Finances and mental health: How to stop stressing over your spending

Wells Fargo Head of Advice and Planning Michael Liersch and Kansas State University Professor of Practice Meghaan R. Lurtz, Ph.D., who is also the former president of the Financial Therapy Association, join Yahoo Finance Live to detail the best strategies to balance one's mental and financial health, how to maneuver guilt and stress related to spending, and finding joy in smaller purchases or experiences.

Video Transcript

- Well, with the looming recession, debt ceiling X date and rising interest rates, there's a lot to be worried about right now. In a recent Bankrate survey, 52% of American adults said that money has a negative impact on their mental health. That's up from 42% just last year. As mental health awareness month comes to a close, we're taking a closer look at how folks can manage their financial stress. Joining us now is Meghaan Lurtz Kansas State University professor of practice, and former President of the Financial Therapy Association. And Michael Liersch, who is Wells Fargo head of advice and planning.

Meghaan, I want to start with you. I mean, money is sort of one of those perennial things we think about as a source of worry. What is this number one tip you give to people to try to cope with that stress?

MEGHAAN LURTZ: Well, I think that's an important thing. So we oftentimes think of like fight, flight, freeze. And the fourth, there's another F word. And it's flock. When we are stressed out we tend to do this anyway. You call your-- had a long day, call your spouse. Your spouse can't really fix your long day, but it feels good to kind of spread that stress out a little bit. Share it with someone else.

Money is oftentimes a difficult thing to talk about. But what makes it 10 times harder is when we keep it all inside. When we try to hold that stress by ourselves, and we try to hold that anxiety by ourselves. It just feels more isolating. And so one of the best tips would be to speak with a spouse or a partner. Speak with your mom.

Or hopefully you're working with a professional financial-- a financial professional of some kind. Be it a CPA or a financial planner, and give them a call. Talk to them. They have seen markets do crazy things before. We've all sadly been through a recession. We've all been through interest rate hike. We've all been through many of these experiences before. And so just talking to someone else, spreading out some of that stress with another can be really, really powerful.

DIANE KING HALL: Michael, I want to bring you into this. Diane here. So let me ask you about some of the tips that you would bring to the table, and let's-- I want to touch on some more practical tips. I do think you do need to talk about things, you've got to get things out in the open and can't put your head in the sand. Especially because some of the things that stand out in particular in this bank rate survey is concerns about inflation. Despite a strong job market, also concerns about job stability.

There were also-- I mean just concerns about paying everyday expenses. That's the inflation piece. Debt, housing, et cetera. Not just having enough, even for discretionary spending. So what are the top three things you would say to Americans et cetera, with regard to managing this stress.

MICHAEL LIERSCH: The first one is to really question whether you need to be doomscrolling on your mobile device. So to your point, we did a survey at Wells Fargo last year, where we asked people what are you doing when it comes to monitoring your financial life? And a lot of people are just going on their mobile device and looking at the markets, looking at their account values and doing what's called doomscrolling. And waiting for let's say, the next shoe to drop.

So I would encourage everyone to say, instead of doing that focus on what's in your control, which are the snackable little things you can do to make your financial life more tenable. Or to the points that were made, less anxiety ridden. So when you think about that there are three key things I would highlight. The first one is really think about how you are spending money that's optional.

And is that optional money, is it really required at this time? Or can you allocate it more, to your point, to those more essential items so that you don't feel as stressed about the gas prices that you're paying or the groceries that you're buying. The second thing is really to the point of don't go it alone with a spouse or a partner, in terms of talking about money. Don't go it alone with your family and friends.

Really question whether you need to buy those gifts for those events. Really question whether you need to go out to dinner. Really think about how you can get together and do things in a very, let's say empowering way. And you see that in TikTok right now, there are second videos where people are talking about those things very openly. Tens of millions of people. So be encouraged by that social power that you have in a positive way to make the most of your money.

And the third thing that I would really suggest people do is really think about where your money is coming from and how much you have coming in. Think about where your money is and how much you have, and then think about where your money is going. Meaning, what you're spending again on essential things versus more discretionary or optional things. And see if those things all match.

Meaning, if you're spending more than you have coming in, really consider how you can make very small changes. So renegotiate your streaming services. Renegotiate think of it as traditional cable. Whatever that is, look at what you're paying for your phone, your family pricing. Call those services and say, hey, I want to become a customer or stay a customer, and can you give me a price break. And those small incremental changes can actually reduce anxiety and put more money in your family's pocket, in your pocket.

