Personal finance goes beyond numbers and charts. Unlike a company with an accounting department, we’re human beings with emotions, biases, and personality quirks. One of the key factors that interfere with investing and saving, however, is stress. Whatever its source, stress levels can cause even the most prudent investor to slip up, and turn toward irrational decisions. Here are some self-care strategies to help with it:
Stress and its impact on your money
Stress has long been linked to risk aversion; so much so that it’s even been blamed for triggering market crises.
When we’re fearful or anxious, our risk appetites plummet as we seek safety. Even normally optimistic investors become prone to panic, and this results in irrational moves like liquidating well-performing assets, or selling when it’s far too late (by the time news of a market crash arrives, the relevant assets have already fallen in value; so panicked selling often means buying high and selling low).
Anxiety isn’t the only concern. Other situations like domestic troubles, or sadness at someone’s passing, can lead to irrational behaviour as well. This can range from reckless trading behaviour, to complete disinterest (i.e., you are too overpowered by emotions to care about portfolio performance or bank accounts).
It’s unsurprising that over time, financial advisors or wealth managers find themselves doubling as part-time counsellors. There’s a real relation between your mental state and your financial state; and caring for the former is protecting the latter.
Here’s how you can you practice some self-care, and avoid stress over money issues:
1. Don’t obsessively track the markets
Unless you’re trading (which is quite different from investing), you don’t need to worry about how the market is moving every hour of every day. There’s immense stress from this, as you feel a pressure to sell both when prices rise (to capture gains) and when prices fall (to prevent worse losses).
Rather, focus on semi-annual or annual reviews of your portfolio. Part of the reason is to adjust your portfolio to match your risk appetite: this isn’t constant and can change with circumstance and age.
You want to tweak your portfolio to keep it at your “sleeping point” (i.e., where you can sleep peacefully at night), and leave it to do its work with minimal interference.
2. Delegate more often
Have you considered why driving is so tiring, when it’s mainly sitting in a chair and turning a wheel?
It’s due to the frequency of decision making. You need to make multiple different decisions each second, on whether to slow down, speed up, turn left, etc. Even if each individual decision is not physically or mentally draining, they all add up and have a cumulative effective.
The same thing applies elsewhere. Even an office job becomes exhausting when you’re trying to answer every trivial email, text message, or call. So now that you have sufficient wealth or income, don’t be too reserved about hiring more help.
Spend a little more on a virtual assistant, secretary, or even just someone to sign off on things for you. This will ensure you’re not mentally beaten down at the end of each work day.
3. Take vacations, or take a working vacation
Even if you can’t take long periods off, you can still opt for a change of scenery. This can mean doing your work from a cruise liner, or flying overseas to do your work from a café somewhere in Paris, Chicago, etc.
This will ensure you can recharge mentally, without worrying that you’re falling behind.
As a bonus, being abroad often means people contact you only for particularly important issues. This can help to filter out the more trivial phone conversations and questions.
4. Find a passion or hobby to use as a mental sanctuary
The best way to lower anxiety is to be completely “in the zone.” This typically requires a consuming passion or drive, which takes your mind off other concerns.
This can be physical (dance, hiking, gardening), or mental (flower arrangement, painting, poetry). Just about anything that shuts off the “noise” of the outside world can work.
Ideally, give yourself at least two to three days a week, or an hour a day after work, to fully engage in your pursuits.
These pursuits are especially good for retirees: they prevent a sense of identity loss that comes from not working, and they challenge you to maintain your mental and physical acuity. They’re also key to maintaining social interaction in your later years.
5. Make sure your estate plans are in place
This provides peace of mind in the event of emergencies. The most basic of these plans is your will: knowing that your dependents are cared for allows you to focus on your recovery, when the worst happens.
More complex instructions can also be delivered via a trust, where the assets you’ve set aside are legally protected, and will be distributed as you wish. Some trust arrangements are airtight, so even in events like bankruptcy, you can be rest assured your beneficiaries are unaffected.
Another bonus to having estate plans is that, however your work or the wider market is performing, you know your family is secure. This can minimise anxiety during volatile times.
6. Cater appropriately to your introversion or extroversion
Generic advice like “go out with friends” isn’t always the best way to deal with stress. Rather, it’s important to vary the approach your own tendencies.
If you’re an introvert, going out with friends might intensify your stress, and further lower your mental reserves. If you’re an extrovert, quiet meditation on a mountain retreat may aggravate you even further, and depress you with the sense of isolation.
Identify where your tendencies lie, and make time to cater to it.
7. Distract yourself often
When you’ve been in an intense meeting, or pulled an all-nighter, your next step should be to distract yourself. The best way to do this is to do something new: take a different route home, go to a restaurant you’ve never tried before, or even sign up for a class in something you’ve never considered (e.g., learn to play the guitar, pick up a new language, become a certified life guard, and so forth).
Constant, repetitive work can break even the strongest mind from tedium. Let this sort of frustration build up, and it can lead to depression, generalised anxiety, and unhealthy addictions.
One of the best things about being a single-digit millionaire is that, even if you’re far from super rich, you probably do have the funds to cater to such occasional whims. Take advantage of that.
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