How is credit card debt affecting your physical and mental health?
With a credit card, the habit of being able to buy and delay payment is born. This is a practice that is increasing. In fact, cash payments are becoming rarer and the fact is that the card makes it much easier for us. In addition, the pandemic has contributed to the increase in card payments and, as confirmed by a survey carried out by the Bank of Spain, 2.5% of the population declared that they stopped using cash due to the coronavirus.
One of the consequences arising from this change in trend and which is related to the mental health of Spaniards is that, according to experts, the indebtedness that leads to the use of credit cards may be the origin of what is known as “financial stress“. In fact, according to the latest survey data Global impact of COVID-19from health insurer Cigna, personal and family finances are respectively the fourth (30%) and fifth (29%) causes of stress in Spain, after uncertainty about the future, the risk of contracting covid and overinformation about the pandemic.
Eyes that cannot see, a pocket that is emptying
Stopping paying with cash means, among other things, that we stop touching the money we use to buy products and services. What happens then is that there is a double loss of consciousness, as you see neither the money you spend nor the packaging of the products you buy.
Now, that’s not to say that credit card purchases are a bad option in and of themselves. In fact, this habit can only be considered dangerous when applied without minimal knowledge of finances.
So credit abuse is completely avoidable if ten tips are put into practice:
- Make a financial plan in January for the whole year.
- Follow up on this planning.
- Set monthly budgets.
- Save some of the income for purchases, expenses or investments planned for the rest of the year, especially for holiday or Christmas purchases. These would be the desired percentages:
- Have 55% for basic expenses: housing, electricity, water, gas, supermarket, etc. Housing costs should hover between 30 and 35% maximum.
- Set aside 10% savings for unexpected events or big expenses like vacations, car, Christmas, etc.
- Save up to 10% on leisure: restaurants, cinema, theater and more.
- Count between 5 and 10% on education and personal growth: courses, books, coaching, etc.
- The expert suggests investing between 10 and 15% for long-term savings or investments.
- If possible, set aside 5% for donations to NGOs or people in need
The anxiety caused by over-indebtedness inevitably leads to deterioration of our physical and mental health, and also affects our family and social environment. One of the first symptoms to appear in someone suffering from stress due to their economic situation is insomniaand family dynamics change.
After the first signs of financial stress, its “side” effects, those related to the environment, do not take long to become visible. Discussions arise in the family about how to manage the little money available. Certain sacrifices may also have to be made, even in terms of food. All this will cause the atmosphere of tension to settle like a black cloud over the whole family.
Ours too social network it will quickly become resentful. And that is that if we cannot keep up with the economic rhythm of our environment, we cut off social support itself. There may even be people who try to keep up with their friends or relatives, but who, out of shame, do not dare to explain their economic situation to them, so they will not be able to get moral support or possible economic support.