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The world we live in is fraught with stress. In the United States, we are constantly pressured to keep up appearances. The “keeping up with the Joneses” mentality triggers many people to make bad financial decisions. Once that pattern of aspirational spending is ingrained, it can be incredibly difficult to unwind.
While both genders are impacted, women are particularly susceptible to the pressures. Women are held to ridiculous standards regarding our appearance, and as mothers, we feel the need to always provide the best life possible for our children. All that pressure adds up.
The stress of too little money
If you don’t have enough money to pay your bills, you’re going to be stressed. When there is more month than there is money, we worry. How will we bridge the gap? Can we use the credit card just one more time, and then get on top of the problem next month?
The problem is that barring some miraculous change, next month will be the same, or possibly even worse, than this month. Financial problems simply do not resolve on their own. As a result, the “wait and hope” approach is destined to fail.
When funds are short, the danger we face is spiraling into debt. Even if you are a careful spender, having too few resources can result in anxiety and depression. After all, we aren’t keeping up with those infernal Joneses, and our poor children might get teased for those second-hand clothes.
Feeling like you are treading water?
Another stress resulting from too little money is the feeling that you’re not making any progress. While you might avoid the lethal debt spiral, you will likely be frustrated that you aren’t making progress toward a more secure financial future.
The hopeless feeling of insecurity about your future can be a real threat to your physical health, too. Financial security is one of the more basic human needs, according to Maslow’s Hierarchy of Needs. After physiological needs are met, security is close behind. And financial security is one of those needs. It’s difficult to concentrate on the higher-level needs when we are consistently worried about making ends meet.
The stress of MORE money
When you are struggling with your finances, it is quite likely you have thought, or said out loud, “If only I had more money, all these worries would go away!” The problem is that more money seldom solves problems. An initial inflow of more income might give a brief respite from money stress, but most likely, it will be fleeting. The reason? Lifestyle choices tend to expand relative to income level.
As people become more successful and generate more income, they should freeze their lifestyle, even if it’s for a relatively short period of time. But this is extraordinarily difficult to do. It is completely natural to feel the relief that more money brings. It’s easy to decide you deserve a reward. So, additional spending ensues, and before long, your spending level adapts to your new income level so you’re once again wishing you had more money.
The stress of too much money
The stress of TOO MUCH money? Sounds crazy, doesn’t it? But this is a reality for some people. The stress is caused by the same behavior of having more money coming in naturally causing a higher spending level. The more money you have, the more stressful money can be. It might be a different sort of stress than the stress caused by a lack of money, but it is still a stress.
I know what you are thinking: I’d love to experience the stress of too much money! Fairly frequently, I have that thought myself! Having counseled people from all walks of life about their money over the years, I can assure you that it is true. Wealthy people worry as much, or possibly more, about money than the rest of us do.
The reason is that the stakes are higher. As incomes rise, so do expenses. Even when your income and expenses are managed well, it is a fact that wealthier people live bigger lifestyles. The risk of losing that outsized lifestyle is worrisome and stressful.
In addition, the wealthiest folks also struggle with how to best steward all of their resources. I don’t know about you, but when I see celebrities throwing money around and spending it on stupid stuff, I feel frustrated. Think about how much good they could be doing in the world! Go ahead and spend some, but please use some of that wealth to make the world a better place! But I digress.
The more responsible and generous among the wealthy DO divert considerable resources to charitable endeavors. But that doesn’t make the stress go away. Managing wealth is inherently stressful.
What is the solution?
All levels of wealth have their own unique stress. Unfortunately, there isn’t a quick fix for stress. That said, there are some things you can focus on to reduce the stress and anxiety produced by money.
When money is scarce
When money is in short supply, focus on two things. First, focus on your spending. Like it or not, if money is scarce, you must be extra diligent and ensure you are conserving your resources. Focus on meaning – spend money on the most meaningful things in your life. School yourself to not spend mindlessly. You can’t afford it. With care and diligent attention, you can improve your budget.
The second area of focus is, of course, income. What can you do to increase your earning potential? Is it a side hustle? Asking for a well-deserved raise? Upgrading your knowledge and education so you’re qualified for a promotion or higher-earning job? Carefully consider your options and then work consistently to achieve a higher level of income.
When money becomes more plentiful
As your income increases and you have your expenses under control, your job isn’t over. Even if the pressure valve of “lack” is easing, don’t lose your focus. Now is the time to double-down on your attention to money. Again, there are two areas for your focus.
First, keep expenses at the center of your attention. Don’t fall prey to the alluring rationale that says, “Oh, we can afford that now, so I don’t have to worry about it.” Instead, pay close attention to what you are spending. Of course, when money is more plentiful you can have more latitude with your spending. But don’t be fooled: Spending can become a runaway train without your diligent attention.
The second thing to do is up your savings game. Even if you feel like you are saving enough, raise the bar. Are you fully funding an employer-provided retirement plan? If so, then open a Traditional or Roth IRA if you are eligible, or simply open a taxable investment account. Continuously increasing your safety net will go a long way in curbing future financial insecurity stress.
Likewise, if you have an emergency fund, raise the bar there, too. Likely your income and expenses have increased since you first set your emergency fund savings target. Now is the time to raise that target.
There is no magic bullet when it comes to reducing stress over money. Like most good things in life, successfully reducing your financial anxiety will cost you something: Your time and attention. The good news is it doesn’t require an advanced degree to accomplish it! In fact, it requires only the most basic financial education. Learn to carefully manage your money and watch out for the pitfalls and temptations as more money comes into your life. You can do this!
Dawn Starks is a CERTIFIED FINANCIAL PLANNER™ practitioner, writer, and blogger who resides in Asheville, NC. You can find her at SimpleMoneyPro.com.