TOP 6 MONEY MANAGEMENT DECISIONS THAT EFFECT MENTAL HEALTH
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TOP 6 MONEY MANAGEMENT DECISIONS THAT EFFECT MENTAL HEALTH



Talking about mental health is difficult, but it is very important. These days, mental health strain caused by unhealthy money decisions is becoming more and more common. Almost 1 in 5 people with mental health problems are in debt! So, you cannot afford unhealthy money decisions. They don’t just affect your finances, but they are also harmful to your mental health.

Today, let’s look into the relationship between poor money management and mental health problems.


The Chicken or The Egg Scenario

What came first, a chicken or the egg?

This situation is very similar to the situation we have in hand. Did the money problems cause the stressor did the stress cause the money problems?

Multiple studies have shown a link between financial worries and mental health problems such as anxiety, depression, and substance abuse.

With financial problems, we often find ourselves anxious about what to do next. This anxiety then affects the way we manage our money. It gets harder to concentrate and put energy into the pile of bills you have in front of you. And then, this mismanagement leads to more financial problems and worsens your mental health. And the cycle goes on. It’s a never-ending, vicious cycle that so many of us are trapped in.

Some people manage to take on any financial distress and challenge it to the end. However, some people fail to do so. This can be due to many reasons that lead to poor money management decisions.

Here are just a few examples of money management mistakes you shouldn’t do.


6 Money Decisions You Should Avoid to Protect Your Mental Health


1. Having only a rough idea of where your money goes.

“You can’t manage what you don’t measure!”

Your bills don’t just consist of your expenses off the top of your head. The credit card bills and debt repayments are all part of your expenses. Just knowing a number in your head is a money management mistake many people do.

Tracking your cash inflows and outflows is the key aspect of money management. You should set up a budget planner that gives you a clear idea of how much goes out every month and how much comes in. These numbers can be too complicated to just “remember”. You need to have the proper resources and tools to effectively manage your cash.

Financial distress can happen to anyone at any time. The uncertainty of the whole thing is the biggest stressor of money itself. However, having a budget planner and a financial plan gives you a clear picture of today, tomorrow, and a couple of years in the future.


2. Forgetting those variable expenses

Holidays and vacations use up a large portion of credit card debt. Sometimes they end up pilling up with interest and the vacation to Florida ends up costing you the same as a trip to France.

These are not necessarily due at the end of the month but I would advise dividing the payments into monthly payments. There is nothing better than not paying interest on credit card debt.

Another variable expense would be any emergency expenses. At any time, your washing machine can break down, or your car won’t turn on. These sudden and hefty payments can be a huge source of anxiety and stress.

Knowing you have an emergency fund for any such contingencies can give you peace of mind and can protect you in case of any emergency.


3. Spending more than you need to

The budget planner we talked about earlier comes into use right about now. When you know how much you’re spending and where your money is going, you can consider reducing some of the extra expenses.

With everything just a button away these days, we often subscribe to several memberships and subscriptions without really knowing the final impact it may have on your budget. If you believe you do not use these memberships or are paying an extra amount for a phone bill you don’t really need, you can cut it off!

At the end of the month, when you are surrounded by hundreds of dollars worth of bills, you might feel your hands getting sweaty and your feet begin to tremble. This feeling of anxiousness arises in most of us as soon as we see our monthly bills. However, this as well as the rest, are avoidable by differentiating between your wants and your needs.

Always remember to prioritize your needs above anything else. Your needs should consist of all the basic necessities that you need to survive. I would also recommend adding your emergency fund additions into the needs. Forceful saving is better than no saving!



4. Living paycheck to paycheck

If you are living hand to mouth, you are doing something wrong. With the unemployment rate still high and a lack of jobs available, experts recommend always having 8-12 months of necessary living expenses on hand.

As mentioned earlier, spontaneity can be a major stressor. It’s better to have an idea of where you stand financially. Smart spending can help answer all the money-related questions that are keeping you up at night.

Having answers to questions like “where will I be 5 years from now?” or “will I be able to afford a house in the near future?” are answers you need to have.


5. Never investing any spare change at the end of the month

Even if you have a couple of dollars left at the end of the month, invest it. To effectively tackle all your financial problems is to grow your money.

You can start with $10-$20 a month. But something is better than nothing. Investing is a saving technique that can also grow your money.

This tactic will ward off any concerns of tomorrow as you will be aware of the money you have set aside in investments. At the end of the day, it isn’t about how much money you earn it’s about what you choose to do with the amount you have got.


6. Not seeking professional help

It’s okay to ask for help if you ever believe money management is something you cannot handle. It’s not a skill anyone can just pick up from the side of the road.

Money management takes a lot of time and effort to properly understand and then apply to our lives. Asking for financial advice from an expert is one of the best decisions you can make for your future.

At FYE Finance, we help you every step of the way. We can help you make a budget plan and plan for a better future for you and your family. Book your appointment and get rid of all your financial distress!

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