The holidays are the perfect time to reflect and plan ahead

Happy holidays! As the popular Christmas song says, “it’s the most wonderful time of year” — but it’s also the most stressful, especially from a financial perspective. Americans have plenty to worry about: 61 percent of adults live paycheck to paycheck, credit card and student loan debt are at an all-time high, and 74 percent say they are stressed about finances.¹

The holidays can take that stress to an even higher level. And stress takes its toll, both mentally and physically. Keep this in mind for yourself and your members and clients as you begin thinking about the year ahead.

The relationship between financial stress and mental health

Forty-two percent of people say that money negatively impacts their mental health, leading to stress, worry, anxiety and insecurity. Many people feel that money stress is harder than work and family stressors. ²

Ultimately, these mental health problems can lead to physical health issues, like migraines, a weakened immune system, high blood pressure, digestive issues, sleep problems and more. This can progress into having to spend money to treat these problems, which can lead to even more financial stress and create a vicious cycle. Rather than receiving medical help and its related costs, many turn to unhealthy coping mechanisms, such as alcohol, drugs, smoking, or overeating. And that can lead to even more problems. 

Self-care and financial wellbeing

During this holiday season and looking ahead to 2024, encourage your members and customers to make their financial and mental wellness a priority. These tips can help improve their financial outlook and in turn, reduce stress:

Track expenses

Write down monthly expenses and financial goals for six months or a year and then create a budget. A budget tracker or planning app can help monitor spending and make you feel more in control of your finances, which can reduce anxiety.

Automate finances

Request payment due dates to align with your pay schedule and set up automatic bill pay to help reduce stress about meeting payment deadlines. Additionally, setting up an automatic deposit to a savings account is a simple and efficient way to grow savings.

Set up emergency savings

An emergency fund is an important component of financial fitness. Set up a separate account for emergencies and establish rules around when to access that money. Having a defined plan and access to money when a financial need arises removes the need to rely on credit cards or loans, which helps minimize financial stress.

Reduce debt

Thinking about paying down debt is overwhelming. Many people don’t know where to start, but there are several methods to help tackle debt. One is the “snowball method.”  After tracking expenses and creating a budget, identify additional money that can be allocated towards debt each month. Add that dollar amount on top of the payment on your smallest loan balance. Once that debt is paid off you add the full amount you were putting towards the previous loan to your payment on your next-smallest balance. This method continues until all debt is paid off, allowing the borrower to feel accomplished, in control and capable of eliminating their debt.

Plan purchases

Buying things on a whim not only drains one’s bank account and hinders long-term goals, but it can also cause regret and create stress. Be planful about purchases, especially during this holiday season; make sure you can afford it and that it brings joy.

We hope you, your loved ones, and your members and customers can ring in the New Year with plans for financial and mental fitness.