Cost of living crisis: why you need to get ‘financially naked’

·4-min read
 (Shutterstock / Olena Yakobchuk)
(Shutterstock / Olena Yakobchuk)

Self-care Sunday – a day that is all about you. Typically, this could be carving out some ‘me’ time to do a yoga class or go for a run, enjoying a relaxing bath... or having a ‘money date’ with yourself to review your budget. Yes, really.

It might not sound as much fun as a spot of pampering but financial self-care is equally as important as emotional and physical self-care, so why isn’t it prioritised and talked about more?

When we think about money, we immediately think of spreadsheets and numbers, and many of us tend to zone out or bury our heads in the sand. Be honest, how many times have you avoided checking your bank balance for fear of what is (or isn’t) there?

What often isn’t talked about is that aside from the numbers, money is emotional. It makes us feel things – happy, worried, secure, anxious – and this has a huge impact on our mental health – either positive or negative.

According to a survey by Investopedia, 74 per cent of millennials say they are “at least somewhat stressed” about managing their finances. With the cost of living crisis in full swing, it is more important than ever that we dig deep to understand our thoughts and feelings about money and take back control.

Financial wellbeing is about feeling confident and in control of your finances, which in turn will leave you feeling less stressed, allowing you to live your life with a sense of security and freedom.

Given the current climate, now especially is a good time to get ‘financially naked.’ Start with these three simple steps to get you on the road to improving your financial wellbeing.

Understand your ‘money mindset’

Strip it all back and take an honest look at yourself and your finances. The first step to improved financial health is to understand your ‘money mindset’ – this is your unique attitude and beliefs about money. What past experiences have you had with money that might affect how you manage your money today? Were you taught to save for something that you really wanted or did you get a credit card at the first opportunity and max it out?

It’s important to understand your money mindset because this drives the decisions that you make each day that affect your overall financial state. It also allows you to understand why you might act the way that you do with your money and to challenge this approach to form better habits moving forwards.

For example, the exhilaration and instant gratification you get from buying something expensive that you desired on credit slowly begins to diminish as you pay the debt off over the next three years – credit isn’t a bad thing when managed correctly, but it’s the managing it correctly that is key.

Create a budget

OK, you’ve certainly heard this one before, but over the next month, set yourself the challenge of recording the amount of money that you have coming in and detail absolutely everything you spend money on.

This is a vital exercise in financial wellbeing, as it will give you clarity and help you make more informed financial decisions.

You may be surprised at how much you spend on eating out/buying coffees and this may influence your decision to make some life changes moving forwards. apps like Emma and Plum can help as they track your spending. App banks like Monzo and Starling are also great as they’re really easy to check daily on your phone and you can set money aside into different pots for various things, for example bills, an upcoming holiday and Christmas.

Once you know exactly how you’re currently spending your money, decide whether you need to rein things in and where. Make a plan by setting a budget. I can’t stress enough how empowering being in control of your finances is.

Set a ‘money date’

Checking in with your finances regularly is key to remaining consistent with your budget and financial health – so I recommend incorporating a regular ‘money date’ with yourself or partner into your routine to check that you’re on track and asses what changes you can make moving forwards.

Every Sunday, mid-morning I will make a coffee, sit down, and do just that for around 30 minutes. I look at what I have spent in the last 7 days and then plan for the next 7 days ahead. Monitoring weekly rather than monthly works best for me as I found that checking my money more frequently makes it easier to keep track of it and I can remember exactly what I have spent my money on. It is also quicker, and it allows me to course correct before the end of the month, and payday, if needed. And once my money date is over, I make brunch and then head off for a relaxing stroll around the park. Well, it is self-care Sunday, after all.