- Yeah some really good actionable tips there. Meghaan, I want to bring you back into this. One of the things, we've talked a lot about anxiety. I want to talk a little bit about guilt also. Because there was this sort of narrative for a while. Oh, just don't buy your coffee every day and you'll be fine. But people value those small things. And then there's this guilt when you're doing those small things. So how do you sort of manage around that?

MEGHAAN LURTZ: Yeah. Well first, I think it's helpful to just differentiate between stress and anxiety. They're often co-morbid, they show up together, but they themselves are different. Stress, this is why stress happens in some people and not in others. It's an outside force. Like something's happened on the outside and you evaluate, can I handle this or can I not? And if you can't, stress arises.

Anxiety is more of an internal thing, which can come from having had stress and then we're worried about that going forward. And as it relates to guilt, and sort of shame spending and things like this that we see. Cutting your coffee and things like that. This makes people so unhappy and makes them very unhappy about their life. And so I think it's more useful to turn to research about happiness and what happy people are doing.

There was a great book that just came out from the Harvard psychologists, it's called The Good Life. It's based on their longitudinal study. And you should read the book, the book is great. But if I could summarize the book in one sentence, it says have experiences with people that you love and that love you. And so if having a cup of coffee-- I'm one of those people, I've got it right here. I have to have a cup of coffee every morning. And my morning is usually with my kids, in my bed, having a cup of coffee. And it brings so much contentment to my life.

And so if you need that moment in the morning with your cup of Joe, please have it. Don't let that be the thing that restricts you. Those are moments that are really important, that can actually lower anxiety, help build up self-efficacy. Just help you feel good about getting your day started. When you have to start your day off with, well, can't go to Starbucks, and now I have this drive that I have to go on. And I'm mad about that. Well, by the time you get to your office, you're going to be like, where are the cookies. I no longer have any more self restraint, because you're so tired from trying to not have your coffee.

It just kind of perpetuates either the expending, you'll take yourself out to lunch because you didn't get to have coffee. So if there are things in your life that are bringing you joy, that are part of an experience that helps to bring you calm. Experiences with people, I thought that the suggestion earlier about not necessarily going out to dinner, but could there be a way that you could cook with friends and family at home? You know, we love to eat, we love warm drinks.

I think that keeping those things in mind, when it's an experience, don't take that away from yourself. It only creates or perpetuates kind of the lack of self control that you'll have later in the day for perhaps the harder things. I'd rather people have a $3 cup of coffee or a $5 cup of coffee than a $25 lunch.

DIANE KING HALL: Well it's not three or five anymore at Starbucks. It used to be once upon a time. It used to be $4, now it's $6 plus. And I will say personally, I've done that before. Completely cut out-- I cut out Starbucks for a year. An entire year because it was just one of those things that to me, I do love my caffeine in the morning, but I just found a cheaper way for a little while. I've been back to Starbucks, not every day now.

Michael, I want to bring you back into this really quickly, and just want to ask you. We're in front of a big spending weekend, which could end up causing some people stress when they look back at, what happened this weekend? Where did the money go? What's your advice for people heading into this kick off of summer weekend?

MICHAEL LIERSCH: I think the biggest piece of advice I would give to people is really to be intentional. And that's what we're talking about here. When it comes to happiness, when it comes to stress, when it comes to anxiety, whatever those feelings are, really be intentional about what brings you and your family joy. And focus on spending with respect to those things that are bringing you joy, and the people that you're surrounded with with joy. So that would be my core advice.

The second piece would be any time you can bring in your entire family in a weekend like this to the table around what you're spending on and why, it'll just make that conversation easier going forward. So use this as an example. How much are you spending on that barbecue? Who are you inviting? Can you afford it?

And those kinds of things give you energy, and your family energy to think more intentionally in the future and more collaboratively. So you're all in it together. And to the point of making things fun versus not fun. Make it a family meeting. Make it fun. Talk about money, talk about how important it is for you all to feel good, safe, and financially secure. And make it a family affair.

- Yeah, that's a really good point, that money for a long time was not something you talked about. And I think that openness is a really important point. Meghaan Lurtz, Kansas State University Professor of Practice, and former President of the Financial Therapy Association, and Michael Liersch, Wells Fargo head of Advice and Planning. Thanks to you both, and have a great weekend both of you.

MICHAEL LIERSCH: You too, Thank you.