Research has shown an undeniable link between mental health and financial health. People with enough money are happier and mentally healthier compared to people struggling with financial problems. So how important is money in your well-being? Well, in this guide, we have put together some of the ways your finances are affecting your mental health. 

1. Stress  

One of the biggest ways that your finances will affect your mental health is stress. According to studies that have been conducted on various cases, it has been proven that people struggling finances are more prone to stress than their counterparts. Once you realise that you don’t have a ‘safety net’ to handle possible emergencies, then you cannot think straight. You are likely to get stressed and more anxious even by very simple. You will always live in fear for the worst, and that’s how to get the stress condition worse. If things don’t improve sooner, the condition might worsen.  

2. Anxiety 

Anxiety is another mental condition that can be triggered by your financial stability. When you are in good financial health, and you can meet all financial obligations, the level of anxiety due to financial pressure is almost zero. But once you get debts piling up or lose your job unexpectedly, then anxiety will start kicking in. Studies have shown that more than 29% of the people struggling with debt usually suffer severe anxiety. 

3. Depression 

Depression is one of the biggest mental problems that most people in Australia are struggling with. However, studies and shown an undeniable link between depression and poor financial health. When you have enough money to meet all your financial obligations and living a good life, the possibilities of developing are very low. However, the moment your income taps get dry, then you start getting anxious, and the nest thing is stress. Studies have shown that around 23% of the people in debt usually suffer severe depression. That is how financial health can impact your mental. 

4. Desperation for Temporary Relief 

Just like when you are feeling pain, taking a painkiller that does not cure the problem feels but release the symptoms. That is the same when in financial problems. If you have lost a job and you are struggling with paying the mortgage or rent, then you end looking for temporary solutions. You can borrow the money to repay the debts that have matured, yet what you have done is postponing the problem to a later date. This is usually the period when most people find themselves in toxic debts such as payday loans which continues to create more financial mess. 

5. Plummeting Self-Esteem 

One of the biggest mental battles that individuals struggling with financial problems face are low self-esteem issues. Once you lose a job or your business has fallen, and you are sinking into debts, self-confidence start eroding. Such people then tend to withdraw from their previous company the moment they cannot live the kind of life they were used to. That’s a sign they are slowly getting into mental problems. Low self-stem has very negative effects on victims’ mental health. If not checked or the situation does not improve, they slowly slide into stress and then depression. 

6. Unhealed Would May Come Back 

When you are financially unstable, your mind is usually preoccupied with fear. You can’t figure out how to deal with the financial burdens with bills piling up. At this time, nothing positive can come from your mind. The brain will start remembering the times that you were going through the same experience. So, you will find yourself feeling bitter most of the time. Therefore, the possibilities of unhealed wounds coming back to haunt you are very high. Therefore, the pain will get bigger as the time goes by unless you get psychological help or the situation improves. 

7. Poor Decision Making 

To make a sound decision about your life or anything, you need a sound mind. That is not possible when you are struggling with financial problems. With the mind preoccupied with negative thoughts, it is difficult to make rational decisions. In most cases, people are looking for shortcuts to solve their financial mess, even if it is a temporary solution. Most of the decisions are likely to be very expensive and could even make the situation worse.  

8. Feeling Out of Control 

When you lose a job, or your business goes down, then your financial obligation will catch up with you instantly. Maybe you have a car loan or mortgage to pay off, and if you’ve got a family, things get even worse. When everything gets exhausted and stretched to the limit, then you will start feeling helpless. You will find everything spinning out of control. At this moment, your state of mind will start getting worse. You will start sinking into debt, and it is pretty easy to slip into depression if things don’t improve. 

9. Denial 

Last but not least is denial. A good number of people facing financial instability tend to live denial. This is a mental condition that makes them believe in non-existent things and not reality. Such people do not want to adjust according to the current situation. Denial is a mental condition that is difficult to deal with and ends up making things worse. In most cases, such people end up depressed. 

The Bottom Line  

If you want to be mentally healthy, then you must ensure that you are financially healthy as well. But because any business can fall, you can lose a job and get into debt; you need to consider covering yourself from financial problems. One crucial thing you need to equip yourself with is a financial plan. Hire a certified local financial planner to help you manage your financial life. That’s the best way to avoid mental health caused by financial problems. 

The post 9 Ways Money Is Affecting Your Mental Health appeared first on Financial Planning Magazine.

So, what’s financial planning, and how can you create a financial plan? Well, if you have been struggling with financial problems, this guide is for you. We have put together everything you need to know about financial planning and how to create a perfect plan for yourself. 

