Controlling financial anxiety
Saving guru shares secrets to getting over fiscal woes
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.