Your money and your mental health - Blog - BetterSaver
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Your money and your mental health

September 22, 2022

Beth
Beth

Mental Health Awareness week runs 26 Sept - 2 Oct. This year's theme is “Reconnect - with the people and places that lift you up, hei pikinga waiora.” The BetterSaver team is here to help you reconnect with your money to reduce your financial stress and enhance your mental health.

Most of us (77%) know someone experiencing mental distress. Many of us face it ourselves.

I, like so many other people I know, suffer from anxiety. Money can be a massive trigger. It's so critical for me to be on top of my finances to ensure I feel in control.

A June 2020 report from the Mental Health Commissioner reported the following:

  • 1 in 5 Kiwis experience a mental illness or addiction every year

  • 50-80% of Kiwis will experience mental illness and/or addiction in their lifetime

  • 12% of all health loss in New Zealanders is attributed to mental distress and addiction

  • People with a mental health condition experience a shorter life span, by as much as 25 years

And since that report has come out, there has been plenty to feel stressed about in the world. A big issue that is affecting all New Zealanders right now is inflation.

Inflation and mental well-being

Money stress has a major effect on our mood and mental well-being. Almost 70% of Kiwis report being concerned about money. Money stress causes 31% of people to avoid accessing healthcare, 28% to make poor food choices, and 20% to hide their financial situation. These all have an effect on our mental well-being.

A research paper assessed a 12-year study on 1.5 million people to uncover the link between rising inflation, unemployment, and mental health. With NZ (and the rest of the world) experiencing record-breaking levels of inflation, the paper has been getting a lot of recent attention.

The research found that when inflation rises we are more likely to experience low emotional states and even physical pain.

University of Auckland professor Robert MacCulloch is a co-author of the paper, and this is what he had to say to The Spinoff about the results:

“There’s a link between the state of the economy and people’s mental health.”

“If inflation … goes to 10%, there’s a 4% chance you’re likely to feel physical pain.”

Combining existing money stress with the added burdens of inflation and unemployment adds up to incredible pressure on many Kiwis. Feeling powerless often leads to inertia, and doing anything about the problem just seems too hard. We end up in a downward spiral affecting our mental health.

What can you do to help your mental well-being?

When things feel out of control, focus on what you can control. While you can’t control the cost of things, you can take charge of your money.

The first step is often the hardest, so we have come up with five things you can do that require the least amount of effort to start making a difference to your finances - and your mental well-being.

BetterSaver’s top 5 simplest tips to start sorting your finances

1. Break down your spending.

Why: Understanding where your money is going is the first step to managing your spending. Once you see just how much of your income is going towards each area - like food, transportation, or utilities - you can focus on where you can make improvements.

How: Most banks have a way of tracking your spending through their app or website, or you can try one of these free resources.

2. Picture your future.

Why: Thinking about what you want to do with your money is the first step to setting goals. Having goals keeps your eyes on the prize, giving you the motivation to take the next steps towards saving and budgeting so your money works for you, not against you.

How: Our mates at Sorted have a list of suggested money goals and how you can start taking action today.

3. Write down all of your debts.

Why: Ignoring your debts won’t make them go away faster. Make a list, organise it by interest rates or by smallest to largest amount owed, then start tackling them one at a time instead of wishing they would all go away at once.

How: Doesn’t get any easier than an old-fashioned pen-and-paper. If you’re ready to take it a step further and work out the details of a budget, try Sorted’s budgeting tool.

4. Talk about it.

Why: Sharing your worries can make you feel better, for one thing. For another, if you talk to a financial adviser they can help you sort your finances much faster. And people who seek financial advice are generally happier!

How: Confide in a trusted friend. Social connections are important for our mental health and you might find you are not alone in worrying about money. When you’re ready, book an appointment with a financial adviser. Check out our 3 steps to finding a financial adviser.

5. Sort your KiwiSaver. (Saw that one coming, didn’t you?)

Why: Your KiwiSaver fund is a long-term investment that can help set your future self up for financial security. You can use it to buy your first home or fund your retirement, or both. It’s easy to do and you can feel better knowing you have taken one positive step toward managing your finances.

How: Take BetterSaver’s fund finder quiz. We’ll match you to a fund that gets you on track to meeting your goals and that has a risk level and investment strategy you are comfortable with. If you decide to switch funds, we’ll do all the work. Easy peasy.

It gets easier

The hardest part is getting started. Pick one thing from the list and do it. Reward yourself! Then pick another. Small steps make for big strides.

If you are still struggling, get in touch with us. Chat via our website or send us a message at [email protected]. We are here to help.

Mental Health Awareness Week puts the focus on what you can do to enhance your well-being. They have great resources for specific things you can do for your mental health over at https://mhaw.nz/.