Con­trol­ling fi­nan­cial anx­i­ety

Sav­ing guru shares se­crets to get­ting over fis­cal woes

Toronto Star - - SPECIAL REPORT: RRSP COUNTDOWN - ANNE BOKMA SPE­CIAL TO THE STAR

Money wor­ries used to keep me up at night. It wasn’t that I was on the verge of bank­ruptcy or didn’t have enough to pay the bills. No, my anx­i­ety was en­tirely fu­ture fo­cused.

It be­gan when I had kids in my mid-30s. How would my hus­band and I, two writ­ers far re­moved from the world of ex­ec­u­tive-level com­pen­sa­tion, man­age to save the $50,000 each of our girls would need to get through univer­sity? The worry ramped up as we ap­proached our 50s and con­tem­plated re­tire­ment. How would we sock away enough to en­sure our sun­set years were mu­nif­i­cent rather than miserly? We were care­ful — we had only one (sec­ond­hand) car, for ex­am­ple. But we also had hefty mort­gage and prop­erty tax pay­ments in ad­di­tion to $1,000 in com­bined RESP/RRSP con­tri­bu­tions each month. That made cash flow tight, so we of­ten car­ried a bal­ance on our line of credit.

That’s what kept me awake at night; I was raised to think of debt as a kind of sin. The money wor­ries, I sup­pose, were my atone­ment.

Ac­cord­ing to a BMO study re­leased last year, a whop­ping 97 per cent of us have anx­i­ety about our in­vest- ments and al­most half of us fear fi­nan­cial loss. A sim­i­lar BMO study from 2013 found Cana­di­ans spend much more time think­ing about money (63 per cent iden­ti­fied per­sonal fi­nances as the top is­sue on their minds) than love (only 14 per cent said ro­mance was top of mind). That study also showed 66 per cent of us are anx­ious about hav­ing enough money in re­tire­ment.

All this worry comes at a cost, says Karin Miz­gala, a cer­ti­fied fi­nan­cial plan­ner and co-founder of Van­cou­ver-based Money Coaches Canada, a na­tional net­work of 20 fee-for-ser­vice plan­ners.

“Fi­nan­cial anx­i­ety of­ten re­sults in ab­di­ca­tion of re­spon­si­bil­ity and that can lead to dis­as­trous fi­nan­cial de­ci­sions,” says Miz­gala, co-au­thor of Un­stuck: How To Get Out of Your Money Rut and Start Liv­ing the Life You Want. “It can mean get­ting your­self overex­tended and not hav­ing hon­est con­ver­sa­tions about money with your part­ner.”

The stress of fi­nan­cial anx­i­ety can have an im­pact on your health, too, caus­ing peo­ple to cope by turn­ing to al­co­hol or drugs or other ad­dic­tions. It can even re­sult in more ex­treme be­hav­iours; fi­nan­cial dif­fi­cul­ties are be­hind a trou­bling rise in sui­cide among 40- to 64-year-olds over the past 15 years, ac­cord­ing to a study pub­lished last year in the Amer­i­can Jour­nal of Preven­tive Medicine.

Miz­gala sug­gests th­ese nine strate­gies to man­age fi­nan­cial anx­i­ety: 1. Rec­og­nize that ev­ery­body wor­ries. You are not alone. “Even peo­ple who are very wealthy worry about run­ning out of money,” she says.

2. Have a plan. Yes, you need to bud­get. “But that doesn’t mean hav­ing a big writ­ten fi­nan­cial doc­u­ment,” says Miz­gala. What’s key is hav­ing a clear set of fi­nan­cial goals and un­der­stand­ing the steps you need to reach them.

3. Get your part­ner on board. If you’re do­ing all the money man­age­ment, and there­fore suf­fer­ing from all of the at­ten­dant worry, talk to your part­ner about shar­ing the load.

4. Fo­cus on to­day. You can’t get rid of your debt overnight. But you do have con­trol over how you spend — and save — your money to­day.

5. Con­duct a reg­u­lar fi­nan­cial in­ven­tory. Once you have a plan in place, hold your­self ac­count­able by re­view­ing and ad­just­ing it, if nec­es­sary, at least once a year.

6. Be re­al­is­tic about re­tire­ment. A gold-plated re­tire­ment with golf club mem­ber­ships and ex­otic va­ca­tions may not be at­tain­able, but that doesn’t mean you can’t en­joy your work-free years. Be re­al­is­tic about the amount of the es­tate you hope to leave be­hind and how much you can help out your kids fi­nan­cially.

7. Keep your worry in per­spec­tive. Re­mem­ber how priv­i­leged you are. “With our govern­ment pro­grams such as CPP, Old Age Se­cu­rity, rental sub­si­dies and other ini­tia­tives, even the most un­der­priv­i­leged peo­ple in Canada have more than most of the world,” says Miz­gala. “Ap­pre­ci­at­ing what you have and be­ing grate­ful can be a real stress re­liever.”

I took much of this ad­vice to heart when I hired a money coach from Miz­gala’s firm four years ago and worked with her over four 90-minute phone ses­sions to ex­am­ine where ev­ery cent of our money goes.

The coach helped me set up a bud­get for each of our 35 cat­e­gories of house­hold spend­ing to de­ter­mine how we could spend less and save more and also cre­ated a sys­tem to al­lo­cate ev­ery dol­lar com­ing in and track ev­ery dol­lar go­ing out. The re­sult has been less debt, a steady sav­ings plan to get our kids through univer­sity and pro­vide for a com­fort­able re­tire­ment and, most im­por­tantly, a feel­ing of con­fi­dence and con­trol over our fi­nances.

I’d be ly­ing if I said I never worry about money any­more. But I’m happy to re­port that I no longer toss and turn at night think­ing about it. In fact, I sleep like a baby.

Writer Anne Bokma un­winds with a glass of wine and a book. Bokma ex­pe­ri­enced fi­nan­cial anx­i­ety when plan­ning for her fam­ily’s fu­ture.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.