Get your finances in order in 2015! Use these financial strategies to save, reduce debt, and enjoy life.
The new year is a time when people often get serious about their fitness and health goals. Yet it’s also a prime opportunity to get our financial house in order too.
There’s good reason to take stock of our finances, and not just because of obvious benefits such as saving for retirement: money woes can negatively affect people’s physical and mental well-being.
Debt = health challenges
When people are dealing with significant debt, they’re much more likely to report health problems, according to an Associated Press-AOL health poll conducted in 2008. Among those surveyed with high debt stress, 27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress. Twenty-nine percent suffered severe anxiety, compared with four percent of those with low debt stress.
The average Canadian consumer’s debt, not including a mortgage, was $27,355 in 2013, according to credit bureau TransUnion.
With debt having become a fact of life for so many, there are ways to tell when money woes may be threatening your health.
How do you know?
“The standard question is: ‘Are you having trouble sleeping at night?’” says Brian Betz, a counsellor at Money Mentors, an Alberta-based nonprofit credit counselling agency. “When it becomes an issue with people’s day-to-day lives, when they can’t sleep or are worrying too much, when it’s affecting relationships, then it really starts to wear mentally.
“When you get a credit card statement that shows you if you make the minimum monthly payments, it will take you 84 years to pay off the debt,” he adds, “that really starts to hit home.”
The stress effect
The health effects of chronic stress are well known. Stress causes the body to release adrenalin and cortisol, elevated levels of which can take a physical and mental toll. North Vancouver naturopathic doctor Cameron McIntyre says when stress is severe, it affects the digestive system, sleep, and immune functioning
“The immune system is the first system that shuts down under stress,” McIntyre says. “Our ability to stave off infection becomes significantly compromised. And with stress come a lot of issues with managing anxiety and depression. Stress has a massive impact on the nervous system.”
There’s no denying the link between financial worry and health problems, says Guelph, Ontario, naturopathic doctor Heidi McGill.
“Financial fear, real or imagined, is a genuine place of deep human suffering,” McGill says. “Our psychology and nervous systems are hard-wired for safety, security, and sufficiency, but as a society we have given money these values. With financial worry, we tend to have feelings of being overwhelmed, of helplessness, and of uncertainty.”
How we react to debt
Rather than take a preventive approach to financial health, however, people tend to react to symptoms, using a Band-Aid approach rather than uncovering the root of the problem.
“Denial and avoidance are our ultimate stressors,” McGill says. “Asking for help and receiving it when it’s offered are important.”
Start by talking about your concerns, whether with an independent financial advisor, someone at your bank branch, a credit counsellor, or friends and family.
“Money doesn’t have to be a taboo subject,” Betz says. “Don’t be afraid to say to someone, ‘I can’t afford that.’ If they want to go out for dinner, suggest a potluck or order in pizza. Everybody struggles with these issues, and you’d be surprised once you start talking about it how much others can relate to your situation.”
Seeking financial advice from a professional can make a big difference when it comes to addressing money matters and achieving peace of mind.
A study commissioned by the Financial Planning Standards Council (FPSC) called The Value of Financial Planning found that people with comprehensive financial plans are substantively more likely to report feeling on track with their financial affairs (81 percent) compared with those who do limited planning (73 percent) or none at all (44 percent).
“I’ve always believed strongly in the importance of taking a comprehensive, holistic, integrative approach to your future from a financial perspective,” says Cary List, president and CEO of the FPSC. “People who get a physical every year and deal with things early before they become problems have greater peace of mind. It’s a preventive approach.
“There are so many people out there who have nagging pain or problems and are really very worried, but out of fear don’t act. It’s actually worse because when you’re not getting professional advice or going for a checkup, you have that uncertainty hanging over your head. It’s the same with finances.”
Debt stress busters
Dealing with stress, including financial stress, comes down to simple, everyday strategies, McIntyre says.
Exercising outdoors is a key step. “We’ve got to get outside,” McIntyre says. “Sitting is the new smoking. We’ve got to move. Get out to the forest or the ocean; there’s so much research on the benefits of exercise, especially if it’s being done outside. It lowers blood pressure and blood sugar and improves mood.”
Breathing deeply is helpful, as it helps the body and mind shift from an agitated state to a calmer one. “Think about focused breathing, belly breathing, yoga breathing,” McIntyre says. “When we get stressed we breathe quickly and shallowly, but when we’re hyperventilating we can’t do the tasks that need to
Get quality sleep
Getting good quality sleep is vital, and to help achieve that, McIntyre suggests avoiding screen time right before bed. Eating a wholesome, balanced diet and staying well hydrated are other must-dos to fend off stress.
“Healthy routines build healthy habits, which build a healthy lifestyle,” McIntyre says.
Finding a financial advisor
- Look for professional qualifications such as certified financial planner (CFP), which is the only internationally recognized financial planning designation. Ask to see the database showing that they’re in good standing.
- Ask for references.
- Understand exactly what services are being offered and what your financial commitment is. Some advisors work on a fee-only basis, meaning they can advise on investments without a conflict of interest as they don’t accept any fees or compensation based on product sales.
- Visit the FPSC website (fpsc.ca) for more information on what to ask a potential advisor.
Know where your money goes.
When times are tight, your money habits may need a makeover. Scott Hannah, CEO of the Credit Counselling Society, suggests tracking spending for one or two months. “I’m talking every dollar,” he says. That way, you can see just how much you may be wasting away on things like lattes.
Aim to cut back by 10 percent.
If that seems unattainable, reverse your thinking. “What would happen if the economy was in a downturn and your income was cut by 10 percent today?” Hannah says. “What would you do? Usually, there are areas where you can cut costs.”
Pay off high-interest debt first.
Write a list of all the debts you have and the interest rate each carries. Hannah commonly sees people with six or seven types of credit, such as credit cards, lines of credit, retail loans, car loans, and the like. Conquer high-interest debts first, such as department store cards and other credit cards. It may be worth consolidating debt for a lower overall interest rate.
Establish an emergency fund.
Aim to save the equivalent of six months’ worth of expenses so you don’t get pulled into the world of credit should you experience job loss or illness.