Of the many important lessons I’ve learned during Bridgehouse Asset Managers’ seven-year partnership with the Canadian Mental Health Association (CMHA), one stands out: Almost everyone will struggle with mental health issues at some point in their lives.
Whether you experience them personally or through friends and family, these struggles can occur regardless of your financial situation or because of it. And when you’re struggling with mental health concerns, it can affect your financial decision-making. The good news is: A growing number of financial advisors are being trained to help their clients make sound financial decisions during times of stress or mental health struggles.
Mental health concerns and financial stress may be more common than you think:
- One in five Canadians will experience a mental illness in any given year.
- A Bridgehouse-commissioned survey found that 92 percent of financial advisors responding said they had experienced at least one instance of a client’s mental health issues negatively impacting their financial decision-making.
- According to the 2022 Financial Stress Index, 38 percent of Canadians said money is their biggest concern, outranking personal health, work and relationships.
- Two in five Canadians reported feeling less hopeful about their financial futures now than a year ago, with one in three saying financial stress is causing them to experience anxiety, depression and other mental health issues.
These numbers are likely rising because of record credit card debt, spiking inflation and rising interest rates. Other common financial stressors include volatility in the market, rising gas prices, the rising cost of groceries, and physical and mental illness.
In short, if you are feeling financial stress, you’re far from alone!
Here are some tips to help you make good financial decisions to help reduce stress if you’re currently facing a mental health concern or before one arises.
Check your statements less frequently
One of the best and easiest ways to kick financial stress to the curb is to stick to a long-term financial plan. That’s the basis of Bridgehouse’s Wheel of Investor Emotion, an online tool that measures emotional gain and loss according to daily, monthly, quarterly and annual statement-checking.
The Wheel of Investor Emotion shows you how you’re going to feel depending on how often you check your statements. When checking your statements daily or weekly, there is a good probability that you will see a decline in your portfolio. And when you see the decline, you’re more likely to call your advisor and want to make changes based on your emotions. The markets will inevitably go up and down, so it’s best to stick with your long-term plan. Time in the market has the greatest impact on long-term financial success, even more so than performance.
Curb your urge to check your finances daily or weekly and stick to a monthly or quarterly routine.
Work with a financial advisor
Financial advisors are trained to help you make and follow a financial plan. They can also help you adjust your plan when necessary. It is a well-researched fact that taking a long-term approach to your finances is more effective than making constant adjustments. Working with an advisor can help you avoid that common pitfall of buying high and selling low. Stay the course…and stay stress-free.
Appoint a trusted contact person (TCP)
A TCP is an emergency contact an advisor can call in limited circumstances, typically when they’re concerned about your well-being. Appointing one allows your financial advisor to know who to trust and who they have permission to contact. Examples of when a TCP would be contacted are if your financial advisor can’t reach you, if they’re concerned about your level of vulnerability or if you’re being exploited, or if you’re having a health issue.
Empowering your advisor to support you means one less thing to worry about.
As in so many aspects of life, looking after yourself is key to avoiding mental health issues and reducing financial stress.
Where to start:
- Eat a balanced diet
- Get outside
- Connect with friends
- Play with your kids
- Practice deep breathing
Know where you stand
Life-changing events are bound to happen, and the impact of different events will vary. Determine your susceptibility to stress-induced health problems with the Holmes-Rahe Life Stress Inventory, which assigns values to dozens of life events.
Financial events are well-represented in the inventory, so by adding up the life-change units that apply to your situation, you can learn a lot about the mental health risks you face and take action.
Get started now and be forward-thinking
The best time to prepare for financial stress is now. Taking a proactive strategy helps you identify your stress points and develop a preset plan of action to help you think clearly, work through challenges, and avoid the instinctive fight, flight or freeze reactions caused by stress.
How do you reduce your financial stress? Share with us in the comments below.
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