Financial Stress Management: Building Financial Resilience

Financial Issues & Stress

Issues with money is cited to be the top reason for relationship breakdown. Add to that being a major contributor to many other issues such as difficulty sleeping, mood swings, depression, and anxiety, it’s important for us to look after our finances, and importantly, our mindset toward money. Just check out some stats:

  • In Australia alone, around 50% of people cite finances as something they are stressed about, with 85% saying it impacts their wellbeing

  • Often a major cause of this is stress related to mounting debt, with 40% of people feeling embarrassed about the debt they have

  • Worryingly, only around 30% of people feel financially secure

Of note is that these statistics are from before the impacts from the global pandemic, so we can expect these to significantly worsen. What does this mean? Well, it’s a great time to build our financial resilience.

What is Financial Resilience?

In a traditional resilience sense, financial resilience is often seen as the ability to bounce back from a financial setback. However, as those of you who have been around with Driven know well by now, we see resilience as far more proactive, preventative and holistic.

Financial resilience means being able to continually advance towards your financial goals, despite adversity and setbacks along the way

So, our concept of financial resilience takes a similar approach. For us, financial resilience means being able to continually advance towards your financial goals, despite adversity and setbacks along the way. This means we need to be both mentally and financially prepared.

Exploring both sides

When it comes to a topic such as finances, it’s important to explore the full picture. Let’s consider for a moment the mental and financial (practical) aspects. Starting with practical side, there are a number of topics of interest:

  • Financial Literacy – This is about knowledge of fundamental financial concepts

  • Budgeting & expenses – Your ability to set up a budget, keep expenses under control and stick to it over time

  • Savings – How much money you’re putting away to reach financial goals, and how consistent you are with this over time

  • Income – How much you’re actually making, how consistent and reliable this source of income is, and even having multiple sources of income

  • Investments – How well you are putting your money to work for you, so that you are building wealth over time rather than having it eaten up by inflation

  • Emergency funds – How prepared you are to access multiple funding sources in case you have a financial emergency

  • Debt – How well you are managing debt, and your ability to use debt for things that build wealth, rather than just drag you down

  • Taxes – How on top of your taxes you are to make sure you fulfil your obligations and don’t fall behind

  • Retirement planning – How prepared you are for retirements, and actively contributing funds towards clear goals that will give you the freedom to live the life you want when you retire

With each of these, it helps to build general knowledge to understand them better and increase your ability to manage them. The better managed they are, the better your financial resilience, right?

Well, half right. This is where we need to consider the mental aspect.

The mental aspect of financial resilience

Generally, we’d assume that having more money is better. With more money, we’d stress less, be happier, all those good things.

To some degree more money is better in that it gives you more options. However, the reality is quite a bit more complex. Each person is unique, and while one person with little money might be stressed, someone with a lot of money might be even more stressed about finances. Meanwhile yet another person with extraordinarily little money might be very happy with their situation.

See, this is the other side of finances that is not as often explored, which is our mindset towards finances. Let’s look at the list of financial topics again, this time asking questions of our own mindset for each:

  • Financial Literacy – Literacy is about the willingness and openness to learn new things – what’s holding you back from learning more here?

  • Budgeting & expenses – Setting a budget and sticking to it takes persistence, organisation and discipline – what might be holding you back here to stick to it?

  • Savings – Often it’s not about us not having enough money left to save, but more that we are spending on things we don’t need to impress people we don’t like. How do we change this mindset?

  • Income – Many people tie their self-worth to their income. But does it really need to be this way? What if we were to change this narrative and build self-worth on more important concepts?

  • Investments – Having investments is one thing, but the ups and downs can end up being extremely stressful and end up in making bad financial decisions. How do you manage this stress and plan accordingly so you are relaxed yet prepared?

  • Emergency funds – Do you tend to have a lot of emergencies pop up, many of which could have been predicted? What are some ways to be more proactive and plan so that you avoid emergencies, and have the mental and physical resources to deal with them when they do arise?

  • Debt – How do you deal with the stress of having a lot of debt, and what are the mental drivers that is leading you to take on debt? How do you move towards a mindset of relaxed action, where you don’t need to stress, but still take steps to resolve debt effectively?

  • Taxes – How do you build a mindset to make sure that you are prepared for when this comes around, so you can effectively deal with it when it comes around and don’t need to stress about it?

  • Retirement planning – Do you have a tendency to avoid planning for the distant future? How can you change this mindset so you start making plans & set goals so you can feel more confident about this?

As you can see, it’s not just about managing stress, but often there are some deep questions to be asked here that are closer to the root of what causes stress in the first place.

In other words, while breathing exercises can help you regain your calm in the moment, there are deeper things to work on which might be causing the situation that results in you needing a breathing exercise in the first place.

Building your financial resilience

To put this into action & work through both the practical and mental aspects of your financial resilience, we’ve created a Financial Resilience course that’s available now for everyone with full access to the Driven Resilience App.

This is how it works:

  1. 📊 For each topic, we start with a short check-in which is usually around 6 questions. This check looks at both your mindset and the practical state of your finances for that topic. You get scores for both the mental and practical aspects, and based on these scores, activities are recommended

  2. 💰 If an activity is recommended to work on the practical aspects, then a couple of interactive articles will be added for you. These will contain practical tips and information to boost your knowledge and help improve your financial situation

  3. 🤔 If it’s recommended to explore your mindset, then an activity will be added for that which will be tailored based on how you scored. This means you get a very personalised experience to help you manage stress and explore the underlying causes of stress around finances

The advantage of this approach is that it’s holistic by integrating both the mental and practical aspects. This means we uncover the real problems and help to improve those.

Even if you’re doing great, it’s useful to check in and make sure you have all your bases covered and that you are indeed financially resilient. I highly recommend doing just the checks themselves to benchmark your financial resilience. Plus, there’s always more to learn!

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