How to deal with money and your finances when the economy is stressing you out

To no one’s surprise, money remains the top stressor for Canadians at 40%, for the sixth year in a row, according to FP Canada’s 2023 Financial Stress Index. With everything that’s going on, budgeting and planning for retirement feels pointless. Why is it so hard to make financial planning and investing decisions when you’re overwhelmed? Glad you asked.

Stress and finances: How to make smart decisions with your money by getting started

According to Samantha Sykes, a senior investment advisor with Raymond James, one of the reasons people have a lot of big decisions to make is that they don’t know where to start. Her clients, who range from mid-30s to early 70s, are often dealing with getting an inheritance, or they’ve just started making a decent salary, while also trying to balance getting married, buying a home and starting a family. “They’re feeling overwhelmed with bigger decisions about real money and real adulting. There are just almost too many decisions to make these days. So a lot of times, it’s just easier to leave it. It makes it easier for clients to press pause on making too many large financial decisions at the same time and walk away.”

Chantel Chapman, the CEO of financial literacy program, The Trauma of Money, agrees about having trouble finding a starting point. It’s common for Canadians to not know where to start when it comes to their money, choosing instead to avoid or ignore it. 

“Financial avoidance is extremely common,” says Chapman from her home in British Columbia. She explains that avoidance comes from the belief that scarcity is present or the person is catastrophizing their situation in their mind. Triggers for this kind of “analysis paralysis” can include, for example, inflation (the past year has seen record numbers for rising costs on the Consumer Price Index) and feeling overwhelmed. As a result, to cope, the brain tries to survive the stress, which can take the shape of avoidance. 

While burying your head in the sand is an option, it’s not a great one. “The problem with avoidance is that it’s a way to reduce pain in the moment,” Chapman says. “It gives us temporary relief, but there are negative consequences to avoidance.”

Those negative consequences are tangible. They include ignoring bills and statements, refusing to talk about money with friends, family and advisors, not knowing your credit score and not having a grasp on your net worth. 

Alleviate stress and investigate your money narrative

Starting the financial planning and investing decision-making process means looking at your relationship with money, says Chapman. That means identifying the narrative that surrounds your relationship with money and why you might be avoiding it. 

Chapman says to ask yourself the following questions to gain insight into your money story. 

• What were some of the messages I heard in my home? 
• What was it like growing up? How did money play into my situation? 
• What are some of the messages I’m hearing from society about money right now? 
• What am I hearing on the news? 
• What is the narrative that’s driving your behaviour? 
• How can I use this to create a new narrative that’s helpful from a financially stable standpoint? 

Doing this helps a person move away from the scarcity mindset and the impulse decision-making process, allowing them to make changes in their attitude and feelings towards money. 

Chapman recommends surrounding yourself with a team of friends, family and financial professionals that support you on your financial planning journey, which is where someone like Sykes comes in. 

Ask for help when you’re stressed about money

Recognizing you need support with your finances is huge. “I give my clients a pat on the back just for asking for help,” says Sykes, who says people who make an appointment with her have made the biggest move towards managing their finances. “They’ve overcome a lot to pick up the phone or send an email or find somebody like myself, and to lay themselves out there and say ‘I need help.’”

Don’t be afraid to admit what you don’t know

Financial jargon can be discouraging for many Canadians who may not be financially literate, which can prevent them from making investment decisions to begin with. Sykes speaks to her clients in their language. She works with a lot of creatives so she prefers to use analogies and examples they understand. 

You could also add a recurring calendar meeting with the link to MoneySense’s Glossary, and learn one term a day. Unlike many others you’ll find online, this one has personal finance and investing terms specifically for Canadians.

Start with a quick win, an easy decision 

One of the best ways to feel good about starting your financial planning journey is with a quick win. “It’s a way to make the client feel like they accomplished something,” says Sykes. She says to look at what’s keeping you up at night, the number one thing that you want to get done today as well as in the next three months.

One example could be setting up a registered education savings plan (RESP) or making a will. She points to the experience many of her clients have had with dealing with a parent who died without a will. It’s a lot of work you can avoid.

Hire a planner, and meet somewhere comfortable

While meeting in an office is one option, Sykes meets her clients where they’re at, especially when she has to coax them into providing necessary information or signing documents. 

She will meet up for a walk, go for ice cream or bring them their favourite coffee, she says. “Their defences are down a little bit and then they’ll give me the information I need, or I can engage with other trusted professionals like their accountant who might have their driver’s licence and their social insurance.” 

Have a buddy

Chapman says having an accountability buddy can help with your financial planning. She says it could be as simple as telling them your goals, such as saving for an emergency fund, and asking for support on your journey. When you feel tempted to spend, your accountability buddy can help you talk through why you want to spend money and even talk you down from spending your hard-earned cash. 

Look, it’s not easy out there and there are some things like the housing crisis that individuals can’t solve by themselves. But there are processes you can put in place to reduce the stress around your finances. That way, it’s one less thing to worry about in a world that feels turbulent, at best.

Read more financial psychology:

• What are money scripts? What’s yours?
• Investing Beyond the Numbers: Understanding financial flashpoints
• Emotional investing: How to make better decisions with your money
• How to overcome financial decision fatigue and start building wealth