The five-part toolkit for calming financial anxiety

1: Take stock of your mental health

Let me start by saying, if you’re reading this article, then well done for taking the first step in acknowledging your feelings. If you're feeling anxious, depressed, or overwhelmed, it’s likely that your motivation to tackle your financial situation is probably lacking. This is where the all-too-common money and mental health vicious cycle kicks in and can lead to patterns like bill avoidance, not checking your accounts, impulse spending, or even obsessively monitoring your finances. To kick things off, we’re not going to jump into action, instead, we’re going to examine your habits and coping mechanisms when it comes to money. Ask yourself: how were you feeling when you made certain financial decisions? How does money make you feel right now? How do you normally respond to financial anxiety? By better understanding yourself and your financial habits, you’ll have much more success at finding solutions that work for you.

Top tip: Remember that your income or financial situation doesn't define who you are as a person. This can be difficult to do when the language we use often says otherwise. For example, we say ‘I’m in debt’ as opposed to ‘I have debt’ or 'I'm broke' rather than 'I'm experiencing financial difficulties'. Try to reframe your financial situation as a part of your life and something you experience as opposed to being your entire identity.

2. Plan a calm money financial check in

Anxiety often stems from the unknown, which is why many of us feel anxious about our finances, especially when we lack a clear understanding of our money situation. Allow me to introduce you to the calm money financial check-in. Here's how it works:

1. First, carve out some time in your schedule a few days from now, making sure you won't be disturbed or distracted. Grab a cozy spot and settle down with a notepad, your financial apps/accounts, and any unopened emails or letters. If you share finances with your partner, consider making this a 'financial date night.' Grab some snacks, light candles, and collaborate to gain a clearer picture of your shared financial situation. The key is to make the check-in as positive and enjoyable as possible — your goal is to rewire your brain to associate 'money matters' with good experiences.

2. Once you're settled with a nice drink or a cup of tea, it's time to address some questions:

- What is your income and average monthly expenditure?
- What stands out as a 'quick win'—something you can do today to feel better? This might involve cancelling a subscription or reading your energy meter.
- What tasks do you need to tackle over the next week, month, and year to improve your situation? This could mean opting back into your pension scheme or seeking debt advice.
- What are realistic financial goals for the next 6 months, 2 years, and 5 years?

By answering these questions, you'll gain a better grasp of your financial situation and set the stage for long-term success.

Top tip: Remember that nobody is perfect. Financial ups and downs are a natural part of life and financial anxiety is something lots of people are feeling right now. Remember to celebrate your progress, no matter how small, and acknowledge your growth along the way. This approach will help you build a healthier relationship with money and do your mental health good too.

3. Create a spending plan

Now that you've got a handle on your monthly income and expenses and a clear vision for your financial goals, it's time to strategise your spending. Start by identifying fixed expenses (that’s things like rent and bills, etc.) and calculating the remaining amount. From there, determine how much to save, allocate for debt repayments, or set aside for your social life. A spending plan (yep, it's pretty much a budget) helps you prioritise and spot areas for trimming costs. Look for quick wins — can you return anything? How about giving your service providers a call or shopping around for better deals? Reassessing your underused standing orders can really pay off, too. Websites like MoneyHelper offer free budget planners Link opens in a new window to keep you on track and your banking app might also be able to help - Virgin Money’s mobile banking app Link opens in a new window has a dedicated budgeting tool. If debt has you worried and you're struggling to make payments, MoneyHelper Link opens in a new window and StepChange Link opens in a new window are fantastic resources. Or, if you’re a Virgin Money mortgage, loan, credit card or overdraft customer finding it hard to make repayments then check out our support hub Link opens in a new window, there’s lots of ways we can help.

Top tip: When devising your spending plan, consider adapting the popular 50/30/20 rule. The idea is that you allocate 50% of your income for essentials (rent, bills, groceries), 30% for discretionary spending (entertainment, dining out, hobbies), and 20% for savings and debt repayment. Those percentages might not work for you so tweak them until they do. This simple rule helps you maintain a healthy balance between meeting your financial goals and enjoying life.

4. Start an emergency fund

Now that you've created a budget, you might find you can put some of your income into savings. If you're focusing on paying down high-interest debt and can't save right now, go easy on yourself. Paying off expensive debt as soon as possible will benefit you in the long run and means you can priroitise saving sooner. If you're able to save, aim to save for an emergency fund that could cover you in any ‘worst case scenarios’ - as a rule of thumb it's a good idea to work towards having about 3-6 months' worth of living expenses tucked away for unexpected situations.

Top tip: When creating your savings plan, consider setting up a small pot in your Virgin Money mobile banking app Link opens in a new window specifically for mental health days. This fund can be used for self-care activities or if you’re self-employed, it could be used for taking a day off when you need a break, without worrying about the financial implications. By prioritising your mental wellbeing, you'll be more equipped to handle financial challenges and make better decisions in the long run. Remember, investing in yourself is always a smart move!

5. Don't Be Afraid to Ask for Help

We’re social creatures, and studies have shown that a lack of social support increases our risk of anxiety and stress. Many people feel shame around money and keep their worries to themselves, but this isn't good for us. It's crucial to understand that there's no shame in struggling with money or admitting you need help. The good news is that there's plenty of assistance available. A November 2022 report conducted by Opinium for Mental Health Foundation Link opens in a new window found that 29% of respondents experienced stress, 34% experienced anxiety, and 10% felt hopeless due to their financial circumstances. Speak to someone you trust and don’t face your anxiety alone. If you're experiencing debt and unsure where to turn, you can get free advice from StepChange Link opens in a new window or National Debtline Link opens in a new window – they're there to help, and really have seen it all.

Top tip: If you're experiencing mental health challenges that affect your ability to manage your finances, talk to your doctor about the Debt and Mental Health Evidence Form Link opens in a new window (DMHEF). This form can be shared with creditors, banks, or utility companies to inform them about your situation. By providing evidence of your mental health struggles, you may be able to access additional support or flexibility in managing your debts or financial commitments. Remember, open communication with your creditors can lead to better understanding and options that can ease your financial stress during difficult times.

For more support, please take a look at the following resources:

For more support with your mental health - Mind Link opens in a new window

If you’re feeling suicidal - Samaritans Link opens in a new window

If you’re worried about debt - StepChange Debt Charity Link opens in a new window