Money has negative impact on mental health: Study

Michelleab Founder and Financial Advisor Michelle Arpin Begina joins Yahoo Finance Live to discuss a survey stating that 52% of Americans experience a negative impact on mental health, high inflation and interest rates, as well as tips to help alleviate financial stressors.

Video Transcript

- Today, money is causing Americans more stress than anything else. A Bankrate survey finds that 52% of Americans say money is having a negative impact on their mental health. When you turn on the news, there's no question why people are so concerned with some of the top financial concerns in the survey being inflation, debt, and rising interest rates. And you don't have to turn the news. You can go to the grocery store or anywhere else where you're spending money.

Joining us now with tips to ease that strain is financial advisor, Michelle Arpin Begina, and she is with Michelle AB. Thank you so much for being here. So when you are talking to clients about this kind of stress, besides maybe some like yogic breathing or something, what are some of your top tips and counsels for them?

MICHELLE ARPIN BEGINA: Yeah. Thank you for asking. It's great to be here with you. The first thing is we have to recognize the difference between stress and anxiety. And what the research is really showing is that people are feeling very anxious. But most people are not going to say, I'm anxious. They'll say, I'm stressed. And part of what needs to be distinguished is what are they worrying about? Are they worrying about an event that has happened, or are they worrying about events that could happen and the impact of, like you said, rising rates of the debt ceiling, or stock market reaction, or job security? So first distinguishing that.

What people really need is a space to talk about these things. So the first thing that I want to know is what's the impact? Are you losing sleep? Is your mind preoccupied with worry? Are you feeling depressed? Because believe it or not, the first piece of advice I'm going to give people is to take great care of themselves. That might mean sleeping well, exercising, getting some fresh air, being with some family and friends. Because there's a connection between our anxiety and our cognitive abilities to think clearly, to be in a good mood, and to make good decisions.

Beyond that, separating out what is within your control, right? Is this a worry about systemic issues that we have very little control over, or can we zoom in and say, let's look at your personal situation and figure out where you might want to act and what you might be able to do about some of the things that are being presented in your life?

Michelle, I want to ask you. So you point out some great tips that people can do with regard to kind of just taking a step back and being more mindful, et cetera. But there's some practical things people have to think about, especially when there's another data point I want to mention. There's a recent Fed survey that shows adults who are worse off financially in 2022 than a year earlier, that number climbed.

So practically speaking, there are some practical steps that people would have to take to deal with their financial circumstances. I mean like sure, there are things beyond your control, to your point about some systemic issues. But what would you say are the top three things people need to do, practically speaking, that can also affect their mental health and their financial wellbeing, if you will?

MICHELLE ARPIN BEGINA: Yeah. Thanks for asking that. From a very practical financial standpoint, I think first is it starts with the budget, right? This is a time to be intentional and to be really efficient about where money is being spent. So for example, add to your cash reserves if you have extra money where you're able to do that, and take advantage of some of the best cash rates that we've seen in at least 15 years.

Lock in some CD rates. Like this morning, CD rates have jumped over 5.4% on a 15-year CD. So really looking at what are you spending? How are you utilizing your cash? Look for bargains, right? Technology has made that easier than ever to spend our money more efficiently. Ask for a raise. Some your former guests on just this morning are talking about how strong inflation is for wage growth right now. Now may be the time to ask for that.

And last but not least is play the markets. This is not a time to reduce your stock or bond allocation. Stocks build compound. Wealth are often one of the best inflation hedges that we have. Just take 2021, for example, where the markets were up 21% when inflation popped about seven.

Look at trends in your portfolio. Make sure you're diversified. So for example, a trend might be artificial intelligence right now. Don't overdo it, but maybe there's a slice here where you're looking forward and starting to compound your wealth based on just current trends that are outside of the trends that we're hearing around the debt ceiling or inflation. Reality to corporate bonds. Some of the places that we have most of our opportunity in the market are really opportunities that we have not seen in a long time. Like I mentioned, CDs and corporate bonds.

- And to your point, just a quick follow-up, Michelle, what do you think about-- because to your earlier point about some systemic issues, what do you think about those state income experiments? Do you think more states need to do something like that where they have like a certain guaranteed income, or there's a cash infusion to a certain demographic in terms of addressing-- like I mean, we've seen this statistic before where many Americans can't even cover a $400 emergency expense. What's your thought on that, the state income experiments?

MICHELLE ARPIN BEGINA: I think everything should be on the table is my opinion. This is a new world that we're living in. And we should be experimenting with all different types of solutions for all different types of people because each one of us is different than the next in our abilities, or opportunities, or capabilities, and how we want to live our lives. So I'd say put it on the table.

- Michele, when you talk about maybe reallocating some more resources, for people who maybe are not putting anything aside or enough aside, whether it's in stock investments or in some kind of retirement fund. At a time like this, of financial stress, how difficult is it for you as an advisor to convince those people that those steps need to be taken? Maybe a short term stress for a longer term gain.

MICHELLE ARPIN BEGINA: Yeah. This is an age old conundrum, right? We're very-- as human beings, we think very much in the present, to keep ourselves alive, versus thinking about our future self and what we need to do now to make that person secure and happy later. So it really just comes down to a simple thing of asking people to do what they can in the moment.

And probably everything that I've mentioned, I've said this is really about personal responsibility because so much of the issues are systemic that we can't control them, which also could make people feel like they're shouldering the burden of lots of different situations. But at the end of the day, it is in our hands, which is a positive, to be able to make positive change to reflect on what it is that we do and we don't want, and to take action. Usually, taking action, even a smaller action like I'm going to start putting $10 a week away to build, it makes people feel better when they're doing something about their situation.

- I like that, Michelle, especially because you talk about the feelings involved around money. And sometimes, there's a shame factor, especially, let's say, with some people who are higher educated or highly educated rather and feel like they should be better off than where they are and kind of hide from just even showing the numbers to someone.

MICHELLE ARPIN BEGINA: Yes.

- I just want to put a bookmark in our conversation. We'll certainly talk to you again. We appreciate you so much for joining us. Our thanks to Michelle Arpin Begina, Michelle AB founder and financial advisor. The segment is sponsored by FlexShares. We appreciate you, Michelle.