Financial self-care: six steps to manage your money

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Covid-19 has transformed the world in a matter of weeks.

It’s forced the closure of schools and parks, put an end to family gatherings and meals out with friends. We’re all living at a social distance, working from home, and reliant on technology to stay in touch, to stay healthy, and to stay informed of what’s happening in the rest of the world.

It’s also forced us all to think about our relationship with our money — what we earn, how secure that income is, where the next paycheque might be coming from, what we should be buying, whether we should be saving, what’s happening to our investments and value of our properties, not to mention what will happen if the looming economic recession becomes a depression.

Money is already emotional. Find a fiver in a pair of old jeans and you’re elated. Splurge at the weekend and ride the guilt.

Covid-19 is heightening those feelings — and adding a whole lot of financial anxiety on top.

Some may be feeling panic around cuts to their income. Furloughing may trigger worries about job security, making rent, taking care of the family. Others may feel guilt for not saving, or spending on non-essentials, or because they’re not struggling to the same degree as others.

Research shows that the way we feel about our finances influences much more than our bank balance. To take care of our mental health, we need to take care of our financial health, just like we do our physical health.

But how do we look after our financial wellbeing during a pandemic?

One: Check your balance

Review your accounts. Look at what you expect to come in. Look at what needs to go out — food, bills, essential costs and subscriptions.

The root of anxiety is uncertainty. When it comes to our money, the single-most useful thing we can do is see and accept the reality of our financial situation. This means checking your balance, looking at what you have, and how your money is flowing into and out of your account. This is an essential first step when it comes to financial self-care.

Two: Categorise your spending

Crises have a way of making us think about what’s important — what matters and why. Once you understand your cashflow, you can think about what’s essential and non-essential, what’s must-have and what’s nice-to-have.

Many banking and savings apps — including ikigai — can help by categorising your spending into things like “groceries”, “travel”, “bills and payments”. You can see everything you’ve spent and quickly understand where you may be able to cut back — like gym memberships that aren’t seeing use or multiple subscriptions.

You don’t need to Marie Kondo your money — but the aim is to know your financial situation and find a strong place to start thinking about your financial priorities and values.

Three: Set a budget

In Open Up: We Need to Talk About Money, Alex Holder talks about the converse feelings that the word “budget” evokes for her. On the one hand it’s negative — a budget is “boredom, restraint, not buying the posh yogurt”. On the other, setting a budget is freeing — it involves taking control and drawing up your terms for how you spend and save. So, if you, like Alex, want the posh yogurt, you can get it.

There’s no one size fits all for building a budget — my sister likes spreadsheets; I prefer to track everything in my banking app — but ultimately, it’s a spending plan. It involves looking at your incomings, comparing to your outgoings, and making adjustments so that you always know what you can afford. Remember: all budgets need a little flex to keep you financially resilient.

The key is honesty. As long as you hold yourself to account, budgeting is a simple way to a healthier financial life.

Four: Be conscious of credit

Pay attention to your debt and make sure you know how much credit you have available (just in case). Personal loans, credit cards, mortgages, and overdrafts are all things you’ll want to factor into your budget and track along with your daily spending, including interest rates.

Five: Consider your savings

Many of us don’t have a casual six months savings sitting in a bank. A recent survey suggested that over half of adults in Britain would struggle to pay a surprise bill of £500, a figure that is even higher for those under 35.

However, your budget should reveal ways to save — including pandemic “benefits”, like the money saved by not commuting everyday.

Five tips that help you save:

  • Use your budget — this should help you decide how much you can afford to save
  • Set a goal — and positively reinforce your commitment to save
  • Separate your savings — so you don’t accidently dip into it for day-to-day purchases
  • Consider accessibility — given current uncertainty, you may choose to put part of your saving into a current account or saving pot to ensure they’re accessible quickly in case of emergency.
  • Start the month right — put a chosen amount into savings at the start of the month / after pay day so that you don’t see it as something to spend.

For those who have more saved, it’s still a good time to build strong habits and consider how you can spend more mindfully.

Six: Treat yourself

Everything may feel doom and gloom. But it’s important to treat yourself — even in a crisis. Self-care isn’t purely about restraint or sacrifice and ‘essential items only’. You need to find ways to relax, have fun, and reduce stress.

Give yourself permission to splurge on a few, chosen ‘non-essentials’. Like a nice dinner from an online restaurant, some comfy new WFH leggings, or a spa kit for a good old fashioned pamper. You could also create a savings goal — a snazzy coffee machine for the home office, or a weekend break once lock down is lifted.

One final thing…

We’re all living socially distanced lives in isolation — but you are not alone.

If you’re worried about debt or experiencing financial difficulties, such as a loss of income, there are places to support you.

Reach out to talk to your bank — they should be able to help provide solutions to fit you and your circumstances.

Speak to lenders, see if you can qualify for a payment holiday or deferral.

Talk to your friends or family. It might feel awkward but a lot of us are in the same position and will understand what you’re going through. You don’t even need to get specific. Talking tips for budgeting or saving together might provide a new perspective, alleviate some of the loneliness and the negative emotions of fear, stress or shame. It may even uncover positives if you start planning for activities for the post-Covid future together.

And if you’re overwhelmed and anxious, there are also groups like Mind and CALM that you can speak to about your money and mental health.

We’re all learning to live in this new world, but small measures do a lot for financial self-care.

Authors: Harriet Allner and ikigai

Harriet Allner is a writer, blogger and fintech specialist. She cares about stories that matter and is passionate about promoting conversation around money positivity and financial feminism.

We built ikigai specifically for those who want to bring their lifestyle to the next level, by taking better care of their finances.

ikigai beautifully combines wealth management and everyday banking in one single app. And by doing so, it creates a whole new world of opportunities.

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With investing your capital is at risk. ikigai is not a bank.

The value of your portfolio with ikigai can go down as well as up and you may get back less than you invested. Returns are not guaranteed and any historical returns, expected returns , or probability projections referenced on our website may not reflect actual future performances. You should seek financial advice if you are unsure about investing.

This article is not advice. ikigai is a trading name of Ikigai Invest Services Limited, a company registered in England and Wales (Company number: 12011662). Ikigai Invest Services Limited is registered with the Financial Conduct Authority (FCA) as an EMD Agent (reference number: 902740) of PayrNet Limited, an Electronic Money Institution authorised by the FCA (reference number: 900594) and is an appointed representative of WealthKernel (reference number: 723719) which is authorised and regulated by the FCA. ikigai is not a bank. Registered address: 16 Great Chapel Street, London, England, W1F 8FL.

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