Benefits of Being Financially Stable

Being financially stable has tremendous benefits for our overall health and well-being, extending far beyond the ability to pay bills on time. Below, we will define financial stability and discuss how it can affect your life.

Mental Health

Research has shown an undeniable link between poor financial health, specifically increased amounts of debt, and mental health concerns. Children in poverty are also faced with many barriers while growing up. Here are a few examples:

In the Money and Mental Health study, 86% of the 5,500 people surveyed who have experienced mental health problems reported that their current financial situation or change in financial stability had made their mental health issues worsen.
Half of all adults who report that they are in “problem debt” also have experienced mental health issues.
People who have debt are three times more likely to have a mental health problem than those who do not. The most common illnesses that those in debt have experienced are anxiety disorders, depression, and psychotic disorders.
There is a higher correlation between suicide and debt. Research has found that those who have died from it are eight times more likely to be in debt than not.
Individuals who are in debt are far more likely to exhibit signs of a substance use disorder, such as problems with drinking or drug dependence.
Short-term debt may place people at the highest risk of depression. One study found that it places individuals at the highest risk for depressive disorders. Furthermore, unmarried people, those who are nearing retirement age, and individuals who are less educated were particularly vulnerable to the harmful effects of stress associated with credit cards and overdue bills.

Fortunately, debt is a solvable issue, and a significant benefit of financial stability is reducing these mental health concerns. However, if you are working through a crisis, you may not be able to tackle financial hurdles just yet. Similarly, paying for treatment may not always seem feasible if there are significant money struggles.

However, to achieve and maintain financial stability, you must prioritize your mental health and take care of yourself first. Seek out available resources in your community, talk with a friend, and begin to work towards well-being. Your financial wellness will follow.

Stress and Overall Health

Similarly, one of the most important benefits of being financially stable is that it can help reduce stress. Unfortunately, financial stress is a widespread experience. According to the American Psychological Association (APA), 72% of Americans are stressed about money at least occasionally, and 22% feel incredibly stressed about their finances.

However, parents, younger generations, and lower-income households making less than $50,000 per year are particularly susceptible. They report higher levels of stress than Americans overall, especially when it comes to money. Those who are particularly stressed about it are more likely to say they engage in unhealthy behaviors to manage their stress.

Chronic stress of any kind contributes to a myriad of long-lasting physical health issues, but anxiety about money, in particular, has its own set of disadvantages. According to Elizabeth Scott, MS, an author and wellness coach specializing in stress management and quality of life, the following are the primary issues resulting from financial stress.

Unhealthy Coping Behaviors

Those who experience financial stress are more likely to engage in unhealthy behavior like drinking, smoking, overeating, or other harmful mechanisms in response to their anxiety. Unfortunately, this leads to more stress, which is associated with even more health risks.

Less Money for Self-Care

Those struggling to make ends meet are far less likely to choose to pay for “extra” things like chiropractic care, preventative measures, or even healthcare or dental care when meeting basic necessities is a priority. Unfortunately, when minor health issues go unchecked, they can turn into larger problems, leading to more stress in the long run.

Less Sleep

When individuals are under financial stress, they often experience trouble sleeping or working long hours, which can add to a sleep deficit over time. This not only causes chronic fatigue but also impairs immune functioning and cognitive abilities while causing additional moodiness.

Unhealthy Emotions

Financial strain, especially debt, can cause unhealthy emotions that tremendously affect your health. There is often anxiety, frustration, and a sense of hopelessness that comes along with increasing debt and the inability even to pay the accruing interest. This only causes additional stress and poor mental health and well-being overall.

Being financially stable can help reduce the devastating effects of chronic stress on our bodies and minds and the cycles that occur when living paycheck to paycheck.

Stability in the Family

It may be a given that being financially stable allows you to pay household bills on time and readily meet your family’s needs. However, did you know that it contributes to the strength of our relationships and family well-being as a whole? First and foremost, marriages and romantic relationships fare better without the added pressure of financial stress. In one survey, one-third of couples reported finances to be the most stressful facet of their relationship, followed by intimacy at a very distant second (11%), children (9%), and in-laws (4%).

Overall, money was the source of marital tensions for 84% of respondents. 13% reported fighting about it several times a month, with disagreement about financial priorities topping the list of problems. Fortunately, economic stability and open communication can help create a healthier and happier relationship, which will overflow into the rest of the home.

For example, most adults report that they overheard their parents arguing about money when they were children. This not only creates tension in the home but also inadvertently affects children. For families living with chronic financial stress, that anxiety about making ends meet often spills over onto children.

