Money and mental health are closely linked, but people often don’t discuss how money worries affect their well-being. Recent studies from the National Financial Awareness & Wellbeing Day 2024 found that 73% of people in the UK think financial worries harm their mental health.
As inflation and costs keep rising in 2025, managing your money is not just about making a budget – it’s also about protecting your peace of mind.
In this article, you will find five simple ways to reduce financial stress, build confidence, and help you take charge of your finances without feeling overwhelmed.
Practical Steps to Manage Financial Stress Effectively
Here are the five practical steps you can take to manage financial stress effectively:
Step 1: Understand Your Financial Health
The first step to improving your financial health is understanding your current situation. Look at your income, regular expenditures, debts, and savings. This might initially feel overwhelming, but knowing where you stand can help reduce stress.
Living in Manchester comes with specific costs, like daily Metrolink travel and weekend activities. Tracking these expenses can help you spot patterns you may have missed before and give you a clear view of how you spend your money.
This honest assessment turns money from a source of stress into something you can manage. Identifying your emotional responses to money is key to finding peace of mind.
Step 2: Create a Simple and Realistic Budget
Many people view budgeting as limiting or boring, but when done well, it can empower you. A reasonable budget helps you understand how you spend your money and where you can cut back without losing joy in your life.
If you reside in Manchester, consider the average costs in the city, like rent, utilities, transportation, and leisure activities. Consider creating categories:
- Necessities (rent, utilities, and food)
- Financial goals (saving money, paying off debt)
- Lifestyle choices (dining out, entertainment)
Set aside some money for fun activities. This is important for keeping your mind healthy. Here’s a simple checklist for managing your finances:
- Figure out your take-home income after taxes.
- List your monthly fixed costs.
- Get an accurate picture of your variable costs.
- Decide how much money you will save.
- Review your budget every week to stay on track.
A clear budget gives you control over areas that may usually feel uncertain, helping to lower stress over time.
Step 3: Build an Emergency Fund
Having some savings can greatly reduce financial stress. A small emergency fund can prepare you for unexpected costs like a sudden boiler repair or an unplanned business trip.
Start small: try to save £10 to £20 each week. Set up automatic transfers to a separate savings account to make saving easier. Over time, this fund will grow and act as your financial safety net.
In Manchester, the rising cost of living means that emergencies can hit harder if you’re not ready. This emergency fund provides money and peace of mind, knowing you can handle whatever happens.
Step 4: Seek Professional Help
Asking for financial help can be scary, but it’s an essential step towards better money management. It does not mean you have failed. However, getting professional advice is a smart choice that can take the weight off your shoulders.
One of the most effective ways to improve financial wellbeing is to work with professionals in wealth management who can help you build a personalised, long-term plan – removing the pressure of having to do it all alone. These experts understand Manchester’s financial scene and can give you personalised advice for your goals, whether you want to buy property, save for retirement, or manage debt.
Working with a trusted advisor can transform financial management from a source of worry into an opportunity to make informed choices and feel confident.
Step 5: Prioritise Mental Health Alongside Financial Health
Money and mental health are closely linked, as this relationship is complex and vital. They influence each other in many ways. To improve your financial health, take care of your mental well-being by using stress relief methods specifically for financial worries.
According to the Mental Health Foundation, 31% of adults in the UK felt anxious about their finances, 27% experienced stress, and 9% felt hopeless last year. This shows how important it is to focus on mental health and manage money.
In fact, cutting mental health treatment waiting times by one month could save the UK government around £1 billion each year through enhanced employment results. This underscores the importance of prompt mental health assistance in preserving financial stability.
You can practice mindfulness, write a journal about your thoughts on money, or seek therapy to help with anxiety. Simple activities like taking daily walks in parks such as Heaton Park or Fletcher Moss Botanical Gardens can also clear your mind.
Remember, managing your finances is part of a broader self-care routine. Getting good sleep, exercising, and building social connections will help you stay strong in all areas of your life, including your finances.
Conclusion
Many adults in urban areas of the UK, particularly in Manchester, feel stressed about money. The elevated cost of living can make it hard to manage finances and can be exhausting.
However, being financially well isn’t about being perfect – it’s about taking small, steady steps toward understanding, controlling, and feeling confident about your money.
You can make 2025 the year when money works for you by knowing your finances, creating a simple budget, building an emergency fund, getting professional advice, and caring for your mental health.
Remember, every positive change starts with one tiny step. Start today, and your future self will appreciate the peace of mind and freedom you create.