Skip to content
  • Home
  • Essentials
        • ESSENTIALS
        • Goals and Budgeting
          • Overview
          • Organizing Your Financial Life
          • Budgeting
          • Your Personal Net Worth
          • Setting Goals
          • Financial Planning
          • Planning Your Charitable Giving
          • 30-Day Financial Cleanse
        • Credit and Debit
          • Overview
          • Good Debt versus Bad Debt
          • How Credit Can Help—and Hurt
          • Understanding Your Credit Score
          • Preventing Identity Theft
          • Paying Off Student Debt
        • Estate Planning
          • Overview
          • Estate Plan Basics
          • Creating an Estate Plan
        • Types of Accounts
          • Overview
          • Choosing the Right Accounts
          • Individual Retirement Accounts
          • Employer Sponsored Retirement Accounts
          • Small Business Retirement Accounts
          • College Savings Accounts
          • Custodial Accounts
          • Understanding FDIC and SIPC Insurance
        • Saving
          • Overview
          • Why You Should Save and How Much
          • Making the Most of Your Paycheck
          • Saving for an Emergency
          • Eight Savings Fundamentals
        • Investing
          • Overview
          • Getting Started with Investing
          • Stocks, Bonds, and Cash
          • Fractional Shares
          • Socially Responsible Investing
          • Understanding Mutual Funds and ETFs
          • Creating an Investment Plan
          • Finding the Right Asset Allocation
          • The Advantages of Diversification
          • Benefits of Compound Growth
          • Tax-Smart Investing
          • The Importance of Monitoring and Rebalancing
        • Taxes
          • Overview
          • Income Taxes
          • Income Taxes for Children
          • Calculate Taxes
          • Payroll Taxes
        • Insurance
          • Overview
          • Insurance You Need
          • Individual Health Insurance
          • Group Health Insurance
          • Understanding Medicare
          • Disability Insurance
          • Life Insurance
          • Long-Term Care Insurance
          • Auto Insurance
  • My Life
        • MY LIFE
        • STARTING OUT
        • BUYING A CAR
        • MILITARY COMMUNITY
        • Buying a Home
          • Overview
          • Buy or Rent?
          • How Much House Can You Afford?
          • Mortgage Basics
          • Beyond Mortgage Costs
        • Jobs
          • Overview
          • Changing Jobs
          • What to Do If You Lose Your Job
          • Managing Your Finances as You Change Jobs
          • Protecting Your 401(k)
        • Getting Married
          • Overview
          • Planning and Paying for a Wedding
          • Marrying Your Finances
          • Prenups: Do You Need One?
        • Starting a Family
          • Overview
          • Budgeting for a Child
          • Insurance and Estate Planning Needs
          • Planning for a Child's Education
        • Divorce
          • Overview
          • Preparing Your Finances for Divorce
          • Protecting Yourself During a Divorce
          • Managing Money After a Divorce
        • Helping Aging Parents
          • Overview
          • Talking Money with Aging Parents
          • Insurance Needs
          • Managing Income and Investments
          • Knowing Their Wishes
          • Social Services
        • Losing a Loved One
          • Overview
          • Handling Finances After Loss
          • Special Guidelines for Loss of a Spouse
        • Retirement
          • Overview
          • Starting Retirement
          • Nearing Retirement
          • Enjoying Retirement
  • Ask Carrie
        • ASK CARRIE
        • Planning & Goals
        • Investing Basics
        • Insurance
        • Education Savings
        • Couples & Families
        • Kids & Teens
        • Estate
        • Retirement
        • Major Purchases
        • Banking, Credit & Debt
        • Budgeting & Saving
        • Taxes
        • About Carrie
  • Teaching Kids
        • TEACHING KIDS
        • Basics
          • Overview
          • Rules of the Road at Every Age
          • Budgeting
        • Saving
          • Overview
          • Starting the Savings Habit
          • Motivating Your Kids to Save
          • Tips for Parents with Kids and Teens
        • Investing
          • Overview
          • Introducing Kids to Investing
          • Important Investing Concepts
          • Benefits of Early Investing
          • Investment Accounts for Kids
        • Giving Back
        • Life Lessons
          • Overview
          • Tips for Financial Success
          • Managing an Allowance
          • Help Teens use Credit Wisely
        • Buying a Car
          • Overview
          • Your Teen's First Car
          • Assessing Your Teens Needs and Budget
          • Cash or Financing?
          • Auto Insurance
        • First Job
          • Overview
          • Your Teen's First Job
          • Income Tax Basics
          • Payroll Tax Basics
          • Getting Serious About Saving
        • Going to College
          • Overview
          • Costs Beyond Tuition
          • Life Away from Home
        • Leaving the Nest
          • Overview
          • A Checklist for Leaving Home
        • Activities and Resources
          • Overview
          • Overview
        • Categories
          • Overview
          • Classroom Curriculum
          • Personal Finance Activities
          • Financial Literacy Programs
        • Age Groups
          • Overview
          • Elementary School
          • Middle School
          • High School
  • Tools & Resources
        • TOOLS AND RESOURCES
        • Worksheets
        • Calculators
          • Overview
          • Savings Calculator
          • Credit Card Payoff Calculator
          • Cost of Debt Calculator
          • College Savings Calculator
          • Rent versus Buy Calculator
          • Mortgage Affordability Calculator
          • Retirement Calculator
        • Spending Tracker
        • Monthly Budget Planner
        • Financial Fitness Quiz
        • Documents and Forms
          • Overview
          • Form W-4
          • Form W-2
          • Form 1099
        • Research
          • Overview
          • Studies and Findings
          • Ariel-Schwab Black Investor Survey (2022)
          • Ariel-Schwab Black Investor Survey (2020)
          • Charles Schwab Financial Literacy Survey
          • Young Adult Financial Literacy Survey
          • Older Workers and Money Survey
        • Financial Glossary
        • Financial Help for Hard Times
  • Foundation
      • FOUNDATION
      • Moneywise America
Search
Personal Finance | May 27, 2020

