As the pandemic continues to disrupt the economy and job security, more and more Americans are struggling with financial stress. A recent survey has shown that 70% of Americans feel financially stressed regardless of their income, with a reported negative impact on physical and mental health. But what can you do to protect your financial and mental well-being during tough times? CNBC Select spoke with a financial therapist and a certified financial planner to find some practical tips.
Focus on What You Can Control
One of the best things you can do to reduce financial stress is focusing on the things you can control. It’s important to remember that you can’t control the Fed’s interest rates or the state of the economy, but you can control what you do with your money. Identify what you are capable of doing, such as building an emergency fund or cutting back on unnecessary expenses. By taking control of your finances, even in small ways, you can reduce anxiety and gain a sense of empowerment.
Establish a Safety Net
Building up an emergency fund is one of the best things you can do to feel financially secure. While conventional wisdom suggests saving at least three to six months’ worth of necessary expenses, it’s worth considering slightly more or less depending on your comfort level and financial situation. For instance, you might benefit from having a larger emergency fund if you are risk-averse or uncertain about the future. On the other hand, if you are currently struggling to make ends meet, it might be more realistic to aim for a smaller fund initially.
Keep at It
Building an emergency fund takes time, so it’s important to stay committed. Consider opening a high-yield savings account to maximize the interest you earn on your balance. Importantly, consistency is key – set up a regular savings plan to avoid dipping into your emergency fund. Remember, the goal is to build a safety net that allows you to weather tough times without dipping into debt.
– Financial stress can exacerbate physical and mental health problems, including insomnia and decreased appetite.
– Building up an emergency fund can help alleviate anxiety and empower you to face unexpected expenses.
– Focusing on what you can control can reduce feelings of helplessness and promote a sense of control.
While financial stress is a common experience for many Americans, there are practical steps you can take to protect your well-being. By focusing on what you can control and building an emergency fund, you can reduce anxiety and feel more financially secure during tough times.
Protecting your mental health and finances during tough times requires a committed effort to stay informed, plan ahead, and take action. While it’s not always easy, focusing on what is within your control can help reduce feelings of helplessness and give you a sense of empowerment. With time and dedication, building up an emergency fund and staying the course can help reduce financial stress and improve overall well-being.