Money management is a skill that affects more than your financial standing. It also impacts your mental health. Taking care of your mind and your finances often go hand-in-hand — if you’re unable to afford basic expenses or find yourself struggling financially, your mental health could suffer.
Taking control of your finances is an essential step in building a foundation for your life and taking care of your mental health and wellbeing.
Budgets Help You Plan Ahead
When you’re able to see your income and expenses laid out in front of you, it’s easier to know where your money is going each month and how you can make the wisest decisions going forward. Budgeting can mean various things and is often tailored to the individual. For some, it’s a thoroughly laid-out spreadsheet where they can manually track their spending. Others prefer to use a virtual tool such as a budget app to do the heaviest lifting.
Suppose you’re unable to secure or follow your budget. In that case, you’ll likely end up seeking a personal loan for a big purchase or to consolidate any debts you may have — this can cause you to stress over your finances, and it adds another payment to consider. That’s why it’s important to commit to a budget. If you know how much money you’re spending every month, you can calculate your savings without worry.
Budgets help you identify your fixed expenses considered your essentials — including food, shelter, necessary medical expenses, and so on. These expenses are essential to your overall health and wellbeing. The rest of your spending is considered non-essential and often leaves more room for cost-cutting. Knowing where you can save money without sacrificing your quality of life is an important financial and mental health component.
Smarter Spending Leads to Better Sleep
Stressing about finances is one of the leading causes of poor sleep patterns. When there’s a fracture in that relationship, it can cause a consistent lack of sleep, resulting in low energy and an unhealthy mental state. Living paycheck to paycheck will likely keep you up worrying at night, which is why taking control of your finances is a crucial step to remedying your current sleeping patterns and vice versa.
Since it’s counterproductive to make any plans at the end of the day, consider setting up a peaceful nighttime routine to begin to train your body to sleep better. Setting soft music and limiting screen time before bed are practical first steps. If you can achieve this, you’ll find you have more energy during the day to take those steps to remediate your finances — whether that’s consolidating your debts, cutting back on spending, or looking for additional income.
Planning for Emergencies Can Lower Your Anxiety
If you’re constantly worrying about the what-ifs, then it’s time to start thinking about building an emergency fund. The purpose of this account is to store money away for unexpected expenses that may occur in your lifetime — this can range from urgent repairs in your home to car maintenance or a medical emergency.
You may not be able to start making significant deposits if your income is limited, but every dollar counts, so it’s acceptable to start small. As you become well-versed in your budget, you’ll know where you can trim costs in your expenses, and you’ll be able to put more money aside. This way, when something unforeseen does occur, your mental health doesn’t suffer, and you’re prepared financially.