Financial Wisdom: Net Worth vs. Self-Worth
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By Bromwich+Smith Staff | 1108 words | Reading Time: 5 minutes | Date: 2023/11/10
For many Canadians, the pursuit of financial stability and self-care often stand at odds. When we prioritize money as success, we often overlook our mental health. Where financial success is seen as the ultimate goal, it can come at the cost of our emotional well-being.
Balancing Net Worth and Self-Care
For many of us, financial success takes precedence to our self care. We have been taught that securing our future means building our net worth and accumulating assets. While this is undoubtedly important, we also want to consider the impact of this on our overall well-being.
Understanding Net Worth: Net worth is a numerical measure of financial health, calculated by subtracting liabilities (debts) from assets (savings, investments, property, etc.). Positive net worth indicates that we own more than we owe, while negative net worth suggests there may still be work to do. Net worth is always changing – one more payment made, one more item purchased will change the value. At Bromwich+Smith, we understand that a healthy financial balance can be tough to maintain.
Prioritizing Self-Care: Self-care encompasses various practices that promote mental, emotional, and physical well-being. This can include exercise, meditation, hobbies, time with loved ones, and seeking therapy when needed.
Neglecting self-care in the pursuit of wealth can lead to stress, anxiety, and even physical health problems, and neglecting financial health can lead to stress, anxiety and even physical health problems- sound familiar?
Debt and the Emotional Toll
Debt is a significant obstacle to achieving a healthy net worth. While it's common and sometimes necessary, debt often carries an emotional burden that can be offset with self-care.
Understanding Debt's Emotional Impact: Debt is more than just a financial obligation. It can trigger feelings of guilt, shame, and stress, making it important to maintain self-care practices. Many individuals see debt as a personal failure rather than a financial challenge- and we hope to help end that stigma.
The Vicious Cycle: Debt can create a vicious cycle where the stress and guilt associated with it lead to poor mental and emotional well-being, further impairing our ability to make sound financial decisions. When we are struggling with debt, we often do not take the time or money to take care of our mental health, resulting in this continuous cycle. We need to break the cycle to take care of both mental and physical health.
Debt Relief Options
When it comes to managing debt, several options are available. Understanding these options and the emotional dynamics tied to each can make a significant difference.
Budgeting and Debt Snowball: Creating a budget is a fundamental step in managing debt. This involves categorizing expenses, identifying areas where you can cut costs, and allocating money to pay down debts. The debt snowball method of paying off debts focuses on paying off the smallest debts first, creating a sense of accomplishment that can boost motivation. Once the smallest debt is paid in full, focus on the next debt taking the payments that would have gone to the first debt and adding them to the second debt.
Debt Consolidation: Debt consolidation involves combining multiple debts into one loan with a lower interest rate. This can make payments more manageable and reduce the emotional stress associated with juggling multiple creditors. This may be a good option when you have a lender who is willing to work with your situation. This new loan will require a credit check.
Debt Management Plans: These plans are typically offered by credit counsellors who work with creditors to negotiate lower interest rates and consolidate payments into one monthly installment. The debt is required to be paid in full, but will likely have reduced interest rates and a longer payment term. This can be a structured way to address debt while avoiding insolvency.
Debt Relief Programs: Through a Licensed Insolvency Trustee, there are options available including a Consumer Proposal or Bankruptcy. With a Consumer Proposal, the Trustee works with creditors to negotiate a fair payment plan with the repayment based on what the client can afford. There is no more interest accrued and up to 80% of debt could be forgiven, resulting in one single monthly payment. A Consumer Proposal could last as long as five years to repay, making it even more affordable. In some cases, when all other options have been exhausted, filing for bankruptcy may be the best option. While it offers a fresh start financially, it can also come with emotional consequences which can be reviewed prior to signing.
The Emotional Journey to Debt Relief
The road to debt relief is not just a financial one but an emotional one as well. It's essential to acknowledge the emotional toll that debt can take and prioritize self-care throughout the process.
Guilt and Shame: Many individuals feel guilt and shame about their debts. They may blame themselves for their financial situation, which halts self-care efforts. Remember that debt is a common challenge, and seeking help is a sign of strength, not weakness.
Stress and Anxiety: Debt-related stress can lead to chronic anxiety, impacting overall well-being. Incorporating stress-relief practices such as meditation and exercise can be immensely beneficial. A short, regular walk outside can make all the difference.
Isolation and Support: People in debt often isolate themselves due to embarrassment. Seeking support from friends, family, or support groups can provide emotional relief and a sense of community. Chances are we know someone in the same situation, and they too are fearful of speaking out.
Striking a Balance
Striking a balance between financial wisdom and self-care is not easy but is essential for your health. Consider these practical tips:
Set Realistic Goals: Define your financial goals and ensure they align with your values and well-being. This might mean pausing or delaying some financial goals (retirement, house renovations, house purchase, new car purchase) to prioritize self-care.
Build a Support System: Surround yourself with friends and family who understand your financial situation and can provide emotional support.
Track Progress: Monitor your journey to debt relief and net worth improvement. Celebrate small wins along the way, and don't be too hard on yourself during setbacks.
Professional Help: Don't hesitate to seek professional assistance, whether it's from a financial advisor or a therapist. Both can help you navigate the complex terrain of debt and emotions.
Net worth and self-care are two important aspects of a fulfilling life, but they are not mutually exclusive. The emotional burden of debt often creates a divide but there are programs and solutions.
Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1-855-884-9243, Live Chat , or you can request a call back at contact us page. We want to see you flourish!