have on your mental health will more than pay for itself over time.

As an example, my hobby is technology, as I know a lot of other peoples is. I love trying the newest things and setting up home automation, having multiple game systems, etc. And technology is a very expensive habit if you let it become one. But I take a measured approach to it all. Rather than spending the money on the latest and coolest technology, could you spend the money on tools that will help you customize or modify what you currently have? Could you change the software on something? A commitment that usually requires no costs other than time.

Thinking like this works for almost every hobby and by framing it in that way you can do what you love in your free time, giving your mind and stress a break, and long term helping your finances and mental health continue to grow.

By the way, has hustle culture put it in your head that if you’re not working in every minute of the day you’re not doing it right? Well I’m here to tell you that’s wrong. Hustle culture has a history of leading to burnout, depression, and anxiety. So save yourself the stress and mental health difficulties that come with it and let yourself enjoy a hobby.

If you still have questions about why hustle culture is bad and not what you should be aspiring to, check out this article.

5. Invest

The last step to manage your finances and mental health together is to invest. All of the things mentioned above will come together to make you more mentally and financially sound. So take that newfound peace regarding your finances and mental health and use it to invest long-term. Everyone has their own opinion when it comes to investing long-term. But there is an option for everyone.

If you’re struggling to figure out yours check out Canadian Couch Potato, the Canadian wizard of long-term investing.

By investing long-term you give yourself the peace of mind of knowing that no matter what comes up, no matter what emergency you face, you will be set. Gone are the days of worrying if you lose your job, what will happen. Gone are the days of worrying about the insurance payment that comes out the day before your paycheque. Knowing that your finances and mental health and stable long-term will change your life. So after you do the above steps, start investing.

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