Additionally, while not every financially unstable household meets the federal poverty criteria, many do. Research has shown the tremendous impact of poverty on children. About 27 million children under the age of 18 live in low-income families in the United States, and 38% of those children live below the poverty threshold. It is important to remember that children are more vulnerable to negative consequences than adults.

Unfortunately, children who directly or indirectly experience risk factors associated with poverty have higher odds of experiencing health problems as adults, such as heart disease, hypertension, stroke, obesity, certain cancers, and even a shorter life expectancy.

Poor children are also disproportionately more likely to attend schools in districts with fewer resources, less funding from local tax dollars, and less parental involvement due to longer, lower-wage working hours and inadequate facilities. Furthermore, families living in poverty may not have access to adequate resources to meet even their children’s most basic needs, let alone their wants. Being financially stable reduces these and other poverty and financial stress risks.

Also, kids who grow up in a financially stable household will look for ways to be economically stable themselves! It is important to teach children about money; parents can serve as role models. Showing children the importance of financial stability and its benefits will help lay a foundation for their future economic health and success in adulthood.

Becoming Financially Stable

Financial stability brings a host of great benefits, but it requires hard work, motivation, intentionality, and sometimes backtracking! No matter where you are in your financial journey, here are some tips to increase your financial health in the new year.

Create a Budget

You can search online for templates or create one that suits your preferences and lifestyle. When making a budget, it is important to remember to set realistic goals, separate your needs from your wants, identify and allocate your income and expenses, and modify for seasonal costs like birthdays, other holidays, back-to-school shopping, oil changes, annual vehicle registration, or prolonged days off from work. Use a budget to make a plan and stick with it. When creating your budget, show your kids how to do it themselves. This is a great lesson to teach your children how to be financially independent adults later in life.

Use Cash When Possible

Using a payment method on your phone, such as PayPal or Apple Pay, credit cards, or even debit cards, all point to what some financial consultants call “auto-pilot spending.” You’re much more likely to overspend if you’re running on auto-pilot. Using cash allows you to “feel” the money physically leaving your hands, which decreases compulsive spending. Similarly, don’t go grocery shopping when you’re hungry, and avoid online browsing when you’re tired or not concentrating well. These behaviors too often result in impulsive and sometimes costly spending.

Make a Plan To Reduce and Eventually Eliminate All Debt

There are some great online resources that can help, ranging from example payment plans to debt tracking sheets. Start by tackling your smallest debt first and work up to the larger amounts! See where to allocate more weekly money and move it towards your savings. Even a small amount will help in the long run. A little extra each week can work significantly in your favor regarding the interest you’re paying.

Avoid Accruing Any New Debt

Most forms of consumer debt are easily obtained but can also have hidden fees and extremely high interest rates. While it may be tempting, staying focused on your financial priorities is essential.

Start Saving

Even a small savings can help when new debt seems like the only option. If you pay yourself first by putting small amounts of money away, you will be less likely to take out quick loans or swipe a credit card. It will also help reduce stress because you will know that you have a small buffer in the case of an actual emergency.

Have a Safety Net in Place

In addition to a savings account, it is crucial to have a plan for life changes or crises. For example, do you have available sick leave at work or disability coverage? What about life insurance? What would be your next steps if something happened and you could not work or lost your job? Planning for the unforeseeable future can help you and your loved ones have peace of mind.

Talk to Your Kids About Money

Financial stability (and instability) is intergenerational. Instilling values regarding saving, spending, and investing money in your children will help them be successful later in life. It’s never too early or too late to start!

Similarly, ensure you and your partner are on the same page about household finances. Will you share one bank account or two? Who will pay for what? What does each person value the most? It is important to have conversations about money when everything is calm and collected, not in the heat of an argument.

Additionally, it is important to ensure that each person in the relationship has an allocated amount of “free money” in the budget. Whether this is $25 or $200, the amount is irrelevant—the goal is to ensure that no one feels trapped. Furthermore, having a little leeway with “extras” will help remind you that money is truly an asset, not a burden while avoiding bigger relational arguments and disputes later on.

Remember, financial security takes time and cannot happen overnight, even when winning the lottery. Taking baby steps toward your financial health will increase your physical and mental wellness, reduce stress, and increase your family’s stability overall. Taking hold of your financial stability is also a great lesson to teach your children the value of money. For more lessons on setting financial goals, please contact All For Kids today.