MENTAL HEALTH AND MONEY: MANAGING FINANCIAL STRESS

Melissa Cox |

This summer I have been extremely blessed to have an AMAZING summer intern! She has spent a lot of time sitting in on our financial planning meetings with clients, and getting real life experience. She had a very interesting observation after our first week together. Her comment to me was "So... as a CERTIFIED FINANCIAL PLANNER... People tell you Everything! I didn't realize that you would talk so much about the mental side of people's money."

What I love about the career I have chosen is getting to know people's hopes and fears, dreams and nightmares when it comes to their finances. Each stage of life has its own challenges, and as we age financial problems that once caused us great stress... suddenly become proverbial molehills. The one thing that is constant it the mental health side of handling finances. More specifically, the stress and anxiety that often comes with money.

Money and mental health are deeply interconnected. According to the American Psychological Association’s "Stress in America" survey, 72% of adults report feeling stressed about money at least some of the time in their life. Financial stress can take a significant toll on mental well-being, affecting everything from sleep patterns to relationships. Understanding how different generations manage financial stress is key to developing effective strategies for maintaining both financial and mental health.

The Link Between Mental Health and Financial Stress

Financial stress can be a real burden, affecting everything from your mood to your physical health. It can cause anxiety, depression, and even physical symptoms like headaches and insomnia. When you're constantly worried about money, it's hard to focus on anything else. Recognizing the signs of financial stress is the first step towards managing it.

Baby Boomers and Money Management

Baby Boomers, born between 1946 and 1964, grew up during a time of economic prosperity but now face unique financial challenges. Many are approaching retirement or are already retired, and concerns about having sufficient savings can be a major stressor. Additionally, healthcare costs and supporting adult children can strain their finances. Baby Boomers often rely on traditional financial strategies, such as pensions and social security, and may benefit from professional financial planning to manage their stress effectively.

Generation X: The Sandwich Generation

Generation X, born between 1965 and 1980, is often referred to as the "sandwich generation" because they are typically supporting both their children and aging parents. This dual responsibility can create immense financial pressure. Gen Xers may face high housing costs, education expenses for their children, and healthcare costs for their parents. To cope, many prioritize building emergency funds and seeking work-life balance to manage their stress.

Millennials and Financial Anxiety

Millennials, born between 1981 and 1996, entered the workforce during economic downturns and have been heavily impacted by student loan debt. This generation also faces high costs of living and relatively stagnant wages. Financial anxiety is prevalent among Millennials, driven by debt and the pressure to achieve financial milestones such as buying a home. Millennials often turn to side hustles, financial technology apps, and social media for financial advice and support.

Gen Z: Digital Natives and Financial Well-being

Generation Z, born from 1997 onward, are digital natives who have grown up in a world of constant connectivity and social media. While they are generally more financially literate due to easy access to information, they also face unique stressors. The pressure to appear successful online and the uncertainty of the gig economy can create financial anxiety. Gen Z often uses budgeting apps, seeks financial education online, and values financial independence. Subsequently, according to a report by the Center for Generational Kinetics, 54% of Gen Zer's expect to be financially independent by age 24.

Comparing Generational Financial Stressors

While financial stress affects all generations, the sources and coping mechanisms differ. Baby Boomers worry about retirement savings, Generation X juggles multiple financial responsibilities, Millennials struggle with debt and high living costs, and Gen Z navigates a digital financial landscape. Economic changes, such as recessions and shifts in the job market, influence these generational stressors.

Strategies for Managing Financial Stress Across Generations

Regardless of generation, certain strategies can help manage financial stress:

  • Set Realistic Goals: Define clear, achievable financial objectives.
  • Create a Budget: Track income and expenses to stay on top of finances. Build an Emergency Fund: Save for unexpected expenses to reduce stress.
  • Seek Professional Help: Financial advisors and therapists can offer valuable guidance. Educate Yourself: Improving financial literacy can empower better financial decisions.
     

Seeking Professional Help

Professional support can be invaluable in managing financial stress. Financial planners can help create a comprehensive financial plan, while therapists can provide tools to manage anxiety and depression related to money. Combining financial planning with mental health support can lead to better overall well-being.

Building  Financial  Resilience

Financial resilience is about being prepared for financial challenges. This involves building an emergency fund, reducing debt, and adopting a proactive approach to money management. Resilient individuals are better equipped to handle financial stress and recover from setbacks.

Breaking the Taboo: Talking About Money and Mental Health

Open discussions about money and mental health can reduce stigma and provide support. Sharing experiences with friends, family, or support groups can offer new perspectives and coping strategies. It’s important to recognize that financial stress is a common issue and seeking help is a sign of strength.

Conclusion

Managing financial stress is essential for maintaining mental health. By understanding the unique challenges faced by different generations, we can develop tailored strategies to cope with financial anxiety. Prioritizing financial literacy, seeking professional help, and fostering open conversations about money are key steps toward achieving financial and mental well- being. Please call or email to schedule an appointment with me, and let's create a financial plan that makes you feel comfortable and confident in your financial future.

FAQs

  • How does financial stress affect mental health? Financial stress can lead to anxiety, depression, and physical symptoms like headaches and high blood pressure.
  • What are common financial stressors for Baby Boomers? Concerns about retirement savings, healthcare costs, and supporting adult children are major stressors for Baby Boomers.
  • How do Millennials manage financial anxiety? Millennials often use side hustles, financial apps, and social media for financial advice to cope with stress.
  • What financial challenges do Generation X face? Generation X deals with the dual responsibility of supporting their children and aging parents, along with high housing and healthcare costs.
  • How can financial literacy help reduce financial stress? Understanding personal finance empowers better decision-making, reduces anxiety, and helps individuals feel more in control of their financial situation.

Until next time...this is Melissa Making Cents! 

Melissa Anne Cox CERTIFIED FINANCIAL PLANNER™ is also a College Planning and Student Loan Advisor in Dallas, Texas