4 Tips to Alleviate—and Avoid—Financial Stress

When thinking about mental health, many overlook a major consideration—financial stress. Aaron, an Ayco Financial Wellness coach, works directly with employees to help them take control of their financial lives and achieve peace of mind. He shares his top four tips for alleviating, and avoiding, financial stress.

Financial planning is imperative for achieving your financial goals, but did you know it can also reduce your stress, increase mental and physical wellbeing, and free up more time and headspace for the things you enjoy? Here are a few tips to help you.

1. Establish an emergency fund

Establishing an emergency fund is a vital part of any financial plan. Having emergency savings set aside can provide reassurance, no matter what life challenges you may face. Have you thought about what you would do if you were unable to work, had a large unanticipated expense or needed easy access to funds in a crisis situation? An emergency fund can provide an extra confidence boost and alleviate stress, arming you with the knowledge you are prepared for worst-case scenarios. It can also help minimize the impact financial emergencies may have on your progress toward financial goals.

2. Set up a strong budget that grows with you

Making financial decisions can be complicated and create anxiety, but a well thought out spending plan can offer the visibility and reassurance you need to increase your physical and mental wellbeing. Your spending plan may change over time due to certain life events, changes in income and expenses or from reevaluating your goals. When you have a strong grasp of how much money comes in versus where it’s going out (your cash flow), you can build an evolving spending plan that:

• Prioritizes your goals
• Leads to better financial decisions for you and the people you care about
• Reduces anxiety
• Frees up time and money to enjoy life with family and friends

If you have access to Ayco through your employer, there are a number of resources on the digital platform to help you create—and stick to—your budget.

3. Create a plan to protect your family’s future

A financial plan can also benefit your mental health by providing the peace of mind that your family will be taken care of if you’re no longer there to support them. Knowing you have life insurance coverage and an estate plan in place can provide a variety of health benefits, from a better night’s sleep to increasing your attention and productivity at work and in other daily activities.

4. Assess your risk tolerance and align your investment strategies accordingly

Do the ups and downs of the market cause you stress? A financial plan with a properly allocated and managed investment portfolio can positively increase your mood, reduce stress and reduce the need for future changes. Investment strategies can differ widely depending on your goal, time frame and the risk level you’re comfortable with. Whether you’re earmarking the funds for retirement, education, a major purchase or providing an inheritance, having a proper plan in place can improve your quality of life, cut down on out-of-pocket-expenses and allow you to be more resilient to market conditions or economic factors.