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8 Tips To Improve Spending Habits and Financial Communication in Relationships
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Debt, feeling unhealthy and strained relationships can all negatively impact mental health. With the current pandemic raising awareness around mental health, it is important to reflect on how bad spending habits and relationship stress also play a role. Pandemic and pre-pandemic times show that Americans struggle to avoid overspending for health and leisure, causing stress in relationships.
40% of Americans admit to overspending on health, about 20% admit it caused issues with loved ones
In pre-pandemic times, nearly 40% of younger Americans went into debt for fitness and nutrition spending. As a result, that led some to have issues with loved ones: Twenty-one percent of millennials and 17% of Gen Z admitted that they’ve been confronted by family members or loved ones on their fitness and nutrition spending habits.
Furthermore, during the pandemic, nearly 1 in 4 Americans admitted they’ve spent more on gaming while socially isolating, and 37% of gamers admitted that their spending led to debt and caused stress on their relationships. (See “pro-tip” from Dr. Zac Seidler, a clinical psychologist, on advice for men experiencing financial hardship.)
8 tips to improve spending habits and financial communication in relationships
Our spending habits can have a direct impact on our relationships and wellness. Additionally, these recent studies show that there is a need for better communication in relationships, especially when it comes to finances. Developing healthier spending habits and communication skills simultaneously is critical to reducing stress and increasing quality of life.
Here are several tips to spend wiser, be more mindful and connect more within relationships.
1. Boost your knowledge
To start improving spending habits, it’s important to educate yourself to avoid falling into a debt cycle. Learning how to build credit, how to pay off debt and how to better understand interest rates are examples of financial basics that can help you make wiser money decisions. Here are several guides and articles to start boosting your finance knowledge today:
- 3 smart ways to build credit from scratch
- Can I lower my mortgage interest rate without refinancing?
- Understanding credit utilization ratio
- How to pay off your debt with these 5 strategies
2. Create and maintain a categorized budget
Establishing a budget creates predictability and helps prevent overspending, which can help reduce the risk of relationship tension. To create an effective budget, start with all essential expenses, then create space for the expenses that promote overall health, happiness and well-being.
If there’s an expense that’s not within budget one month, consider saving up for it over a few months to afford it, in order to avoid carrying debt. Another way to handle large purchases is to consider a 0% intro APR card. A 0% intro APR card allows you to pay off a large purchase over the course of several months without accruing interest. This way, you stay within budget each month without the fear of paying extra in interest.
The key to maintaining a budget is to take time to evaluate it every few months. Needs and circumstances change, so it’s important to update a budget accordingly. For instance, the pandemic has led more Americans to turn to streaming services and online subscriptions, more than tripling their subscription spending. It is likely that subscription needs can change from one month to another, so knowing which services to cancel when you’re no longer using them can help keep your budget in check.
3. Prioritize credit card debt payoff
Having debt pile up can trigger stress and negatively impact mental health. Debt also creates stress in relationships; a recent study showed that 23% of millennials have broken off a relationship over debt.
While there are many forms of debt, credit card debt is the most critical to pay off first. Why? Because credit cards carry significantly higher interest rates. For example, the August 2020 average APR for a new credit card was 19.30%. Interest charges can quickly inflate unpaid card balances, making them much more difficult to pay off. Prioritizing debt repayment can help reduce relationship stress with loved ones, and can also provide peace of mind in uncertain times.
4. Set a regular time to discuss finances with loved ones
Frequent communication can prevent relationship strain over money issues. Especially in romantic relationships, it’s important to understand each other’s views on debt and spending on particular categories. Ideally, partners should communicate their budget to one another so that they can both be on the same page on a regular basis.
5. Listen to money and relationship experts
Paired with ongoing communication, using resources to learn about handling finances and relationships can improve spending habits and reduce stress. Podcasts make it easy to learn while going about a daily routine.
Here are several podcasts on relationships and money to tune into:
6. Consider helpful apps for mental health and mindfulness
In addition to working on improving relationships and finances, it helps to work on improving individual mental health. A strong, healthy mindset can more readily handle uncertainty and money issues. Current technology makes mindfulness easy to access through a variety of apps dedicated to mindfulness and mental health.
Here are apps to consider using:
7. Consider seeking a professional or mentor
Sometimes it takes more than an app or podcast to get effective help for mental well-being and relationships. For some, having a dedicated professional to work with one-on-one is crucial. Here are resources for finding a dedicated professional or mentor:
8. Celebrate the small wins
Improving spending habits and relationships require continuous efforts. At times it can seem overwhelming, so it’s important to celebrate the small wins. Plan fun dates or trips to celebrate staying within budget or going a month without any money arguments.
Credit card rewards make celebrating small wins easy. Use a rewards credit card for purchases you’ve already budgeted for and use the rewards to celebrate good habits. LendingTree found that 13% of those with rewards cards don’t often use their points, miles or cash back, so these rewards can go overlooked. Cash back is the most convenient reward, as it effectively puts money back into your wallet. Here are some cashback credit cards to consider.
Pro tip: Advice from a clinical psychologist
For an expert lens on mental health, we turned to Dr. Zac Seidler, clinical psychologist, leading men’s mental health expert, and director of mental health training at Movember.
Dr. Seidler’s research confirmed that financial hardships do have a direct negative impact on mental health, particularly for men. “Men who are struggling to make ends meet, who are under financial pressure in any way fare a lot worse on mental health outcomes. This may be linked with dominant masculinity around needing to be self-reliant, a provider and protector, which are all hard to upkeep when you’re really toughing it out.”
Fear of judgment and opening up can prevent someone from seeking the help needed. Pushing through those uncomfortable feelings and finding a space to open up can help provide new perspectives and also start the problem-solving process.
So what is the key to fostering healthier relationships? “Healthy relationships start with respect, but people often misconstrue this to purely mean respect for the other person. I can tell you from experience as a therapist, it also includes respect for self. That’s how you’ll work out how to communicate effectively and foster a meaningful connection … when you have done your own work,” advised Dr. Seidler.