What is Financial Planning? 

Financial planning is a concept of financial management designed to help people get the most of their finances. The concept is about managing all the financial aspects of human life. So, it’s a comprehensive financial statement designed for long-term implementation. Therefore, creating a monetary plan is an affair that affects all aspects of your financial life. 

Good financial planning should take into consideration several elements, including cash flow, investment, insurance, savings, debts, and other aspects of your financial life. In addition to that, it should also include budgeting as one of the cardinal elements of monetary management. 

Tips on How To Create A Financial Plan 

Financial planning works for everyone. Whether you are in business or gainful employment, this is one of the concepts that you need to adopt. You don’t have to be a financial expert to create this plan. You have the option of creating it yourself or hiring a certified financial planner to do it. For beginners, here are six tips to creating smart a financial plan: 

#1 – Audit How You Spend Money                       

The first step to creating an ideal financial plan is to auditing your money spending habits. It is very crucial because it will give you an idea on how good or bad you are with financial management. So, where has your money been going? Are you investing or spending most of your money funding recurrent expenditures? You can start by writing down how you are spending money every day for like a whole month. Then this will give an idea of where most of your money goes. 

#2 – Set Financial Goals

One of the biggest reasons why most people are struggling finances is due to a lack of goals. So, whenever they have money, they throw it around because they have no plan on how to use it. You need to have financial goals so that you can have targeted places where you will be going. However, these goals must be realistic. For instance, you can own a home with a half mortgage paid. That means you need to start saving up 50% of the house price. It is a smart way to create a financial plan and reduce wastage. 

#3 – Cover for the Unexpected

There are many aspects of human life that you need an insurance cover to protect yourself from the unexpected costs. For example, if you don’t have a family, it would be wise to buy disability insurance coverage to protect your earning power. For those with families, you need disability covers for your loved ones. Health insurance, homeowners/renter’s coverage, and auto coverage are equally crucial in financial planning.  

#4 – Maintain Good Credit Score

Maintaining a good credit score is one of the essential financial planning tenets. You can’t be rich without taking debts for investment. But to get access to loans, you must build a good reputation in the financial market. One of the critical factors that debtors look for when lending money is the credit score. Therefore, make sure that you are checking your credit score every year. 

#5 – Take Toxic Debts

High-interest loans is one of the biggest problems that most people without a sound financial plan deal with very often. These toxic debts are usually as a result of poor cash management and can quickly drop your credit score. Some of the debts you need t deal with include title loans, credit card balances, and payday loans, amongst others. They are very expensive and can quickly drain your all money due to high-interest rates. 

#6 – Develop a Saving Culture

A good financial plan must include a proper saving plan. There are many ways that you can save money in Australian. If you are in the business, there are many investment plans, such as corporate bonds, and government boards, amongst others.  For employees, you can join the superannuation amongst other investment plans. That’s how you ensure that you are financially safe even after retirement or when you can’t work. 

3 Benefits of Financial Planning 

There are many benefits that are associated with financial planning, and that’s why it is good for everyone. Whether you’re an entrepreneur or an employee, there are many reasons why you should create a financial plan. Here are some of the key benefits. 

Managing Cash Flows 

Whether it is a business or employed, cash flow is one of the most crucial aspects to consider. You need to have money flowing for you to be financially independent. Financial planning will help you realise where you spend your money. With this information, you will be able to adjust your spending to improve cash flow throughout the month. 

Debt Management 

Poor cash flow and uncontrolled spending are the main contributors to toxic debts to most people and businesses. That’s a problem that will be solved automatically by creating financial planning. You will be to minimise or stop unnecessary spending; hence, avoiding expensive debts. If you are debt, the plan will help manage them efficiently. 

Better Saving Plans 

It is impossible to make any tangible savings when you are financially unstable. You might not even get extra money to save. But with a financial plan, you will streamline your spending and spend on what’s necessary. So, you will get excess cash that will enhance your savings. Financial planning also helps you to identify the most lucrative investment plans for you. 

Conclusion 

Financial planning is an important concept that everyone must adopt if they want to streamline their financial management. You don’t have to be a financial expert to create this plan. What you need is to know the most productive ways of using your money. Audit your spending to remove unnecessary expenditures. You must also learn how to budget for what you earn to avoid getting into debt. Try these financial planning tips, and your final problems will a thing of the past. 

The post What Is Financial Planning? 6 Steps To Creating A Smart Financial Plan appeared first on Financial Planning Magazine.