Struggling with finances? Persistent money problems could stem from upbringing, say experts. Learn how to escape this pattern.
Managing your finances can be a challenge, even when you're bringing in some income. It's quite simple, really - you need to make sure you're not spending more than you're earning. Sounds easy, right? Yet millions of us still break this golden rule every day.
Take a page from Mr Micawber in Charles Dickens' David Copperfield: "Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." In simpler terms, if you're living within your means, you'll find happiness. But when you overspend, things can quickly spiral out of control.
The Money and Pensions Service (MAPs) reports that eight million individuals across the UK are currently in debt, and this issue affects all genders, classes, and age groups. However, faced with feelings of guilt, shame, and fear, many people struggle to ask for help.
Charities like StepChange strive to remove the stigma around debt and encourage anyone struggling to reach out for help. If you're finding it tough to keep your head above water, consider talking to your relatives or seeking advice from one of the many specialist organizations available to assist you.
Money troubles can cause immense stress and can even contribute to mental illness. Finding support is crucial for overcoming this barrier. Debt can sneak up on even the most cautious individuals, like Kim, who, despite earning a low wage, managed to live within her means until a series of unexpected events drained her savings and left her drowning in debt.
Kim's situation was salvaged when she found a better-paying job and moved into a flat share, allowing her to maintain a tighter grip on her spending. Having an emergency fund to fall back on can be a lifesaver, but it can be difficult for many individuals, particularly those described as "chronically broke" in the 2020 RSA report "Thriving, Striving or Just about Surviving."
The report found that over 41% of respondents had less than £1,000 in savings, with 32% having less than £500 - and these numbers paint a grim picture. But why is it so difficult for so many of us to save money, regardless of our income levels?
Psychologist Richard Wiseman explains that spending feels easier than saving, as we're naturally drawn to instant gratification rather than planning for our future. Graham Bentley, an expert in behavioral finance, agrees, stating that spending offers immediate pleasure, while the benefits of saving are often abstract and tied to distant ambitions.
James can testify to this challenge. Growing up with indulgent parents who never emphasized the importance of saving, James struggled to balance living in the moment with planning for his future. Now, as an adult, he's learned to curb his spending by asking himself one question before making a purchase: "Do I need this?" If the answer is no, he walks away, learning to find satisfaction in living a more intentional life.
Our attitudes towards money are deeply rooted in our childhood experiences. According to Dr. Roz Halari, a clinical psychologist, our upbringing plays a significant role in shaping our relationship with money, whether we view it as a source of security, happiness, or a necessary evil.
Besides upbringing, there are several other factors influencing our spending habits, including peer pressure, our transition to cashless societies, personality traits, and self-image. However, it's essential to remember that our relationship with money can be changed if we're willing to seek guidance and take action.
So, if you're feeling uncomfortable about your financial situation, remember that you're not alone. Seek support from organizations like the Money and Pensions Service (MAPs), Pay Plan, Citizens Advice, or debt charity StepChange. With the right advice and mindset, you can regain control of your finances and let go of the stress that has been plaguing you.
Pete Matthew, author of The Meaningful Money Handbook, offers some practical budgeting tips to help get you started:
- Budget: Stick to a budget to ensure you're not overspending and always prioritize your future savings over short-term wants.
- Have a Safety Net: Establish an emergency fund to protect yourself in case of unexpected expenses, job loss, or illness.
- Manage Debt: Avoid high-interest debt, like credit cards and payday loans, and focus on paying off these debts first. Seek help from a debt management organization if needed.
- Increase Your Income: Look for ways to boost your income through additional jobs, education, or negotiating a raise. A side hustle could be just what you need to get back on track.
With these tips and a new mindset towards money, you'll be well on your way to financial stability and peace of mind.
[3] K. Kukafka, A. Lehmann, and C. S. Kessler, "The Prevalence and Co-Occurrence of Money-Related Stressors and Their Association With Common Mental Disorders: A Cross-Sectional Study," Plos One, vol. 9, no. 10, Oct. 2014, p. e109148.[5] International Labour Organization, "Global Wage Report 2018/19: Wages and income inequality," ILO, 2019.
- Struggling with personal-finance and debt-management can have profound impacts on one's mental health, as a study in Plos One indicates.
- The link between health-and-wellness and financial stability is undeniable, as living within your means and managing debt can save you from the mental health burdens of stress and anxiety.
- Apart from the impact on mental health, debt can also affect family-dynamics, causing strife and disagreements when multiple family members are in debt.
- To maintain mental and financial stability, it's essential to practice effective budgeting, ensuring that you're not overspending and always prioritizing your future savings.
- By implementing strategies such as budgeting, having an emergency fund, and managing debt, one can achieve financial stability and maintain a healthier lifestyle that will positively impact their relationships and personal wellbeing.
