Scientists would like you to believe that gray and thinning hairs are a product of genetics. That somehow, the information stored in your parents’ deoxyribonucleic acid (DNA) and passed down to you will determine whether you reach your late adult years with a thick mane on your skull … or in desperate need of Rogaine or Just for Men.
They’d like you to believe that.
But internal research by WealthUp’s motley collection of money minds indicates they’ve got it all wrong.¹
You can chalk up our dying follicles to financial stress.
And in the spirit of sticking with this comically razor-thin premise and generally lazy introduction, we’re going to tell you how to keep that hair on your head … by sharing our recent discussions with a pair of experts about how to emotionally (and practically!) deal with that stress.
The Tea: A couple of weeks ago, our Weekend Tea focused on financial stress specifically related to the outcome of the upcoming presidential election.
But let’s say the election wasn’t in a few months. Let’s say it was next year. Or five years from now. Call it 10.
WealthUp Tip: Not sure whether you need a financial advisor? Here are a few questions to ask yourself.
Would your current money anxieties even budge?
Oh, sure, an election can exacerbate your fears. But the key word there is exacerbate—it’s taking something aggravating and just … well, aggravating it even more.
Let’s quickly go back to the MarketWatch Guides Financial Stress Survey we referenced in that prior Weekend Tea. A reminder: MarketWatch Guides talked to 2,000 Americans about how finances are affecting their mental health. Their findings:
- 88% say they feel some level of financial stress.
- 65% say finances are their biggest source of stress.
- 64% reported feeling “financial fatigue.”
- 47% say that, financially speaking, 2024 has been the most stressful year of their lives.
That paints a pretty stark picture of financial anxiety now. But it’s important to understand that many of these concerns have been around for some time.
Grant Gallagher—Head of Wellbeing at New Jersey-based Affinity Federal Credit Union and emergent Weekend Tea regular—shared a few observations from various AFCU surveys and studies over the past few years:
- AFCU asks its members how satisfied they are with their current standard of living. Over the past three years, he says, they’ve consistently found that only about 60% of surveyed members express any level of satisfaction.
- Members also are regularly asked “Have you worried about money over the past week?” Yes answers are consistently a little over 30%. “It has creeped up a little bit,” he says, “but it’s consistent.”
- In a study that AFCU discontinued at the end of 2023, respondents from the credit union’s communities consistently said for a few years that inflation was their biggest source of financial stress.
However, perhaps more troubling than what people are saying is what people are doing … and aren’t doing.
In the aforementioned MarketWatch Guides survey, 58% of respondents admitted to hiding financial stress from their loved ones, and 44% say they’ll just ignore their financial problems until they turn into full-blown crises.
If you’re wondering just how effective burying one’s own head in the sand is, wonder no longer.
For one, that idiom is built on a fallacy. Despite what you might have heard, ostriches don’t actually bury their heads in the sand at all, let alone out of fear. (H/T Cleveland Zoological Society!)
But also, no … ducking your responsibility and hoping it will magically go away on its own is, as you should probably expect, completely ineffective.
“If you’re hiding a problem until it becomes a crisis, that’s typical behavior for someone that is in over their head. It’s what we see when people are dealing with financial situations they don’t know how to navigate,” Gallagher says. “But that’s just going to compound the problem until it truly veers out of control.”
So, what can you do?
The Take: We wanted to provide a wide variety of ideas from a couple points of view, so we took some time out to talk not only to Gallagher, but also Kassi Hyde, ChFC, Wealth Management Advisor at Apollon Wealth Management, a South Carolina-based financial planning and wealth management firm.
WealthUp Tip: Index funds are a typically low-cost way to build a portfolio with all the essentials you need.
Conveniently enough, attacking the underlying financial problem can help you with the emotional stress that comes from it, but also, improving your mental well-being can also help you make a clearer decision on fixing your financial situation.
Below are several of the most productive ways you can begin helping your mind and your wallet.
Mind What You Can Control, Let Go of What You Can’t
Even though financial anxiety and stress stem from real problems, those emotional responses are quite literally in our heads—and thus, says Gallagher, a solid way to tackle that is with a mental-health approach.
Affinity’s wellbeing coaches ask their members about their financial concerns and stresses, then tell them to sort those into two buckets: what’s in their control, and what’s not in their control.
“If it’s within your control, you can figure out how to manipulate that pain point to get it to where they want it,” Gallagher says. “But anything you can’t change is literally just a ‘stress black hole,’ and you’re only hurting yourself if you’re focusing on those things.”
That’s not to say you should outright ignore things you can’t change. For instance, if you’re just barely making ends meet, paying your bills probably causes you stress. You can’t ignore your bills—you have to keep paying them. But rather than dealing with them every single day as they come, set aside a regular time each week to address them. When you do, pay them, and move on. By reducing the frequency with which you engage that particular stressor, you’re giving your mind time to think and breathe, which can in turn help you better focus on improving your financial situation.
And when it comes to managing things you can control, don’t swing for the fences. Address your financial shortcomings in a more realistic, sustainable way.
“Make slow, steady progress,” Gallagher says. “That might not give you very strong positive feedback at the time. However, once you look back a couple weeks or months later, you’ll see that you made a difference, that you had control, and it will make it less stressful than it was.”
Combat Feelings With Data and Context
Fear has a way of distorting reality—and that’s where conversations with financial advisors, consultants, and other professionals can provide much-needed context.
Hyde says providing data is helpful.
