Financial Stress and Investing Don’t Mix

The Situation

According to a recent study done by the American Psychological Association, one of the leading causes of stress for Americans is financial instability. Nearly 80% of those surveyed said that financial problems were the leading cause of their stress (Jones 2009). Financial stress is being felt as a result of our current economic situation that has forced many Americans to deal with the loss of a job or home, a shift in spending habits, or maybe even an entire lifestyle change. The economic turmoil has brought to the surface many concerns about financial security and even one’s ability to retire when originally planned. These types of financial stress have been shown to affect people’s confidence in their ability to make an informed decision about personal finances and investments. A person’s propensity to save money, create a budget, and control impulses is due largely to their perceived level of control over their financial future as well as their knowledge about financial management. How people feel about their finances is directly linked to how they feel about their lives.

The Problem

In a nutshell, financial stress reduces an investor’s confidence, decision making abilities, and their perceived level of control (McCallen 2009). To be a successful investor in the long run, one needs to be focused and trade without emotion or distractions. Trading should be based off of logic (cost vs. benefit) rather than emotion or stress. Trading based off of emotion and stress can lead one to making irrational decisions and trading with a sense of urgency. In the end, that sense of urgency can make investing decisions reactive as opposed to proactive.

The Solution

Knowledge is power. A lack of knowledge couple with financial stress can lead to some very poor decisions in your portfolio. Failure to properly manage finances can have long-term consequences on your investment portfolio. Educating yourself on the proper ways to manage your finances is the key to reducing your financial stress. With education, people can change their expectations and their behaviors that are currently leading them down the wrong path. Investors who are knowledgeable about finances are more likely to behave in a responsible way with their money (Taylor and Overby 1999). Financial stability will help give you back the confidence and sense of control over your financial future. In addition, you will be able to make sound investing decisions with a clear point of view.

References:

Jones, Dan. “Meeting your financial goals.” Paraplegia News 63.7 (2009): 24+. Academic OneFile. Web. 27 May 2010.

McCallen, Joan. “Saving for tomorrow lowers stress today.” Public Management 91.3 (2009): 5. Academic OneFile. Web. 27 May 2010.

Taylor, D.S. and Gail Overby. 1999. Financial Practices and Expectations of Students and Non-Student Consumers. Journal of Family and Consumer Sciences, 91 (4): 39-42.

Financial Doom and Gloom Or Opportunity?

The economy was going crazy. There was more money and credit available then ever before. Then like a light switch it changed, instantly, overnight.

Are we hearing the truth from CNN, Fox News, the media and politicians in general? Do they ever really tell us the truth?

They say the economy is recovering, unemployment is improving, housing stats are up. Are the statistics true or manipulated?

Are we facing a depression? Are we in a depression? Some have compared what we are in to the Great Depression of the 1930’s. Did you know that more millionaires came out of the Great depression than went into it and some of the largest companies still in existence today were started in the 1930’s. Not everyone that came into the depression as a millionaire came out a millionaire. How can you protect what you have and build on it rather than lose your hard earned money?

There are opportunities to create substantial wealth for you and your family right now, in 2010 and onwards and have the lifestyle that you desire. The informed and educated will be able to take advantage of the opportunities available right now and in the future. The key is where to get the education and information so you can be apart of the wealth transfer that is about to take place. It is vital to get information from the experts that tell the truth even if it is not pleasant to listen to. It is important to work with people who have some vested interest in what they are recommending to you.

A membership of well connected, informed financial advisors can lead you in the right course to financial freedom. You will learn how to invest your money wisely. This membership has no conflicts of interest. All wealth creation opportunities have been researched and due diligence done on the company and the management team but you are also encouraged to do your own research. Align yourself on the same playing field with the ultra wealthy and connected. Checking this out will change your life if you act on it.

5 Tips on How to Manage Financial Stress and Your Health

Global recession or not, one has to face financial stress every now and then in their lives. A common man has been cursed to cross roads with financial instability at some stage if his life. Financial problems lead to mental stress which doesn’t really help in the predicament. This mental stress does not serve any purpose and only results in creating further problems.

In turn it will have bad effect on our health also, causing us many stress related diseases such as high blood pressure, tension, acute depression etc. So, it is a very important to fight financial stress in today’s world, not only for monetary reasons but also because it can have severe effects on our health too. In this article there are five tips to help fight financial stress and its bad effects on health.

1. Try to save on your normal bills and don’t waste money on frivolous things. There are many small things where you can save money like you can go for cheaper clothes instead of designer clothes. At such time, your saved money can prove to be a boon for you. If you buy anything frivolous and later realize it is frivolous, then you are going to spend more time cursing yourself for the bad decision, leading to more mental stress. It is best to avoid such a situation from the beginning.

2. You can invest some of your money in low risk business ventures. You should put money in those companies which have a proven record of transparency and reliability, even if the profit is not much. At such times, reliability becomes much more important than profits. Be well informed of the all developments of the market by reading the economic news and through the internet. Knowledge is power, and you can take good and profitable decisions only if you are well informed this will help you to deal with your financial stress.

3. Take time off from the daily activities to relax. Indulge yourself in your avocation. Do things that take your mind off from the stress. Have a fun time doing it. Taking a break from all your stressors is a great stress relief technique.

4. You can go for professional advice to take care of your financial assets. Most of us can take ill informed decisions as a result of lack of knowledge and financial training. Financial experts can help you take wise decisions as they are well informed and well versed with the financial nuances and economy upheavals.

5. At such times, your health can be negatively affected by the financial stress and money scarcity. Remember to keep a track of your health status. Visit the doctor if you have any doubts about your health condition. “Exercising regularly and eating healthy” may be something that you may have heard a million times, but it can never be overemphasized. If you manage to take out time to exercise, you will realize that your stress level has decreased considerably.

Remember that health is the real wealth for humans, and if you are healthy, you will be able to fight all the problems with more confidence and sustainability. You have to keep in mind that these bad times will end sooner or later. Those who will survive this time with patience and sane decisions will reap the benefits later on. But for this you have to be healthy this will help you to cope with stress, not only physically but also mentally.