Financial Planning’s Role in Mental Health and Well-Being

Key Takeaways 

• The right planning reduces stress by providing clarity on cash flow, goals, and contingency plans for unexpected challenges.   

• Skilled advisors create a safe space for couples to discuss money concerns and overcome planning inertia.   

• Behavioral coaching helps clients avoid making emotional, wealth-eroding decisions, especially during times of market volatility. 

When financial markets become more volatile than usual, it’s important not to let financial stress affect your mental and physical health.  Having the right financial advisor can help keep things in perspective and improve your life beyond growing your wealth. 

Even in the best of times, couples argue about their finances. One spouse typically sees money as a vehicle for enjoying life while the other worries about having “enough.” Financial uncertainty adds to  stress especially when taking on debt to buy a home or car, or when facing job insecurity or an uncertain stock market and economy. Then there are couples in the "sandwich generation" who are trying to care for children and aging parents simultaneously. Anxiety, sleep disruption, relationship strain, and decision paralysis are common in couples before they start working with us, typically in their mid-50s. 

How Planning Reduces Stress  

The right kind of planning can substantially reduce stress by giving you clarity around your cash flow, goals, and contingencies for any curveballs life throws your way. Take eldercare, a potentially stressful situation for both aging parents and their adult children. I’ve had discussions with several aging clients who want to remain in their homes (with caretakers) instead of moving to retirement communities. I told them: “You and your children really need to go look at some assisted living facilities, because if the level of care that you get at home isn't sufficient, you need a backup plan in case of emergency.”   Having that type of contingency planning done in advance reduces stress tremendously since you (or your children) don’t have to scramble around looking at options when a parent’s health or cognition has deteriorated significantly, or when the kids can no longer handle the eldercare responsibilities on their own.  

Having too much idle cash can also be a financial stressor, too. Many people don't want to get caught short in an emergency as they age, but that can also be problematic. I recently met with a client who had the equivalent of 30 years’ worth of living expenses spending tied up short-term CDs and low-yielding savings accounts. He didn’t trust the stock market and recent events only made him more steadfast in that view. But he was giving up so much return by being so conservative. I told him: “You’re 75 and you have enough in bonds and short-term reserves to last the next 20 years. You have the capacity to take on a little more risk to get higher returns for the benefit of future generations of your family.” By getting people’s investment allocation aligned properly with their goals and time horizon, we can improve the return on their investments. And that reduces money anxiety. 

 Safe Space for Money Conversations  

One of the most important ways we help couples is by creating a safe space to discuss the money concerns without judgment. Spouses often don’t agree on a money strategy, so they take no action at all. I get it. People live such busy lives these days. Sometimes the semi-annual meeting with us is the only time they  actually sit down and focus on their money together. Sometimes having an impartial “tiebreaker” to help them get through their planning inertia gets things moving in the right direction. Having a specific date, time and space to focus 100% on your financial situation can alleviate procrastination and bring couples closer together.  

Behavioral Coaching as a Core Value: 

I know many people start working with us because they want guidance about investments and retirement planning. But one of the most valuable services we provide is behavioral coaching – helping clients avoid self-destructive behaviors such as panic-selling, overspending, or procrastinating. People are incredibly emotional when it comes to their investments. This really surface when the markets are more volatile than usual.   

Over my career I’ve found that most people don't care about money per se. They care about what money can do for them and their loved ones. Helping clients maintain that perspective and stick to their investment plan is a key reason why we can deliver a better investment experience. 

We help set reasonable deadlines and hold our clients accountable, especially for those who need them to make sure their savings targets are hit or that they spend within their means. Our clients rely upon us to be reliable and provide our professional perspective so that they can be informed to make the right decisions that work best for their family. 

Financial Self-Care 

Sometimes it’s as simple as setting up automatic transfers so you don’t even have to think about moving money around to achieve your goals. For instance, when you get your bonus, you don't have to think about how much you can afford to splurge on and how much you need to save. We already know you need to save $100,000 a year, so the amount you need for savings is already pulled from your bonus as soon as it hits your bank account. That’s another way the right financial planning reduces stress. You don’t have to rethink decisions you already made every time you have cash accumulate.  

Focus on the big picture. When the stock market is volatile, people tend to get caught up in large day-to- day market movements. While changes in one’s portfolio value may feel large in the moment, in the grand scheme of things they may be just another bump in the road. When we review financial plans with clients, we focus on the big picture first to show the impact of recent stock market returns on their plan’s probability of success.  Most clients are surprised and pleased to see the minimal impact due to their properly diversified portfolios. This leads to the peace of mind most of us seek when it comes to our finances. 

Conclusion  

If you’re concerned about volatility and feeling stressed about your financial future and the impact it’s having on your health and relationships, we’re available anytime to have a conversation. We’ve helped many people just like you achieve financial freedom and peace of mind in all market climates.  

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RYAN M. VOGEL, CFP® is the CHIEF PLANNING OFFICER, PARTNER at Novi Wealth Partners. financial planning and mental health