How Financial Mindfulness Reduces Anxiety

(Last Updated On: )

This guest post by Somrita Sen of the lifestyle blog BeingSen teaches us how financial mindfulness reduces anxiety. Somrita beautifully outlines steps to take towards financial mindfulness, as well as ways in which it can decrease our daily anxiousness. We are honored to have her guest post on Literally Simple.

“A wise person should have money in their head, but not in their heart.

Jonathan Swift

Mindfulness is one of the most discussed topics in today’s world. Many people have greatly benefited from this practice and shared the advantages with the world. One such major pro of practicing mindfulness is its ability to alleviate stress and anxiety from our daily lives.

Interestingly, mindfulness practices can be incorporated into various aspects of our lives, including how we manage our personal finances. Money management can become a stressful topic at times. However, by consciously practicing financial mindfulness, one can greatly reduce the anxiety they experience.

What Is Financial Mindfulness?

But first, what exactly is financial mindfulness? To put it simply, it is all about being mindful of how we deal with our personal finances, whatever our standing be. I do not believe that money is the end-all and be-all of our lives. However, I certainly think that it is an essential tool for leading a fulfilling life. We do not need a lot of money to be happy, but it does alleviate many problems. Thus it is important to be able to manage it well and that is where financial mindfulness comes in.

There are several ways in which financial mindfulness can be practiced. Here’s a great article about the basics. However, if you are looking for something more specific, then the following 4 steps are really pertinent. 

4 Steps Towards Financial Mindfulness

1. Needs Vs. Wants

Knowing the difference between our needs and wants is an effective way to be mindful of spending habits. This is essentially a matter of prioritizing what to spend our money on. At the same time, it is also important to understand that some wants are almost needs.

For example, I sometimes indulge myself and buy art supplies for my hobby. While it may seem frivolous, painting is one of my biggest pleasures and key to my well-being. Hence, I give in to the occasional “want” in this case.

So, find that balance between your wants and needs as the first step towards financial mindfulness.

2. Experiences Over Materials

By valuing experiences over materials at certain times, you often create a memory that is going to last you forever. Thus, giving you better value for money. However, this practice is applicable in very specific areas.

For example, instead of material gifts, if possible, you can gift your kids a holiday that will become a memory for a lifetime. Or you can go for educational experiences like a trip to a museum. An important aspect of financial mindfulness is choosing the right experiences to invest in, instead of material objects.

3. Assess Your Income 

This helps to have a realistic idea about how much you earn in a typical month and how you spend and save. Take some time to objectively assess the income and have an outline for the possible expenses. You can take it a step further and find how much are you allocating to different sectors like food, housing, utilities, travel, entertainment, etc.

Sometimes, you have to prioritize and invest your time and energy towards saving more. This way, you will minimize the chances of being taken off-guard by your financial situations.

4. Reduce Attachment 

We tend to attach a lot of importance to money itself. While having enough money is absolutely essential to lead a comfortable life, it is not the ultimate thing. Thus, having the ambition of being financially stable is important; but do not be consumed by it. Remember that money is a tool and you can control it. It should never be the other way round. 

You can read more about financial mindfulness practices in this article. 

How Can It Reduce Anxiety?

Practicing mindfulness in money matters empowers you to have control over your financial aspects. That, in itself, reduces anxiety to a great degree. When you have a clear idea about your monetary situation, your expenses, and savings, you can plan effectively. 

5 Ways Practicing Financial Mindfulness Reduces Anxiety

1. An Exact Idea Of How Things Stand

As mentioned before, these practices allow you to have an exact idea about how things stand in your figurative purse. A lot of our anxiety and stress about a situation arises from the lack of a clear picture. Financial mindfulness practices take care of that aspect and reduces the fear of the unknown considerably.

2. Financial Confidence

From knowledge comes confidence. When you are aware of the exact state of your finances and know your spending and saving habits, you feel more confident. Having enough financial cushion is essential, but it is not the ultimate thing for feeling confident.

Once you start prioritizing spending on needs and experiences, you gain more control of our purse strings. You learn to better allocate your monetary resources and all these lead to more financial confidence.

If you are interested in building financial confidence, then check out this article. 

3. Allows You To Focus On One Thing At A Time

Most of us don’t do well when our attention is divided amongst many things. It can give rise to a lot of anxiety, especially if you are not comfortable with multi-tasking. To that end, financial mindfulness practices are a great way to reduce that stress because they let you focus on one thing at a time. 

When you are aware of how your money is flowing, you can really be present in the moment while making financial decisions. This kind of awareness helps you to not feel unnecessarily anxious.

4. A Plan For The Future

Being forward-looking in life is generally considered a good practice. So when you can plan your finances for your future, you create a path. While life may (and will) throw surprises your way, essentially you will be set on a course and that is assuring.

Knowing how much to save for major future expenses and strategizing for the same are some of the best ways to tackle the fear of the unknown in life. Having a plan is no doubt a great stress-reducer.

5. Contingency Preparedness

Finally, being financially prepared for those emergencies that we talked about does reduce stress. Setting aside money for any unforeseen circumstances, like a major health issue, can help you to sleep better at night. However, you will need to be mindful of your money habits and save accordingly to be able to have this rainy day fund. 

There is a reason why businesses always plan for contingency situations. In life, if you can follow the same strategy you will surely have a little less to worry about.

The Key Takeaway

It is important to understand that practicing mindfulness is not enough to directly improve your financial situation. However, as you become more intentional with your money, you will find that it becomes easier to manage it. This, in turn, greatly reduces the amount of money related anxiety and stress that you feel in your life, thus positively impacting your overall state of mind.

And at the end of the day, we can lead a more fulfilling life if we are in a positive and stress-free mind frame.

Guest Author Bio

Join the Discussion

Tell us in the comments below- what bit of advice did you find most helpful on financial mindfulness?

P.S. We always ask readers to follow us on Instagram, Pinterest and Facebook. We consciously try to document our everyday simple lives with wellness, financial literacy, and minimalism tips. If you’re trying to cut out social media, you’ll need to subscribe directly to this blog. We welcome you to join us!