As we go through another total lockdown, we can’t help but to feel anxious about our finances. Many jobs, hours and wages have been lost with thousands of businesses having to pause operations or permanently close. When facing uncertain situations like these, it is only natural to have an anxiety response, but if your fear has become overwhelming and disruptive, it may be a sign of an anxiety disorder. 

Money-related anxiety can cause your stress to reach unhealthy levels. Like other forms of anxiety, it can affect your physical health and daily life, causing insomnia, loss of appetite or inability to focus. If left untreated, anxiety can also develop into depression. Below are some signs often related to financial anxiety:

Overspending

• “Retail therapy” is real! Spending money is a common coping mechanism when it comes to strong negative emotions, such as sadness and anxiety. Also known as emotional overspending, it is a vicious cycle that temporarily relieves and then worsens stress.

Fear Of Spending

• As important as it is to save money, especially during these times, extreme frugality is unhealthy. Some people with financial anxiety may take frugality too far by overworking themselves and refusing to pay for essentials, like healthcare or house repairs.

Financial Denial

• It is common for us to deal with anxiety by avoiding our triggers. However, when it comes to our finances, they are too important for us to ignore. So, when we avoid dealing with our finances, it only causes us more problems and anxiety.

Compulsive Behaviour 

• From an obsession with being frugal, or earning more money, to obsessively checking your bank accounts, these anxious thoughts and behaviours can be debilitating. If so, they need to be taken seriously as anxiety disorders are real medical conditions.

Whether you find yourself engaging in these behaviours, or are looking to develop a more positive mindset towards money, here are healthier ways for you to cope with financial anxiety:

Manage your debt

• Studies have shown that people in debt have higher rates of mental health issues compared to those who are debt-free. Go through your debt to get a better understanding of them and develop a plan to pay them off. To avoid debt, put together a budget that covers your major expenses.

Automate important payments

• Missing payment due dates and having to pay a late fee can cause financial distress. If you’re able to pay these debts, bills and other obligations on time, automate them! For those you’re unsure of, set a reminder on your phone to prepare yourself for the due date.

Create a budget

• Being able to stick to the right budget will ensure that you live within your means. Budgeting will also help you track your spending and build your savings! Learn more about creating a budget from HeyAlfred here.

Track your spending

• End every week with a financial check-in, but don’t just look at your bank balance – go through your transactions and see how you can improve in the following week. Think of it as a financial self-care routine, which you can learn how to put together here.

Develop an emergency fund

• The COVID-19 crisis has made it crucial for all of us to have an emergency fund. These savings will help support us for a few months in case we fall sick or lose our jobs. Here’s how you can develop an emergency fund – it’s not too late to start.

Seek help 

• If your financial anxiety affects your day-to-day life, please seek mental health support. Other than therapy and counselling, you can reach out to a financial advisor for professional advice or to the human resources (HR) department at work for more information about your employee benefits.

Budgeting app, HeyAlfred, is here to help with this article!

Here’s a scary fact: did you know that more than 50% of Malaysians find it hard to raise RM 1,000 for emergencies? We all know we need to save money, but with rent, bills and day-to-day spending, saving money can sometimes take a back seat. However, it should be non-negotiable! Despite our financial commitments, having money set aside for emergencies and our future should be prioritised the same way as paying a bill – it HAS to be paid, on time, every month. If you’ve found yourself with some paltry sum in your bank account, scratching your head wondering where it all went this month, consider these steps:

• AUTOMATE A 5% SAVINGS RATE

Most financial advice will tell you to save 20% of your paycheck, but if you’re living paycheck-to-paycheck and struggling to save – start with 5%. One way to do this is by automatically setting up a direct deposit of 5% every time your paycheck comes in. This way, you’re building the habit first and can increase the amount once you’re in a more comfortable position. You can automate your savings at the bank or through saving platforms like Pod (via the HeyAlfred app). You can also consider increasing your EPF contribution, which could help you get your employer to match it. 

• BUDGET!

If you don’t know how much money you CAN save, you need to create a monthly budget – it’s not as scary as it sounds! Most of the time, our inability to save comes from the habit of overspending. With a budget, you can determine your monthly fixed expenses and variable expenses. From there, you’ll be able to see where most of your money goes, and what you can cut down on. Start by making a list of what you’ve spent on last month, then based on those numbers, set a budget for next month. For example: if you spent RM800 on food last month, try to reduce next month’s food budget by a little, say, RM750. If that was doable, try reducing it a bit more next month. Your budget will take trial and error – keep on tweaking it until you get it right. You can read more about how to create a budget here.

• SEPARATE SAVINGS ACCOUNT FROM SPENDING ACCOUNT

When you separate the money you’re saving from the money you spend everyday, you won’t be tempted to spend it all. This makes sticking to your budget more fool-proof too! Put the amount you’re allowed to spend into a spending account and monitor it closely – if it’s dipping low, it’s a sign that you need to reel back on spending not reach into your savings. At the end of each month, transfer any extra money leftover from your spending or checking account into your savings account.

• SAVING A FEW RINGGIT DOES MATTER

Anytime you have a little bit of money left, SAVE IT. Even if it’s just RM 1 or 50 sen – put it into your savings because believe it or not, it counts! Each increase in your savings will bring you closer to financial independence, and the younger you are, the MORE these little amounts count. Because of compound interest, the longer your money has to grow, the larger your returns will get.

Remember to put your money in a savings account that has a good interest rate (check out rates here). You can also look into property or other ways to invest your money and grow your savings. If you’re looking for a fun way to save, with accountability buddies, join HeyAlfred’s Simpan Challenge! Save RM 1,000 in a month and WIN cash rewards for a job well done. Join the challenge now.

NOTE: If you are struggling to follow these steps due to a low-paying job, or any unfortunate circumstances, saving money may take more work than what is listed here. This could involve taking on another side gig, or talking to the people at AKPK when facing serious debt.