When you think of health and wellness, what comes to mind? Most people think of physical and mental health; however, one key pillar that causes more stress than work, health, and personal relationships is your financial health. While financial health can mean different things to different people it comes down to the current state of a person’s financial situation (income, expenses, savings and retirement planning).
Nearly half of all Canadians say that they’ve lost sleep because of financial worries. This figure comes from a survey conducted in 2018; According to a poll from CPA Canada, one-third of Canadians say the stress associated with money management has increased due to the economic impacts of COVID-19.
These negative impacts on your financial health can cause numerous problems for your day-to-day well-being. Financial stress can increase your chances of poor health, including more serious health problems like heart disease, high blood pressure, and mental health conditions like depression and anxiety. Your personal life can suffer too. You are more likely to experience strain in your relationships while dealing with financial worries.
The best way to combat this stress is to deal with it head-on and regain some control over your financial future. We have put together five tips to reduce financial stress, helping you focus on the things important to you.
Create a Budget and Stick to It
A business evaluates its financial health through careful budgeting and accounting. The same principle applies to individuals. The best way to gain an understanding of your finances is with a budget in place. Budgeting allows you to see where your money is going and evaluate if you are allocating it properly.
Start by ensuring that your immediate expenses are covered. You need to prioritize mortgage or rent, utilities, groceries, and transportation. When you subtract these expenses from your after-tax income, you will get a clear picture of your savings potential. You can determine areas of opportunity to decrease costs, increasing that savings potential.
Stick to your budget and review it every so often to ensure that your targets are realistic to your present situation. If you need a little help making a budget, the Financial Consumer Agency of Canada has a free tool to help.
Crush Your Debt First
Debt is a financial reality that causes stress for many of us. Lowering your debt-load, which lessens the monthly interest you’re paying, is an essential step toward improving your financial well-being.
Create a list of your outstanding debts, starting with the most toxic ones. This is debt that carries the highest interest, usually credit cards. From there, create a plan and set a reasonable payment timeframe.
If you are struggling to pay back your debt, it may be time to talk to your creditors – your credit card company or financial institution. They may offer you a lower interest rate, reduce your minimum monthly payment, or consolidate your debt. You won’t know the options available to you until you’re ready to have a serious conversation.
Create Extra Sources of Income
A budget helps you focus on the expense side of the ledger. You also need to think about the revenue side. Revenue is where a side hustle comes in. Monetizing your favourite hobby or interests is a way to generate income without feeling like you’re taking on another job.
Rideshare companies are always looking for reliable drivers and allow you the flexibility to work whenever you have hours to spare. Several online platforms, like Fiverr or Etsy, enable you to capitalize on a skill, whether you’re selling your homemade artisanal soaps, photographing pets, or freelancing your web design talents.
The internet is also a profitable marketplace for selling old items that you no longer use and might make you a profit. Perhaps those designer dresses or that dusty vintage baseball card collection can be loved by someone else while bringing you closer to your financial goals.
Professional Help
Even after you create a budget or a plan to pay back debt, you may find that you are not progressing as anticipated. Don’t be afraid to seek professional assistance. There are many professional financial planning designations across Canada, so before you start working with a financial advisor or planner, ensure that they have the qualifications to meet your needs.
Financial hardships can take a toll on your mental health. If this is the case for you, you can seek out help from a mental health professional. Not only can they help you navigate feelings of stress or overwhelm, but they can arm you with tools and more specified literature to help you with your specific needs. The CAMH has created a series of free online tutorials as a starting point for learning about mental health.
Find Balance and Set Boundaries
It’s hard to regain control of your finances without first taking care of yourself. Self-care is essential to your well-being; feeling balanced will give you clarity to create and stick to the financial goals that you set for yourself. There are many ways you can practice self-care, including practicing gratitude, journaling, meditation, and getting outside and away from social media.
Obsessing over your investments or constantly checking your accounts does not serve your mental health. Activities that increase mindfulness and improve your physical health will lower your overall stress, better preparing you to deal with your financial reality.
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Moving Forward
If you are dealing with financial stress, you are not alone as most Canadians experience it at some point in their lives. It can feel like you have lost control of your finances, so by creating a budget and a debt-reduction strategy, you can take some of that control back. Don’t forget to celebrate your successes, even the small ones. You can do this.
Life Insurance can provide peace of mind
If worries about the financial future of your loved ones is a constant source of stress, life insurance can help. Life Insurance can ease your mind in knowing that your family is financially protected in case of an unexpected event.
Speak with your advisor or contact Canada Protection Plan for a no‑obligation life insurance quote.
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