Money on Your Mind?

It may be true that “money can’t buy happiness,” but how you manage money can impact your mental health.

In the wake of Suicide Prevention Month, I want to shed light on the connection between money and stress. Let’s explore some statistics of adults in the U.S.:

• 35% said they are financially worse off than the preceding year with inflation, affordability of basic needs, and retirement savings as the top drivers (The Federal Reserve)
• 67% say money is a significant source of stress (American Psychological Association)
• 16% of suicides in the U.S are linked to financial problems (The Aspen Institute)

It is difficult to eliminate every source of stress in your life but empowering to tackle the ones you can control. Confronting money problems, even in small doses, can help provide a sense of control and accomplishment.

Take charge of your financial situation by creating a budget. Our Build a Budget learning guide has many helpful resources to explore more resources, and follow these steps to help reduce stress through budgeting:

1. Understand your current situation.
   Most Americans say their income has not kept up with the increase in household expenses, so it’s important to know where you stand today. Review your money coming in and more importantly where it goes every month.
2. Know where your money should go.
   Expenses are either “needs” or “wants” and once you put them in those categories it’s easier to see what you can cut or spend less on. Some general guidelines for major expenses include saving and investing 10% –15% of pretax income, limiting transportation expenses to 15% –20% of pretax income, and keeping housing payments to 25% of pretax income. These are all easier said than done but provide you with a good target.
3. Create a plan.
   As the saying goes, “failing to plan is planning to fail.” Prioritize your expenses and ensure you pay your bills on time. Consider asking your lender to change the payment due date if you are struggling to pay larger expenses at the beginning of the month. This can help even out your monthly cash flow.
4. Monitor and adjust.
   Budgeting is not a one-and-done exercise. Monitor your cash flow at a pace that suits you. Always revisit your budget before major life changes such as new jobs, relocations, major purchases, or changes in family situation.

Taking charge of your money, even with small changes, can significantly reduce stress. It’s a step toward a brighter, more peaceful financial future.

The USAA Educational Foundation is a nonprofit, tax-exempt IRS 501(c)(3) and cannot endorse or promote any commercial supplier, product, or service. The content of this blog is intended for information purposes only and does not constitute legal, tax, or financial advice.