For many working Americans who put major life changes on hold during the pandemic, 2022 presents a time to finally take the next step. Each generation has varying priorities when it comes to what these changes will entail – for example, according to a MetLife study, 81 percent of U.S. millennials are expecting to make a major life change in the next 12 months, including buying a new home (24 percent), getting a pet (22 percent), changing careers (19 percent), or having a child (15 percent). Nonetheless, individuals across the U.S. workforce are preparing to embark on new chapters in life, both mentally and financially.
However, these changes – while exciting – can be costly and stressful coming out of a year that has plunged financial confidence for many. MetLife’s 2021 Employee Benefit Trends (EBTS) study found that finances are a top source of stress for American workers, especially within the younger generations, as nearly 7 in 10 Gen Z (69 percent) and over half of millennials (54 percent) expressed concern over their financial health.
Here are three tips for how individuals can build positive financial habits while pursuing their long-term goals — and feel good about it.
Understand the connection between financial and mental well-being
There is no shortage of financial stressors these days – whether employees are battling inflation costs, unexpected medical bills, student loan debts or saving for retirement. These factors can add up and become a detriment to anyone’s mental health. Just consider that MetLife’s 2021 EBTS study found that poor financial health is a top driver of poor mental health.
What’s more, MetLife found that these financial anxieties can impact both personal and professional lives, with 26 percent of U.S. employees saying they’re less productive at work due to financial worries. This can have a compounding effect, as poor performance at work can lead to loss of promotions, raises and more down the line.
When realizing that mental well-being can worsen when financial stress is high, it’s important to consider their connection and how they can positively – or negatively – work together. For those stressed about making a major life change, looking at mental health in tandem with finances can be a great first step.
Take charge of their money and emotions around it
Everyone has a different experience with money, and this relationship can change over time. For some, this coming year may be their first experience managing their own money, for others it may be the first time they add their children’s expenses into their budget – all of which can challenge their existing financial plan. These new stressors can result in increasing anxieties around budgeting or putting savings on the back burner of financial priorities. Regardless of where people are in their financial journey, it’s important to consider how their emotions might affect short- and long-term financial decisions.
Financial anxiety is so much more than just worrying about money, as it can affect other parts of our lives and prevent us from working towards and meeting our budgeting and savings goals. In fact, MetLife’s findings saw that 50 percent of working Americans have felt more emotional about money in the past year as a result of the pandemic, and 41 percent do not feel in control of their finances.
That’s why, when preparing for a big life event, it can often be helpful to start building healthy money habits early in the planning process. Doing so will help establish a positive relationship with money, which will translate into increased feelings of preparedness and confidence in the big purchase, as well as in daily money habits like budgeting and saving.
This can be as simple as setting aside a small portion of every paycheck for a “dream house fund,” or incorporating weekly budgeting into a Monday morning routine. Whatever it may be, establishing positive habits ahead of time can help Americans stabilize their “Money Mood” when it comes time for a big expense.
Seek out available resources along the way
Thankfully, there are resources that can help individuals prepare for and manage these big goals. Utilizing financial wellness tools – like MetLife’s app, UpwiseTM – helps people create positive financial habits and make progress that feels good. UpwiseTM recognizes that money is emotional and that taking small steps can make a big difference. It offers educational content and interactive challenges that can help people understand, learn from and change their habits with simple steps.
Another helpful resource for working Americans is their employer, and employees should check with their HR team to see what financial tools or benefits are available to them. For example, they might offer benefits that promote employee financial wellness, including financial workshops and classes, or they may have employee resource groups available to ask questions and crowdsource advice from co-workers. Advice from trustworthy people can go a long way, too – they may have been in a similar situation before and can therefore give tips on how to prepare financially and mentally.
Major life changes don’t have to be as intimidating and overwhelming as they might seem, as there is no shortage of financial literature and information out there. The key for most people is to find out what works best for their specific situation and life stage, and taking the actions that lead to confidence and a greater sense of control. These actions can be as simple as creating a budget or setting defaults like rounding up savings or setting limits in certain spending categories. And we all know how much an ounce of prevention is worth, right?