Those Christmas carols in the shops are urging consumers to spend, spend, spend. This is how you can control your spending.
The closer we get to the big spending time of the year the more the cash registers are ringing and the less you sleep when you think of all the debt shops are ringing up in your name.
Financial management, the basic act of organising day-to-day finances, managing debt and building a savings buffer, is one of the most underemphasised components of comprehensive financial planning, despite having a disproportionate impact on mental health. This narrative needs to shift, JJ van Wyk, financial adviser at Momentum Financial Planning, says.
“A significant link is often observed between your financial situation and your mental well-being. Consumers experiencing problem debt are more likely to also report mental health difficulties. Financial difficulty can trigger stress and anxiety, which may lead to or worsen mental health issues.
“These difficulties can then make it harder to manage money, maintain income, and seek assistance, potentially creating a cycle that intensifies the financial strain.”
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Positive behaviour, such as saving, is good for mental health
Van Wyk points out that when your financial behaviour is positive, the benefits extend far beyond your bank account. For instance, he says, basic acts, such as regular saving and paying credit card balances on time are significantly linked to improved mental health.
“Having a financial cushion reduces the constant background hum of worry, leading to less stress and greater peace of mind.”
Conversely, he says, the presence of persistent unsecured debt creates a crushing psychological burden.
“It is strongly associated with a higher incidence of depression, anxiety and even suicide. Consumers struggling with debt are up to three times more likely to experience a mental health condition.
“The stress of debt can affect sleep, concentration and relationships, creating a vicious cycle where poor mental health makes sound financial decisions even more challenging.”
The reality is that you cannot build a secure future on a shaky foundation. Recognising that financial well-being is a prerequisite for mental well-being is crucial, Van Wyk says.
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How to take control of your debt and finances
Taking control of your finances is a powerful way to reclaim your mental peace, he says and shares these actionable tips to reduce money-related stress and anxiety:
- Create a simple budget: Start with a basic understanding of where your money goes. Use the 50/30/20 rule as a guideline: 50% for needs (rent, utilities, groceries), 30% for wants and 20% for savings and debt repayment. Engaging the services of a financial adviser can help you understand where you stand financially to instantly reduce ambiguity and anxiety.
- Build a small emergency fund: Start with a modest goal, such as one month’s expenses. This buffer is primarily a mental health tool. It ensures that a small, unexpected expense (like a car repair or medical payment) does not derail your stability and trigger a panic spiral.
- Tackle high-interest debt: Focus on paying down unsecured debt (like credit cards or short-term loans). Use the “snowball” (pay off the smallest debt first for a quick win) or “avalanche” (pay off the highest interest rate first to save money) method. Eliminating high-cost debt frees up cash flow and reduces the mental burden.
- Automate good habits: Set up automatic transfers for your savings and debt payments. Removing the need for constant decision-making makes good behaviour habitual and reduces the mental energy you spend on finances.
- Schedule a “money date”: Dedicate 15-30 minutes once a week to review your bank accounts, pay a bill, or check your savings goal. Approach this with curiosity, not judgment. This practice prevents financial anxiety from festering in the dark and keeps you proactively in control.
