Updated October 10, 2023
Mike Zaccardi, CFA, CMT
Financial wellness is a newer concept that underscores the importance of investing in yourself just as much as putting cash to work in stocks and funds.
Sometimes, we all just need a break from the hustle, and with today’s post-pandemic work culture of non-stop connectivity to the demands of your job, it can quickly become overwhelming to ensure that your mind stays strong. We see more young people hitting personal financial burnout today than ever before.
Starting a new job is stressful!
Moreover, in today's fast-paced world, people are constantly on the move, frequently switching jobs and even careers. This adds to the mounting stress and uncertainty in our minds, resulting in mental fatigue when it comes to handling personal finances. After a hectic week at the corporate office, or at your at-home workstation, the last thing you may feel inclined to do is delve into investment allocation and budgeting decisions.
Women and young people encounter burnout most
Data show that women, in particular, are susceptible to feelings of heightened anxiety stemming from paying down debt, not having an emergency fund, paying for a house, or just feeling uneasy about meeting everyday needs. According to a 2023 survey, money is the most prevalent factor having a negative impact on people’s mental health. More than half of U.S. adult respondents cite money as leading to anxiety, stress, worrisome thoughts, insomnia, and/or depression. Finances are most draining on women, younger people, and low-wage earners, the study found.
Don’t quit, don’t lose hope!
The truth is that burnout is the product of neglecting your overall financial wellness, and steps must be taken to ensure that you are healthy both with your wallet and with your mind. (And ladies, we’re looking at you here.) According to a CNBC “Women at Work” survey of more than 3,600 women, more than half said they feel burned out at least some of the time. That is a financially precarious stat because the survey went on to find that more than 1-in-3 women said they considered quitting their job in the previous 12 months as a result of nearing a psychological breaking point.
Personal finance burnout can be costly
So, not only is there a well-known gender pay gap, but women are also more at risk of financial burnout than men. Research conducted in 2016 concluded that females face a $500,000 financial shortfall over lifetime earnings if they take a corporate hiatus (read: having kids) early in their careers. The same concept applies to any Gen Z employee—while you can surely embark on exciting adventures in your 20s (or even 30s, before you have extra mouths to feed) when not shackled to a 9-5 job, your future financial independence is at risk if you don’t have a long-term financial plan.
Here are four traits seen in people who are going through personal finance burnout:
Money avoidance: When we feel stressed, a common reaction is to ignore the problem and anything that might trigger us. If you are worried and anxious about your finances, then you are more likely to neglect checking in on your bank accounts and investments. That can lead to overdraft fees and a portfolio that gets out of whack.
Careless spending: The brain is only two or three percent of body weight, but it’s responsible for 20 percent or more of calories used in a day. So, the mind is an energy drainer. When we are mentally worn out, the brain is on the hunt for ways to conserve. That plays out in your money life through impulsive spending.
Rushed decisions: Likewise, stress often results in hasty and downright costly choices. That might mean selling stocks during market volatility or just making big online purchases without considering longer-run financial implications.
Getting by without a plan: During personal finance burnout, we see young people and women all-too-commonly disregard financial planning. What do we mean by that? Not paying down high-interest-rate debt, running a monthly deficit between income and expenses, and not realizing the value of basic strategies like contributing up to the company match in a 401(k).
Let's bridge the gap here. The solution to financial burnout doesn't involve quitting your job and going rogue, nor does it entail grinding away at a career you hate without giving yourself a break to have some fun. Instead, here are steps we should all consider taking to achieve a healthier work-life balance:
Stay informed: Just keep up to speed with how much you are taking home after taxes each month and what your biggest spending buckets are. Also, every now and then, peek at your investments to make sure they are on track. If you are not sure, get help. Finally, go on a money scavenger hunt by removing any junk fees and old subscription charges from your credit and debit card accounts. You can even use Allio's holistic view to keep a pulse on your financial health.
Craft a burnout budget: Don’t ever put guilt on yourself for splurging on the little things. Go for that Grande at Starbucks or indulge in a nice brunch with friends on a Saturday morning. Those things can help keep you going, and including them in your budget helps plan it all out.
Create easy guardrails: Small niceties are A-OK and help you keep mentally fit. Budget busters, though, are large one-off expenses or recurring charges that go unnoticed, adding up over time. Guardrails are like mini-money rules to live by, and it all comes down to being mindful of your spending.
Automate through simplicity: Remember before when we talked about how our brain likes to be as lazy as possible? You can use that to your advantage! Automating your savings, investments, and even parts of your spending, simplifies your finances, thereby reducing stress and tossing burnout to the curb. Just as routines and habits work wonders for our health, your personal-finance well-being can be taken up a notch with a bit of structure.
The Bottom Line
You can say goodbye to financial stress and hello to a happier, healthier you with a few quick money moves. Personal finance goes beyond just earning and saving, and dollars and cents. It is about striking the right balance between work and life. Take care of yourself, invest in YOU, and enjoy well-deserved breaks now and then. A little TLC often has the highest ROI.
In our hectic post-pandemic work culture, it’s so easy to become mentally and financially drained, and women and young people are most at risk. But by taking some “me time,” staying informed, setting money guardrails, and automating your finances, you can tell personal finance burnout to take a hike!
At Allio, our mission is to help you invest like a pro whether you are saving for a short-term goal or have your eyes on reaching financial independence faster. Our team of money experts has your back.
Allio’s mission is for everyone to enjoy financial wellness. You can get started today by downloading the app and automating your investing strategy with Allio.
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