The Emotional Benefits of Strong Money Management

By Carrie Schwab-Pomerantz

Key Points

  • Anxiety about money coupled with new daily obligations due to COVID-19 are stretching people to the limit.

  • There are strategies and systems to help you cope and stay calm beginning with the awareness that many things in your financial life are still in your control.

  • Staying on top of your money and creating a plan of action remain some of the best ways to keep yourself mentally, physically and financially healthy.

Dear Readers,

Even in the best of times, money concerns can cause a lot of stress. But according to a recent survey by the National Foundation for Financial Education®, nearly 9 in 10 Americans say that COVID-19 is making money a primary cause of anxiety. Add to that the need to juggle working from home, child care, home schooling and health concerns and people are being stretched to the limit.

Understandably, people are worried about their financial future. Equally understandably, they often don't feel like they have the energy to deal with it. But as overwhelming as it can seem, there are strategies to help you cope and stay calm. As I wrote recently, you may have to think differently to get through these times, but there are ways to do it. And it starts with awareness.

Be aware of what you can control

First realize that no matter how uncertain you may feel, there are some financial things you can still control. That in itself will help ease your stress. For instance, to a certain extent, you can control your spending. That may mean you have to rethink your budget, but it's in your hands. You can also control the way you prioritize your bills. It may require you to do some negotiating, but it's possible. And you can control how much you save, even if you have to redirect some of your savings to more pressing financial needs for a while.

If you're an investor, while you can't control the markets, you can control the way you respond to market events. Trying to time the market is rarely a good strategy, and bailing out at the wrong time can be a costly mistake. So don't. Rather than overreacting to current volatility, thoughtfully rebalance based on your own goals and timeline.

Smart rebalancing means systematically selling investments that have increased in value and buying those that have decreased in value. In short, rebalancing can help you limit risk by selling high and buying low.

In all these areas, you're still in charge. Try to focus on what you can do proactively rather than reactively.