“I have clients that come to me and say their portfolio has to be down because the Dow [Jones Industrial Average] is down,” she says. “And I say, ‘You don’t own the Dow; you own this,’ and show them how [the index is] related or not related to their portfolio. We try to educate them about understanding benchmarks better so they can feel a little better, and then they tend not to overreact.”
WealthUp Tip: How long will your retirement savings last? That depends on your withdrawal strategy.
This kind of guidance isn’t just pivotal in battling day-to-day anxiety, but to stay your hand from making potentially detrimental financial mistakes.
“I try to put a dollar into perspective,” Hyde says. “Let’s say a retired client says ‘I want to put a half a million dollars in cash.’ I’ll tell them, ‘If you only spend $100,000 a year, do you think the market will do nothing for five years?’ Then we talk about how much money they really need to have in the next few years.
“A key to being an advisor is talking through pros and cons [of pulling out of the market]. We have to explain that if they are fearful and want to sit on the sidelines, their decisions could affect their longer-term plans; they might have to spend less in retirement as a result.”
This doesn’t just pertain to managing a retirement portfolio, either. Even seemingly mundane actions such as going to the grocery store can warp how you view your own day-to-day finances. And “people also need to have conversations with professionals to help them zoom out and see the bigger picture,” Gallagher says.
Consider a person who gets a sizable raise at the start of the year, then for the rest of the year, they receive a regular reminder that food prices are rising. Even if that person has no problem footing the bill, they’re likely to think they’re in a worse financial situation than they really are.
“You buy groceries every week, so you feel that pain every week. But you only get a raise once a year, so you only feel positive once. That’s one good feeling versus 52 times a year you feel bad because you’re paying more for milk and eggs,” Gallagher says. “Financial professionals help people contextualize that.
Review How You Take in News
Your feelings aren’t just influenced by what you see at the store, of course. What you read and watch can have a significant impact on how you view your own finances.
Gallagher points out that media headlines are “sensationalized to grab your attention.” That’s true, though to varying degrees—how sensational those headlines get largely hinge on the medium, whether that’s newspapers, TV news, online news, or social news “providers.” But when he says “the headlines are typically less exciting when you dig in and understand the full story” … well, we can tell you to take that to the bank.
The problem this causes, he says, is that there’s a disconnect between broad consumer sentiment about the economy and actual economic indicators (think: GDP growth or jobs data). And sometimes, there’s a disconnect—how the economy is doing might make you view your own finances differently than if you were looking at them objectively.
“A financial professional who looks at all this [economic] information and has these conversations every day can help you contextualize your situation,” he says. “They might say to you, ‘Sure, you’re feeling stressed, but look at your debt—you’re actually doing OK, while the average person is overlevered. You have an emergency fund. You’re not tapped out.’ These conversations can help.”
Gallagher’s advice? “Don’t just look at headlines. Read whatever the financial news is. Understand what it’s telling you. Step back and understand how it potentially impacts you.”
Hyde adds that it’s possible to oversaturate yourself, especially when it comes to the financial markets.
“I tell my clients to stop watching the market on TV,” she says. “If you watch day-to-day, you’re missing the forest through the trees. You’re well-attuned on a daily basis, but you’re not seeing things on a larger scale.”
WealthUp Tip: Before you worry about your retirement savings, see how they compare to the averages for each age group.
Importantly, financial shows can be informative, but they’re also meant to be entertaining. They need to educate you, but they also have to keep you watching, so they can often make things seem worse or better than they really are.
“We even do presentations about the taglines from the big shows on TV: ‘The best of …’ ‘The worst of …’ It’s extreme,” Hyde says. “And it can make you fall into a negative thought process. So you have to step away and realize it’s entertainment.”
Be “Financially Irrational.” No, Really!
From time to time, the soundest emotional solution might actually be at odds with the soundest financial solution. When that happens, don’t automatically assume your calculator has the better plan.
“We tell people it’s OK not to be financially rational,” Gallagher says. “The most financially rational approach might not benefit your wellbeing the most. It’s OK to pay a premium to support your mental wellbeing.
Gallagher points to the two widely recognized techniques for paying off debt:
- Avalanche: You look at all your debt from a rate perspective and prioritize paying off your highest-rate debt, no matter the size of the debt.
- Snowball: You start paying off your smallest-balance debt regardless of interest rate.
The former is the more rational approach, as it saves you the most in interest payments. But the second one, which prioritizes the psychological and emotional at the cost of higher interest payments, might still be the best way to go.
“If your high-interest-rate debt is your largest debt, it could be years before you pay it off and feel a sense of progress,” Gallagher says. And as a result, some people might get discouraged and fall back into bad habits. “But with the snowball method, because you pay off your debt quickly, you start a positive feedback loop—you feel like you’re getting somewhere, which encourages you to continue paying off your other debts.”
Financial advisors will do their best in guiding you to the most mathematically sound course of action, but they too understand the importance of preserving peace of mind.
Consider the COVID bear market of 2020. The conventional wisdom was to stay in the markets—when people sell out of stocks during a crash, they often don’t return fast enough on the rebound and end up in a much worse position than if they had simply stuck to their guns.
“For clients who were nervous, we put some money in cash,” Hyde says, “but maybe only 10%—some part that made them more comfortable but didn’t completely blow up their entire plan.”
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That’s it for this week, all. Congratulations to Team USA for winning the 2024 Paris Olympics medal count, and RIP Olympic breakdancing.
¹ We can’t stress this enough: We’re joking. We believe in the scientific process. We do not believe non-scientists know more about science than actual scientists. Please don’t angrily email us with dozens of links showing it’s actually genes that control hair pigmentation and hair loss. We know, we swear.
Riley & Kyle
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