As we come together for World Mental Health Day on 10th October 2023, it's a reminder of the connection between mindfulness and money. While mental health encompasses a wide range of aspects in our lives, one area that often goes overlooked is our relationship with money. Loqbox looks at how practising financial mindfulness can lead to a positive money mindset.
The link between mindfulness and money
Money can be a significant source of stress and anxiety for many individuals. Worries about bills, debt, savings, and future financial security can be a heavy burden on our mental health. Constantly worrying about our financial circumstances can have long-term effects on our physical and mental health like panic attacks, anxiety, depression, and weight changes.
Not only are mindfulness and money linked, they can also reflect each other. When you’re struggling with money and a negative mindset, coping mechanisms can actually make things worse. This could be overspending while reaching for a retail high, or making irrational borrowing decisions — it can spiral out of control if left unchecked, which is why advocating for your own money mindfulness is so important.
What is financial mindfulness?
It’s really important to try and find a positive money mindset. This is also known as financial wellbeing, financial wellness, or financial fitness.
It is considered to be when a person feels secure and in control of their money. They’re confident that they’ve got their monthly expenses in hand and they can even make plans for the future.
Mindfulness and money management?
So, how can we achieve financial mindfulness? Loqbox has some simple mindful money coaching tips and advice:
Set achievable goals
Having a goal is an important part of staying motivated towards a positive money mindset. Of course, taking control of your debts and having enough money to cover your monthly expenditure will help to relieve anxiety. But the other aspect of financial wellbeing is being able to plan for your future. What are your life goals?
You may want to save towards a large purchase, like a house or a car. But if that feels like too daunting a goal to start with, just start smaller. Maybe you just want to clear that one credit card debt, or you want to build your credit score. Setting and hitting realistic milestones will keep you motivated, as you build up to your bigger life goals.
Getting your money and mindfulness in harmony is most likely going to take honesty, compromise, and probably some sacrifices. A budget is a great way to get a truthful view of your finances. Grab all of your bills and bank statements. Look at your monthly expenses and separate them into what you really need and a list of your ‘wants’.
There are lots of budgeting rules so you should be able to find one that suits you. But let's look at the 50-20-30 rule. It says that essential expenses, like rent and bills, should be around 50% of your income. Your goals should be about 20%. That means you have 30% to spend on the things you want, like luxury items and entertainment.
Look at your expenses. Do they line up with that breakdown? Are you spending more than 30% on non-essential things? Cutting unnecessary spending can relieve pressure on both your income and your mindfulness. Be honest, how much do you use or need the things you spend money on? Could you bring your spending under better control?
Reduce impulse spending
As well as regular or repeat spending on luxury items and entertainment, many of us also have triggers that can result in impulsive spending. Try to stay present when you use your bank cards. What are the things that you buy that you might not even really think of when you put your budget together?
Do you splash out on frivolous stuff when you’re feeling down, or lonely, or bored? What are your triggers and what do you spend money on? Could you find something more wholesome and less expensive that might fill the same gap? Don’t punish yourself, but recognise what your triggers are and try to replace them with better — and better-priced — options.
Another way to reduce impulse spending is to wait. Take a breath and consider not buying it until the next day, or after a week. Sleep on it.
Find out if you really want the thing after a delay. You might find that you’re not as convinced after the initial retail buzz has faded. It’s a great way to reduce your impulse spending.
Grow your credit score for peace of mind
Your credit score is a number that represents your credit report, including your history of borrowing. And it’s a helpful tool to let you know how creditworthy you will appear to potential lenders. A great credit score will mean you’re more likely to be accepted for credit and will also help you to get the best possible interest rates. And that can make all the difference.
If you take out a loan for a large purchase (like buying a car), or you’re sorting out a mortgage, a favourable interest rate can actually save you £1,000s in the long run.
For less than the price of a coffee per week, you can get started with Loqbox Grow and put your best foot forward with building your credit history. For £2.50 per week, you’ll get an interest-free credit account (no hard credit checks, no scary contracts) and you’ll use it to charge your £2.50 a week Loqbox membership, and any add-ons.
We’ll then report regular activity to the top three credit reference agencies (CRAs) in the UK, Experian, Equifax, and TransUnion. And because lenders love to see low credit utilisation (spending less than 25% of your credit limit), Loqbox Grow helps to give your credit score a welcome boost.
Improvements to your credit score are not guaranteed.
Cultivate your positive money mindset
Ultimately, the goal of financial mindfulness is to view money as a useful tool for achieving your goals and enhancing your wellbeing rather than a source of stress. With mindful money coaching and daily mindfulness practices, you can banish money worries. Let go of your fear and anxiety surrounding money and make room for your confidence.
Develop the skills and mindset needed to grab your financial freedom. Don’t forget to celebrate the milestones — and remember, your mental health and your finances are intertwined — by tending to both, you can lead a more fulfilling and balanced life.