Reducing financial stress is an important step in attaining Financial Wellness. When we are experiencing financial stress it is important to spend as little time as possible worrying about our future. This type of stress can rob us of our creativity and our objectivity, and even prevent us from clearly seeing the possible solutions that are before us. When we are consumed with financial stress and unable to clearly see all of our options, we continue to spiral down a less desirable path.
Spending money today without thinking about the future consequences is one of the leading causes of financial stress in today’s world. I’d like to share a story with you about a fictitious character named Stan, he represents an example of what this habit looks like and how it can affect us.
Stan Smith is living the dream. He has a great job with a good company, and owns a home with a wife and two children. However, years of advertising bombardment by the credit card companies have scored a victory with Stan. He has bought into the “Slash into Cash—Live Richly” slogans and has accepted the buy now-pay later concept as a way of life. Stan hadn’t planned on over-extending himself with too much credit—it just sort of happened. Now Stan goes to work everyday wondering how he can juggle all of his household and credit card payments to fit the paycheck he’s earning. He often wakes in the middle of the night to a panic attack, as the fear of an unknown future creeps in to his consciousness. During the day his employer is beginning to notice that Stan’s work productivity is slipping. As more time passes, his continued employment with his company becomes jeopardized. And as the financial stress digs deeper into Stan’s world, he becomes withdrawn and distant—even from his wife and family. At this point, his wife begins questioning the longevity of their marriage.
In this example, Stan is discovering the relationship between overspending and financial stress. This stress is a symptom of his growing fear about his future. He senses his life slipping away from him, but feels powerless to make the necessary changes.
We are so busy with our lives, our earning, and our spending habits that we have become de-sensitized to how this stress actually affects our well-being. We’re encouraged in today’s world to spend more than we make—to live with credit consumption. We are not rewarded for paying off our mortgages or putting money in the bank. In an effort to keep our economy vital, credit has become easy and cheap. We are constantly bombarded with credit card offers that lure us into a false sense of freedom. The consequences of this have become apparent as bankruptcy filings are increasing as credit card balances continue to rise and savings continue to diminish. (According to Credit Card and Debt Statistic Database)
Many professionals offer to help us with our financial stress “for a price.” These professionals range from mortgage companies promising to lower our stress by consolidating our loans and selling us a higher mortgage, to the many banks offering high-priced credit lines to help solve our problem.
In Stan’s example, like many of us, he has already refinanced his home many times to consolidate his accumulated debt. His ability to refinance his home had prevented him from looking at the impact of his spending addiction and so each time he refinanced to consolidate his debt he had a renewed sense of freedom. His credit cards had been paid off through the refinance and he began accumulating debt all over again. Each time he consolidated his debt, he made a promise to himself that it would be the last time—but it never was. Somewhere in the back of his mind he knows that his mortgage amount continues to increase as a result of his spending habits, but with the combination of creative financing programs, increasing real estate values and lower interest rates, his mortgage payment hasn’t changed that much. His spending pattern doesn’t become a problem until there is a lull in the real estate market and he discovers he doesn’t have enough equity to refinance his home (yet again) and consolidate all his debt. It is only then that he will be faced with the consequences of his spending habits.
When faced with a similar situation as Stan’s, we can to choose to do nothing different—continuing in the same downward spiral that we are currently in—or we can set aside our worry and move ourselves into a solutions-based view of our entire life. From this solutions-based perspective, we would take a snapshot image of the life we have thus far created. We would then be open to discovering the habits, patterns and beliefs that have bought us to this place of worry and stress. Then, based on our top three values in life, we would develop a plan for recovery, starting by exploring the entire canvas of our life including our job or business, family, and our home. We might interview different professionals as part of this recovery exploration. For us to change our lives, we must be willing to live our lives differently. We must become immersed in the present moment—but with an awareness of how our present actions may affect our future.
There are many other life situations that can create financial stress such as loss of a job, an illness, a divorce, or the death of a loved one. If our spending habits are out of control, then difficult life events will have a much bigger impact on us and create even more financial stress for us. Of course, everyone wants to have less debt in his or her life, but few are willing to make the tough choices to actually make that happen. There are many ways to minimize debt, but the best I know of is to reduce spending. Therefore, the moment we choose to give up a few material pleasures, we may realize a more soulful pleasure in life while reducing financial stress.