Understand how anxiety affects financial decisions

Studies have shown that anxiety has an adverse effect on almost all our financial decisions. Stress can make us spend more, save less, and rack up credit card debt. Kind of like stress eating, we think spending will make us feel better. Saving, however, can provide you with peace of mind that you can better handle unexpected expenses, adapt to changes in income or take advantage of new opportunities. The best way to feel better right now might be to put unnecessary purchases on hold and save more.

Put everyday money management on automatic

If you haven't already, clear your mind and save time by using bill pay for regular monthly payments like mortgage, rent, utilities, phone, internet, car loans, student loans, even credit cards. All these can be paid automatically through your bank so you don't have to stress about missing a payment. (It might even qualify you for some discounts!) You just have to make sure you have the money in your checking account to cover them.

Do the same for your savings. If you have a 401(k), you're already saving for retirement automatically. You can set up regular payments from checking to savings accounts for your other savings goals.

Share your fears

Still waking up at night with worry? Talk it out. If you have a spouse or partner, work through your financial fears—and your solutions—together. Whether it's your partner, a family member or a trusted friend, listening to another perspective may help you think more clearly. And sharing your concerns and voicing your questions can help you come up with a plan of action. Which brings me to my next point.

Reach out to an advisor

For added peace of mind, consider talking to a financial advisor or financial planner. There's a misconception that advisors are only for the wealthy. Not so. A financial advisor can help you see beyond today's struggles and feel more confident in the future. And everyone can benefit from that.

From everyday budgeting to proper insurance to long-term goal setting for things like retirement or a child's education, a financial planner can make suggestions on how to prioritize your current needs, and outline steps you can take now toward future goals. Even a one-time consultation could offer you a helpful course of action. Plus, there's a whole range of financial advice available to fit any budget. The Foundation for Financial Planning is even working to expand pro bono counseling to vulnerable populations including low-income individuals and families, military personnel and veterans, domestic violence survivors, and people affected by natural disasters like COVID-19 or serious medical crises.

Rather than worry about the unknown—prepare for it

Coming up with a plan of action during uncertain times can seem counter-intuitive. How can you plan ahead if you don't know what's coming? By being flexible. Think of a plan as more of a process that will evolve over time as your goals, your life and the world around you change. It's a way to replace worry with preparation.

To me, the best way to be prepared for whatever the future holds is to follow some tried and true money management principles: spend wisely, set goals, save for emergencies, and invest for the long-term. These are the knowns you can count on to help you reach your financial goals in both good times and bad.

Do it for your health

While we may not be consciously aware of it, money worries can be detrimental to our physical and emotional health. Conversely, it's been shown that staying on top of our money can have positive side effects. For instance, savings can act as an emotional buffer to reduce anxiety. A financial plan can give you more confidence and help you stay focused.

So just as you try to keep physically fit during this particularly difficult time, make a carefully thought out effort to keep yourself financially fit. You don't have to do everything at once, but each extra step you take to manage your money will make you feel that much better—mentally, physically and financially.

 

Have a personal finance question? Email us at askcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries, contact Schwab.

What You Can Do Next

  • Explore other Ask Carrie articles on personal finance.

  • Get more money tips for the whole family at SchwabMoneyWise.com. 

  • Follow Carrie on LinkedIn, Twitter and Facebook.


  • About the Foundation
    • Foundation
    • Moneywise America
  • Ask Carrie
    • Ask Carrie
    • Planning & Goals
    • Investing Basics
    • Insurance
    • Education Savings
    • Couples and Families
    • Kids and Teens
    • Estate
    • Retirement
    • Major Purchases
    • Banking, Credit & Debt
    • Budgeting & Saving
    • Taxes
    • About Carrie
  • Essentials
  • My Life
  • Teaching Kids
  • Tools and Resources

The information on this website is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager.

The Charles Schwab Foundation is a 501(c)(3) nonprofit, private foundation that is not part of Charles Schwab & Co., Inc. or its parent company, The Charles Schwab Corporation.

© 2022 Charles Schwab & Co., Inc. ("Schwab"). All rights reserved. Member SIPC.

(0820-0RM3)