Money is one of the leading causes of stress in Australia, with over 95% of Australian’s finding money as a cause of stress based on recent data from Canstar.
The flow on effect of this stress impacts other areas of life and wellbeing, like your relationship with your partner and family members, your job choices and career progression, and ultimately your ability to optimise your physical and emotional wellbeing.
But it doesn’t have to be that way. If you know what to look for and what to work towards, you can eliminate money as a source of stress in your life. Here I cover the three key things you should be looking to do to remove money as a source of stress in your life.
Make your money easy
It’s really common for your money management to end up ‘sprawling’ to the point where you feel caught in a constant juggle, shifting money around from one account to another to pay your bills and living expenses, figuring out when and how much you should save, invest, or use to make extra payments on your debt. The confusion, frustration, and feeling of overwhelm that comes with this constant juggle can be a big driver of your overall stress levels around money.
To nail it in this area, you should be looking to simplify your money management as much as possible. It’s a good idea to start with the basics, looking at what money is coming in and going out - i.e. your budget.
Your aim here should be to get clear on what money is coming in and going out, prioritising the spending that’s necessary or most important to you. Once done, look at how much money you’ve got leftover for saving, investing, or making extra mortgage or debt repayments.
If after going through this process you’re not entirely happy with the amount of money you’ve got available for saving, don’t give up. This is completely normal and just means you’ve got a little more work to do. Circle back on your spending, de-prioritising the things that are less important to you so you can save more.
The end result should be a spending and saving plan where you’re happy with the amount of money you’re saving and how much you’ve allocated to your spending in different areas.
Now the hard work is done on your spending and saving plan, you should try to automate as much of your day to day money management as possible. I’m a big fan of using multiple bank accounts so you have the right money in the right places at the right times, and automating payment of your bills, your savings, and any investing or additional debt repayments.
Taking this approach automates your day to day money management so you won’t need to actually do anything to achieve the outcomes you’re looking for, effectively setting your default money strategy to success. This goes a long way to eliminating financial frustration and money stress day to day, setting the foundation for stress-free money management into the future.
Get clarity on your financial trajectory
I speak to a lot of people that are either guilty spenders or guilty savers, not sure if what they’re doing is right, sensible, or enough to get them to where they want to be. The key to answering this question is to get clear on the trajectory you’re on with your money.
Once you have your spending and saving plan from the previous step, you can add in your current level of savings, investments, property, and any debts. This helps you start building a picture of where you’re likely to be in one month, one year, or ten years. This will allow you to understand whether what you’re doing now or planning to do in the short term is going to get you to where you want to be.
If you’re not quite on track you’ll know you need to change your approach, and the best time to get started is today. If you wait a month (or a year) you’ll just need to push harder to get to where you want to be.
There are a heap of really helpful online resources and calculators you can use to help with this, the ASIC MoneySmart website is a great place to start. If things are simple, you should be able to start mapping this out on your own, but if you get stuck on this stage or if your situation is complex, think about getting some good professional help and advice - it will pay for itself in peace of mind alone many times over, not to mention the financial benefits you’ll likely receive.
The outcome of this is to help you build confidence in where you’re headed with your money, helping build peace of mind and eliminating another key driver of money stress.
Make decisions with confidence
There is no one pathway or set of steps that every person can follow to lead them to money success, because the right choices and decisions depend on you. They depend on where you’re at now, what’s coming up for you, and what’s most important to you. There are a lot of ways to be ‘right’ with your money, but there’s only one way that’s the best for you.
Buying property, buying shares, paying down debt, building your superannuation, saving in cash - all these options have different risks attached to them. Risk is not a bad thing, it’s ultimately what makes you money.
The key to smart decisions is making choices that give you the financial results you want while giving you the peace of mind you want. The key to making the right decisions for you is in understanding these risks and tradeoffs so you can confidently choose the path that gives you the ideal balance between the money results you’re aiming for and the risks involved.
Take the time to understand the risks involved in your different options and how you can manage them. This will help you build the confidence needed to make decisions and drive the action needed to get the results you want, and to do it all in a way that doesn’t involve you getting stressed about making a mistake that will cost you a bunch of money.
The wrap
Money can be a big cause of stress, but it doesn’t have to be. Make your money management easy, get clear on your financial trajectory, and set yourself up to make smart, confident choices, and it will go a long way to eliminating money as a source of stress in your life.
Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth, and Author of the Amazon Best Selling Book ‘Get Unstuck’.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.