Updated: Jun 13
It is often said that money isn't everything. While this may be true, the fact that money is needed for nearly everything makes it very important. It’s almost impossible to do anything without money so it’s understandable that many emotions are linked to it. The stats don’t lie. According to the Money and Mental Health Policy Institute, 46% of people with debt also have mental health diagnoses. Money has also been tracked as a leading cause of burnout in many adults. In a research carried out by Mental Health UK, among the nine factors found to contribute to extreme levels of burnout, 81% chose money as the leading cause of theirs. It’s no brainer that money and mental health go hand in hand. It’s almost impossible to downplay or remove one from the other.
YNAB likens it to a two-way street; your mental health impacts the way you handle/manage money, and the way you handle/manage money in turn affects your mental health. Our relationship with money dictates a lot of our mood. Whether it’s the guilt that comes from overindulging and occasionally overspending or the anxiety that comes with debt, or the frustration and concern about never having enough. Financial stress is difficult to turn off. It lingers at the back of our minds and creeps into our thoughts even when we’re doing something unrelated. While the causes behind economic insecurity are sometimes complex and it may not be feasible to get rid of financial stressors, controlling the way we respond to our money problems is achievable. One way to do this is to create and use a budget. Using a budget is a good way to work towards organisation and achieve control of our finances.
Ever heard the saying “Budgeting is self-care?” This sums up the effect of budgeting because budgeting not only helps us to manage our finances in the healthiest way possible, it also helps us to realise our wants in a way that doesn’t put a strain on our finances. When we feel like we’ve got a good hold on our finances, we’re more focused, less stressed, and feel less guilt and shame around our financial decisions. This empowers us to thrive and live the kind of peaceful life that we seek.
While it’s tempting to pin our money problems on never having enough and while this may be true, it may also be true that the bulk of our money problems stems from not knowing how to handle money and our inability to adjust our lifestyle to conform to our earning power. Two truths can co-exist. Remember the adage that reads “cut your cloth according to your size” to “cut your cloth according to your cloth?” Analysts enjoy using this phrase when talking about money because it’s possible that sometimes, many times, you are not scaling your spending to align with your limited budget--what do you do in this context? It's advisable to find a balance by cutting unnecessary material. This makes you utilise every bit of material in a way that works for you.
Whether your feelings about your finances are a consequence of spending or your spending is a byproduct of your feelings, a budget is a big first step to finding a balance and ultimately some peace. Will it make you an overnight billionaire? Of course not, but it is a practicable step that will creep some ease back into your life and may ultimately solve your problems.
Budgeting can help you fix bad spending habits which means that your money can be redirected to meet other important needs, it can give you more confidence, build your optimism and help you to control your money and inadvertently control your life. It will help you get organised and help you create a system of accountability where you can track your finances and visualise your progress.
It is important to note that while budgeting can be helpful it could also be harmful if you do it wrong. The key is to find a balance; a viable method that works for you, and be realistic about your finances as much as possible. That could mean finding a soft job by the side to enhance your earning power or cutting down on some wants to maximally serve your needs. The goal is to find a method that serves you. An approach that would enhance your level of control over your finances and reduce your stress level so that you can experience the health benefits of budgeting and get the most out of your money.