Five insights on how to reduce money-related stress from Executive MBA alumnus Ken Okoroafor (EMBA 2014).
Ken Okoroafor, an alumnus (EMBA 2014) of the Executive MBA programme at Cambridge Judge Business School, is co-founder with his wife Mary of The Humble Penny and Financial Joy Academy platforms, with the core mission of helping families achieve financial independence.
Money and finances have been the top stress-related issues for people in Britain for many years, according to the Mental Health Foundation (MHF), whose findings are consistent with the belief that financial stress significantly impacts our health and well-being.
This has increased owing to the coronavirus crisis: about one in five (22 per cent) of UK adults previously reported “not having enough money” as their primary cause of stress, while one in three people are now worrying about finances such as bill payments and debts.
So, with financial insecurity on the rise due to the pandemic, we asked Ken to share five insights on how people can reduce stress related to money:
1. Place your problems in perspective.
A good starting point in handling financial stress is by feeling, facing, and then freeing your worries. Begin to observe your worries by identifying the source of your financial stress: is it a lack of employment? Low income? Crippling debt? Health worries? Next, let them go by not engaging in negative thinking.
For example, just because statistics are pointing to a huge increase in unemployment does not mean that you will not be able to find an income opportunity. Just because you’re currently in a lot of debt does not mean that you’re doomed to remain in a lot of debt for the future.
2. Stay focused on simple activities that help you declutter your mind.
After identifying the source of stress over your financial situation, stay focused on what you can do to change it by listing all of your possible options. This divergent thinking can be fun and positive, and I’d encourage doing this with someone you love and trust such as your partner or a good friend.
These are the beginnings of creating a plan, which would help you commit to a pathway to seeing some change. At worst, it would lead you to ask better-quality questions about how to solve your problems. Finally, put things in perspective by activating gratitude in your life: make a daily list of three things that you’re grateful for, as this can remind you that among the many burdens of life, there are also many blessings to celebrate.
3. Choose your path.
In order to execute a financial plan, it must be realistic for your unique needs and goals. For example, spouses may agree on why they need to manage their finances, but they can be on an entirely different page when it comes down to how they should manage their finances.
Most goals in life require a compromise or trade-off. For couples, a sensible suggestion to lower financial stress is to generate a list of financial priorities – and then put ticks next to those you both agree on and question marks next to items up for compromise.
4. When compromising, it can be helpful to keep in mind the greater goal.
I like to call this the North Star Goal, because compromise can be aspirational and game changing for your life. For example, if you want to optimise your future for a life of financial independence, the road to making that a reality begins with simplifying your lifestyle. Although it could mean making sacrifices on the journey towards a better financial life, at least you’ll be at peace knowing that you’ve chosen a purposeful path to a financially stress-free life in the future.
5. Seek help.
A support system is one of the most effective tools for reducing stress. The Mental Health Foundation says that those who have someone to turn to when they need emotional support reported lower stress levels and better outcomes than those without. Relationships represent the missing piece in the well-being puzzle.
It’s not uncommon to become overwhelmed when keeping up with bills and tackling debt, and this can result in a stress-induced spiral. So don’t go it alone: Trusted and experienced friends or family members, and charities, are useful resources for those who find it too stressful. Loved ones can discuss what worked for them or mistakes they might have made on the money journey, while organisations such as Step Change or Citizens Advice Bureau can provide expertise and can even talk directly to creditors such as credit-card firms to help you set up workable debt payment plans.