The UK's stress and personal debt statistics speak for themselves. And the way things are right now, they don't make for a pretty sight. The long cycle of downturn to recovery doesn't feel like it's fully over yet. Maybe reading the news headlines hasn't helped my optimism - they do have a tendency to relay information in a brutal and stark kind of way. Here are some examples of this very phenomenon in action:
Average UK household to be £10,000 in debt by end of 2016 (1)
Money is the leading cause of stress in relationships (2)
Nearly half of adults feel stressed every day or few days (3)
Whew. Fancy a duvet day after reading that lot? Think again:
Seven in ten bosses do not think mental illness merits time off work (4)
Of course, not every single person is in debt and not every single person is feeling debilitated by stress right now. However, the chances are that most of us will experience money worries or stress (or both) at some point during our lives. So what can we do about it?
Creative Money Management - What's That?
Okay, so by 'creative' I don't mean that you need to suddenly become an artist or a film director. I'm just trying to get across the point that money management is something that we need to engage with on an imaginative level. By looking at it this way, it can often seem less burdensome which in turn helps you keep on top of it.
Some of the main elements I developed in my own style of creative money management just kind of occurred to me as I went along. This definitely isn't a prescriptive approach to things - in fact for me what works best about it is that it is flexible, and completely grew out of necessity.
The main aspects of creative money management are as follows:
'Microscoping' your expenses - This takes a bit of getting used to but becomes second nature. What it involves is basically recording every single expense for a few weeks, then looking at where you can tear some holes out of the total. For instance - a sandwich from the shop for lunch every weekday, and a pizza delivery on a Friday night could amount to at least £25 a week. Which is £100 a month, £1,200 a year. Taking a packed lunch to work and making your own Friday night pizza could reduce this expense by around half (if not more than that). Do this for each area of your spending and see how much you can save - it can be properly amazing!
Dealing with bills head on - Never, ever stick a bill under the fruit bowl with vague thoughts of 'I'll pay it tomorrow'. Pay it today, right now, the second you receive it. That way you will never have to pay a late payment charge and may even get an early settlement discount. Even better, pay direct debit and let it happen by itself.
Dealing with debt head on - Again, procrastinating will just increase the pain. Look at your level of debt, work out how long it will take realistically to clear it, then do everything in your power to stick to your plan. Windfalls and wage rises along the way may even mean clearing it faster than you thought. Oh, and credit cards? Don't ever fall into a rhythm of monthly minimum payments - because most of that will be interest.
Make your money work for you
Savings these days don't offer fantastic interest, so you have to pay extra attention to your spending in order to save more. Take full advantage of special offers in the supermarket (and learn how to spot which deals really are a good deal and which aren't). Use cashback sites. Treat Martin Lewis as a guru. Money won't work as hard for you right now as it maybe once did, but sharpening your money instincts is only going to help.
The virtuous cycle
You spend less money. Your bills are paid on time. You know (almost to the penny) how much cash is in the bank and how much you'll need until pay day. You feel less stressed. And as a result of feeling less stressed, you're less likely to engage in coping strategies such as:
•Retail therapy
•Overindulging in food and drink
•Procrastinating
And this is how one set of good habits potentially lead to another. By having a more Zen approach to finance, life itself becomes more Zen. Ordered finances, calmer soul. Of course, it all sounds so easy written down, and I know real life can often be quite complicated and confusing - even for financial wizards. After all, who foresaw the downturn? But if we can move in the right direction with every pay packet (rather than the wrong one) - and do it creatively, then who knows what we might one day achieve.
1 Average UK household to be £10,000 in debt by end of 2016 - Guardian Borrowing and debt section, March 2015
2 Money is the leading cause of stress in relationships - CNBC, February2015
3 Nearly half of adults feel stressed every day or few days - Mental health Foundation
4 Seven in ten bosses do not think mental illness merits time off work - AXA PPP health insurance 2015 workplace survey, reported in The Telegraph