By Bill Taber
The link between mental health and money has long been researched and discussed—with arguments on both sides of the “Does money make you happier?” debate. As we witness historically high levels of inflation and the looming possibility of a recession, it seems the link between mental health and money is now more critical than ever.
In fact, a recent survey conducted by the American Psychological Association (APA) found that 87% of Americans are stressed about the rising costs of everyday items. (1) In a separate survey conducted by Bankrate, 42% of Americans said money concerns frequently have a negative impact on their mental health. (2) With numbers like these, it’s no wonder that many Americans believe that having more money makes you happier—or at least allows you to live with less stress.
However, at TABER Asset Management, we believe that simply having money isn’t the key to happiness. Rather, it’s your financial mindset and beliefs around money that can both propel you to accumulate wealth and appreciate what you have along the way. We are so passionate about this topic that we recently recorded a podcast about it. Here are three factors that we think affect both your mental health and your money:
Your Financial Mindset
Your financial mindset is the single most important part of your beliefs around money. It can be an antidote to the stress you may feel about inflation, debt, and personal finances, or it can be a prison that keeps you trapped in those feelings.
For instance, if you are worried about not having enough money, your subconscious mind will focus on that thought and work to inhibit you from seeking out ways to accumulate more. It may kill your motivation to obtain a higher-paying position. You may also avoid developing your professional skills by dismissing continuing education courses, networking events, and other career opportunities. In doing so, you become less competitive in the workforce and create a self-fulfilling prophecy.
On the flip side, if you have a positive financial mindset and believe that you will always have enough money, you may use your current circumstances as a catalyst to expand your skill set and become a more marketable employee. In doing so, you are open to “possibilities” and career opportunities around you, and you will more likely achieve your financial goals.
Napoleon Hill said it best: “What the mind can conceive and believe, it can achieve.” The way you think dictates what you will (or won’t) do to make your goals a reality.
Having an Abundance Mentality
Having an abundance mentality can also greatly affect your ability to accumulate and maintain wealth. I like to think of the financial mindset as your thoughts about money, whereas an abundance mentality represents a positive way to think of it. It will be difficult to have an abundance mentality without first thinking in a positive financial mindset.
An abundance mentality focuses on what you have rather than what you don’t. It is an opportunity for you to practice gratitude (i.e., being grateful or thankful for the things that are going well in your life) even if you’re not exactly where you want to be just yet. This requires an understanding of the law of attraction. Life is like a mirror; it will reflect back not only what we think, but also the level of effort we put in. By focusing on abundance and prosperity, more of it will show up.
Let’s take a look at some examples:
Example #1: Debt Mentality
Imagine you just graduated college with $100,000 in student loan debt. Maybe your first job only pays $40,000 to $50,000 per year and you are overwhelmed and stressed about how you’re supposed to pay back your debt, while also living a decent life. You become consumed by this dilemma—dwelling on and worrying about the debt so much that your mental health suffers.
Because you are suffering, when you shop, go on vacations, and, generally, live beyond your means, you are creating more stress. All of this is funded by debt, and now you have gotten yourself even deeper into a financial hole you can’t see your way out of. Your debt mentality brought you more stress, and stress brought you more debt.
Example #2: Abundance Mentality
Now imagine that you still have the same amount of student loan debt and the same job that only pays $40,000 to $50,000 a year. But this time, you create a plan to pay off your loan. It may take you 10-plus years, but you have budgeted an amount that can be paid each month without straining the rest of your finances. You track your finances knowing that this is a short-term issue that hard work, diligence, and consistency can solve. With a regularly planned repayment of your debt, you can put the debt burden out of your mind.
You now feel empowered to focus on developing your skill set, working your way up in your career until you get to a point where you can pay off your debt more easily. Because you don’t see the debt repayment as an impossible burden, but, instead, as a necessary step on the path to abundance, you are able to create more prosperity within your life. Your abundance mindset brought you more abundance, and feeling empowered to pay back your debt allowed you to pay back your debt without being consumed by it.
An abundance mentality starts small. Start by acknowledging the good things in life. Whether it’s a beautiful sunset or a bus that runs on time, nothing is too small to feel grateful for. Write these down and review them on occasion. The more you can focus on abundance and prosperity (in all forms), the more it will show up in your life.
Wise Money Management
The last factor that affects your mental health and your money is wise money management, even in the face of extreme unforeseen events (like a pandemic). The truth is, wise money management is not some grand plan to earn millions of dollars all at once and ride out the rest of your life. Instead, it is the small, consistent steps that compound over time. There are three things you can do to set yourself up for success and improve your relationship with money:
Build an Emergency Fund
If the pandemic taught us anything, it’s that having an easily accessible emergency fund is a crucial part of a solid financial plan. A good rule of thumb is to have at least six months of non-discretionary expenses saved in a highly liquid account. If you have variable income, or your household only has one source of income, consider saving closer to 12 months of expenses.
Create a Budget & Track Expenses
Budgeting and tracking expenses are always good things to incorporate in your financial toolbox. The more you can feel in control of your money, instead of feeling controlled by your money, the better.
Take Advantage of Dollar-Cost Averaging
As tempting as it is to stop investing during down markets or when times are tough, consistent investing is a huge part of building wealth over time. This is because of dollar-cost averaging. If you invest $100 a month into a mutual fund, it may only buy two shares when the market is doing well. But when it’s doing poorly, that same $100 may buy five or six shares. You are still investing the same amount, but you are getting more for your money. When the market goes up again, you are able to take advantage of that return on more shares than if you only invested when the market was high. These small gains add up over time through the power of compounding. Keep in mind that until you start investing, time will always work against you. Once you start investing, however, time works for you even if there are short-term dips in prices.
Are You Ready for a New Financial Future?
If you’re ready to reshape your beliefs around money and stop feeling consumed by your financial concerns, we are here to help! At TABER Asset Management, we can help you achieve a positive financial mindset through our comprehensive wealth management process.
Bill Taber is President and Founder of TABER Asset Management, an independent, fiduciary wealth management firm that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. With more than four decades of experience, Bill is dedicated to building relationships with his clients and their families and walking alongside them as they navigate financial decisions. His favorite days are the ones when he gets to witness the joy and relief on his clients’ faces when they realize they can pursue their dreams and live their ideal lifestyles. Bill is known for going the extra mile, getting things done with integrity, and working with a stewardship mentality.
Bill graduated from the University of Iowa with a bachelor’s degree in business administration and fell in love with the profession when he got to help one of his first clients—his father—turn his lifetime of hard work into a dream retirement. He got his start in the industry as a corporate services representative for Bankers Trust Company and spent decades working as Assistant Vice President of E.F. Hutton & Co. and First Vice President of Principal Financial Securities. He is also a graduate of the E-Myth Worldwide Mastery Business Development Program and is Series 65 registered.
In his spare time, Bill enjoys giving back to his community and served 11 years as a member of the Board of Trustees of Broadlawns Medical Center and 14 years as a Community Representative to their Board Finance Committee. He is also one of the founding members of the Greater Des Moines Connections Mentoring Program. When he’s not working, you can often find Bill spending time with his family and participating in one of his many hobbies, which include traveling to national parks, presidential libraries, and foreign countries; gardening; reading non-fiction; and practicing yoga, Pilates, and meditation. He also loves the simple joys of listening to music, going for walks or bike rides, and watching James Bond 007 films and any movie starring his favorite actress, Meryl Streep. To learn more about Bill, connect with him on LinkedIn.