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Personal Finance

How to approach your finances with a mindset that reduces stress

Financial Therapist Lindsay Bryan-Podvin and CFP Jaime Eckels weigh in with advice.

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If the thought of your personal finances gives you a sinking feeling in your stomach you're not alone. A recent CNBC Your Money Financial Confidence Survey found that 70% of Americans report feeling financially stressed, and it's a problem you may not be able to solve with more money — 57% of those surveyed with incomes of $100,000 or more suffered the same anxiety despite their relative affluence.

But just because you can't buy peace of mind doesn't mean you're doomed to spend sleepless nights fretting about credit card bills, mortgage payments and more. CNBC Select spoke with a financial therapist and a certified financial planner about how you can protect your mental health and your bottom line.  

A spiral of stress

Lindsay Bryan-Podvin, a financial therapist and founder of Mind Money Balance LLC, believes worrying about money has consequences beyond the bank account. "The stress of the economy and finances can impact us physically, making it difficult to sleep, eat and digest food," she says.

Aside from giving us an upset stomach, Bryan-Podvin asserts financial stress can put us on edge and make it hard to turn off our thoughts around money, leading to chronic loss of sleep. This, in turn, can negatively affect how we handle our money, causing us to avoid engaging with our finances because we think it'll cause even more stress.

But ignoring bank statements or credit card spending often exacerbates the problem and eventually brings things to a point where we must wrestle with our financial woes, starting the cycle all over again. "We need to figure out how to close that stress cycle when it comes to money," Bryan-Podvin says.

How to care for your well-being during stressful financial times

Taking care of your well-being is easier said than done. But even if it won't solve all your financial problems, identifying what you can control and taking positive action will go a long way toward protecting your mental health.

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Focus on what you can control

If your stress stems from rising interest rates, inflation and other economic activities, keep in mind that ruminating over things you can't control only saps your mental energy. "We have no control over what the Fed does with inflation or what outcome ends up happening with student loan debt, and we know what causes anxiety is a lack of control or not knowing what to expect," Podvin explains.  

Instead seek solace in the things you can control, like building your emergency fund so you're prepared for surprise expenses. You might also feel better if you write a list of the things you can control around your money and create a plan to act on those items — even in the smallest of ways.

"It can be as simple as saying, 'I have no control over what the Fed does to interest rates but I can control how much I put into my savings account each month,' " says Podvin.  

Establish a safety net

Often, knowing you have the cash to get you through difficult times can help you avoid feeling helpless and stressed.

The traditional advice has been to save at least three to six months' worth of necessary expenses as part of your emergency fund. But there's also a ton of value in building emergency savings around a number that allows you to feel more confident in your ability to weather unforeseen circumstances. For some people, this could mean going beyond that six-month benchmark. For others, this could mean scaling down to a smaller number for the time being.

"Cash reserves used to mean just emergency reserves but having even more cash on hand may make sense for some clients — like those who are more risk averse and more nervous about what's ahead," says Jaime Eckels, a CFP and Wealth Management Partner at Plante Moran Financial Advisors.

Keep at it

Of course, it can take time to build a reserve of cash that makes you feel truly safe, but what's important is that you start today and remain consistent.

Experts recommend putting your money into a high-yield savings account where you earn more interest on your balance. This can grow your funds a bit quicker, though, you likely won't earn hundreds of dollars in interest with a small balance. UFB Secure Savings (previously known as UFB High Yield) and Varo Savings Account are two solid contenders currently offering some of the highest APYs today.

UFB Secure Savings

UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.
  • Annual Percentage Yield (APY)

    Up to 5.25% APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to 0.20% APY on savings

  • Minimum balance

    $0, no minimum deposit or balance needed for savings

  • Fees

    No monthly maintenance or service fees

  • Overdraft fee

    Overdraft fees may be charged, according to the terms; overdraft protection available

  • ATM access

    Free ATM card with unlimited withdrawals

  • Maximum transactions

    6 per month; terms apply

  • Terms apply.

Varo Savings Account

Bank Account Services are provided by Varo Bank, N.A., Member FDIC.
  • Annual Percentage Yield (APY)

    Begin earning 3.00% APY and qualify to earn 5.00% APY if meet requirements

  • Minimum balance

    $0.01 to earn interest

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle

  • Excessive transactions fee

    None

  • Overdraft fee

    None

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes, if have a Varo Bank Account

Terms apply.

Then the real trick becomes making sure you consistently deposit money into that savings account so the balance can keep growing. The most hands-off way to do this is to set up automatic deposits weekly or monthly for a certain amount of money. This way, the funds get transferred without you having to think about it.

Bottom line

While the economic climate and various other factors can cause significant stress when it comes to our money, it's important to remember that much of mitigating that stress involves taking action on the things we can control.

Doing even some of the smallest tasks we have control over can set us up to feel more confident in our circumstances, so don't overlook the little things.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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