Wedding season is upon us. Photos of smiling brides and grooms and ads for wedding paraphernalia are everywhere. Young couples starting their new lives with dreams and hopes for a happy future together. While I’ve written in the past about the importance of educating the young newlyweds so that they begin their joint life on a sound financial footing, I want to focus now on the financial stress that many people face long after the wedding dress has been put away and the confetti has been swept up.
Financial stress can be caused by several reasons including:
- Lack of knowledge, fear of the unknown
- Poor communication
- Lack of funds
Interestingly enough, the first two points are the main causes of financial stress, despite the misplaced notion that it is insufficient income that alone creates stress and conflict. Couples across the financial spectrum are stressed by their financial situation, and in many cases the stress can be alleviated, and the relationship improved, by taking proactive steps.
Financial clarity minimizes stress
I recently met with a client who was under an almost unbearable level of stress that was impacting his physical health. His concerns were many and overwhelming … he had no financial plan in place and felt that he had no idea how he and his wife would survive in retirement.
I told him to take a step back. We built a plan based on his current financial reality and lifestyle so he could see clearly what his retirement would look like based on his projected income and savings. With that tangible information in place he could then decide if this projected reality was sufficient for him, or if he needed to make changes to his current lifestyle to fund a more comfortable retirement.
In some cases, when my clients see their projected plan they are pleasantly surprised and relieved by their financial situation. Although unfortunately this wasn’t the case with this particular client, the mere knowledge that he had a plan in place and was proactively making adjustments and implementing cutbacks for his retirement, was sufficient to reduce his stress levels and improve his physical health.
Proper planning is crucial for your financial and mental health. Everyone should have an idea about how to get through the month, and also a plan for achieving annual and longer-term goals.
- On a monthly basis, even something as simple as ensuring that direct debits and credit card payments are paid after salaried income, bituach leumi and any other income is received, can lower your stress levels.
- On an annual basis, ensure you are planning for those large one-time expenses that need to be budgeted. Leaving the unforeseeable events aside for a moment, there are times of the year that you know are going to be more expensive … chagim, vacations, celebrations such as bar/bat mitzva. Paying in installments can help with major expenses but you need to think seriously about how you plan to finance these future payments that you didn’t manage to budget for in the past.
- Your long-term plan should give you the peace of mind that you are heading in the right direction. Update it yearly if there are no major changes in your life, or after any major occurrence so that it remains an accurate projection for your financial future.
Communication is crucial
It is very common for couples to have different attitudes towards money – saving vs spending, working vs leisure and how to enjoy leisure time. But those disagreements can often be diffused and compromises reached if they are addressed early and honestly.
When you sit down and review or plan your budget make sure you are honest with each other. Too many people hide expenses from their spouse. When that happens not only does the budget become irrelevant, but the lack of honesty can also be detrimental to your relationship. Invest time in trying to overcome the impasse and find a compromise that works for both of you.
Poor communication is often listed as a leading reason for divorce. And poor communication about finances consistently eats away at the fabric of a healthy relationship. The financial concerns may reflect other issues in the relationship that need addressing. Focus on sorting out your finances together, but if you feel you aren’t managing then speak to a professional. There are financial life coaches who can help you build and improve your financial plan and your relationship.
Financial stress in a relationship can also be caused by a lack of systemic awareness, when everyone is looking out for their own interests rather than seeing the bigger picture. Obviously if this is a problem between spouses the professional will help deal with and diffuse that issue. Children, however, are often oblivious to the family’s financial reality, and it’s not always their fault. If you don’t educate them in what you and your spouse perceive to be correct financial management, don’t be surprised if they act in a way that you feel is irresponsible and/or selfish.
Include your older children in discussions about your financial priorities. You might be surprised by their maturity … and getting them on board can lead them to behave in a more financially responsible way which can help reduce your stress as well.
Facing up to your finances
There is no getting away from the fact that those who have insufficient income (however we define that … but that’s a subject for another article) will need to be more creative to make it through the month and not get into debt. But ignoring one’s reality only increases the stress levels and changes nothing. If you feel you don’t have enough income to get through the month, you need to clarify your priorities and make some tough allocation decisions. The very real worry and stress about your lack of resources will still be there but you must be proactive in planning and adjusting your lifestyle to your income level’s reality. In parallel, considerable time and effort must be put into long term planning to increase your revenue, through increased education, entrepreneurship or just plain “working harder or smarter”. Be proactive rather than reactive and your positive mindset can make a real difference.
Everyone wants that fairy tale happy ever after but here in real life we have to ensure that we do everything we can to help make it happen.