Frugal Family Takeover 2 - Money & Mental Health

How having a budget can make you happier…

I have worked with all sorts of people, with an array of financial realities. I can testify that money in itself does not make you happy or prevent mental and physical health problems. It can however be a powerful force for good, and our relationship with money is a very complex affair.

How you react and respond to your financial reality will be based on all sorts of things, especially your upbringing, experiences and early lessons. Whatever your situation is one thing is very important – you need to know that situation inside out and upside down!

We can’t change things we don’t acknowledge.

I’ve worked with people who hadn’t opened the post for over a year, and were so stressed by the pile of increasingly threatening

letters from creditors the fear became much worse than the reality – once we dealt with the facts and figures, the scary unknown became a plan of action which is much easier for us to feel in control of.

By knowing our income and expenses by week, month or even year we can make sure we feel more able to tackle shortfalls, savings, life-long needs and desires. It may be that you can do this on your own or with friends and family to help – you may need

some professional help to sort through complex or old paperwork. You may need to take general control of your paperwork first and I have used Lisa’s book for this. If it’s a stressful topic for you there are two options and you can choose which feels more ‘you’…

1. Get it Done. Some of us work best with just getting a job finished and done, so getting all our paperwork into order in one hit. Even this technique may need some advanced planning. For example giving your self a week to add all the paperwork to one box before the Get It Done tackling can start. Make sure you allocate breaks and have plenty of drinks and snacks, and a few treats too.

2. Take Your Time. It may be that the whole idea of looking at your finances gives you cold sweats. In this situation it may be best to go slow, and take your time to feel in control. Make a list of the jobs in order and do one at a time, maybe one a day or even one a week. If you do more that’s fine.

Once you know where you stand – even if that news is not ideal – you are dealing with the reality, and that is always safer for your brain to manage than the fantasy it can create on its own. If you do need to have some support for this job, make sure you think carefully about who you ask for help. It needs to be someone practical and sensitive, who you feel safe around.

After the job of ‘reality’ you may need to create a new list of things you would like to do financially. It could be that you want to make a Will, a Power of Attorney or just keep a new filing system for bills. At this point you can also start creating a budget for the week, month or year. It should include the basics like food, home, utilities, etc. It should also include regular costs you can predict, like birthdays and special events. In our free e-book there is a page of ideas on how what you might include in your monthly budget. I can also include aspirational items and a savings for a longer term goal like a holiday or expensive item of furniture.

Spenders and Savers

The next way to work with money is to be honest about how you relate it. Most of us are either Spenders or Savers.

Quite often life’s spenders get a physical and tangible emotional reaction to spending money and owning things. This is a very powerful reward for spending and can be a very difficult habit to break. Conversely some people are natural savers and it can be difficult for them to spend even when it’s clear they are in need of something. What complex creatures we are!

When working with spenders, it was often the case that selling was just as powerful a response to spending. When spenders found items they had bought, but not needed or even really wanted and started to sell them, the ‘high’ was just as good. Another option for curbing spending is to give a limited budget to each shopping experience. Finding a ‘bargain’ , or the chase of shopping could be unrelated to the price, so a small budget of say £5 may still get the same emotional response. Spenders may also need to consider if they spend less when using cash or cards – and make sure they only have the opposite available!

Savers need to consider what their savings are for, are they allocated to specific needs? If you have a large amount of savings but not enough warm clothes to stay safe in Winter the balance is out of alignment. Many of us will have strong messages of ‘rainy day’ savings, and this is not a bad thing, but remember that you can’t take it with you – so if you have the resources and need something that relates to your wellbeing that’s a reasonable expense.

Living Our Dreams, Within Our Means

Budgeting and planning ahead mean you can achieve realistic financial goals and reap all the feel good energy from that. Being in control of our money has a powerful mental health benefit, and that is the element of money that can make us happy.

One way to achieve this is to move away from our current cultural obsession with having new and more elaborate ‘things’ in our homes, gardens, lives all the time. The pressure from marketing and advertising is enormous, and it can be very beneficial to just avoid it – turn off the TV, and don’t read magazines. If you find that you feel less happy when you are bombarded with a lifestyle you ‘should’ conform to try one of these simple techniques to rebalance.