Why You Should Become an Early Bird: 10 Benefits of Rising Before Dawn

Sticking to a budget and creating a savings plan can have a positive impact on your financial health. But did you know that a lack of sleep can also have an effect on your finances?

A recent survey takes a look at the link between debt and sleep quality in 1,000 Americans. This survey shows that worry over money and finances is the number one source of stress in Americans.

It also highlights how anxiety over money can lead to insomnia. Getting inadequate sleep night after night can create a vicious cycle that may, in turn, lead to an inability to wisely manage your money.

Below, we have outlined the most common reasons why a lack of sleep could impact your financial health.

Cognitive Abilities

Recent medical evidence shows that a lack of sleep can have dangerous effects on your cognitive health, which may result in an inability to manage one’s finances. Lack of sleep can affect your cognitive abilities in the following ways:

  • Decreased attention span and ability to focus
  • Slower response time
  • Decreased ability to commit information to memory
  • Decreased ability to learn new cognitive tasks
  • Decrease ability to find solutions to simple problems
  • Increased chance of errors 

Some of us may be unaware that we are operating in a sleep-deprived state; however, the CDC recently reported that a third of Americans get less than the recommended 7 hours of sleep per night.

Additional research suggests that suffering just one sleepless night can produce symptoms of decreased cognitive abilities.

This means many Americans could be dealing with cognitive issues that significantly reduce their ability to manage their finances effectively.

Effect On Work Performance

The reduction in cognitive ability can also affect work performance in the following ways:

  • Involuntary microsleeps – Sleep deprivation can lead to involuntary microsleeps that could affect your work performance if you are having trouble staying awake at work. 
  • Absenteeism – A lack of sleep over time could lead to other mental and physical health-related issues that could result in frequently calling in sick or being late to work. 
  • Presenteeism – Being present at work but being too fatigued to perform at a normal level could result in decreased job performance. 
  • Increased Error – Decreased cognitive abilities will increase the chance of errors and mistakes in your work. If your work involves operating equipment or driving, this can result in dangerous consequences such as work-related injuries. The frequency of errors in your work could also delay the opportunity for a raise or promotion, and, in extreme cases, could cause you to lose your job. 
  • Longer work hours – The reduced cognitive ability can also cause you to work longer hours due to an inability to work effectively. This can, in turn, lead to more exhaustion and more chance of error. 
  • Decreased ability to remember things and stay focused – If you are unable to perform at a high level due to the inability to stay focused or retain information, this can also lead to a delay in promotional opportunities and could lead to poor quarterly performance reviews. 

Lack of sleep can have a major impact on workplace performance. If work performance is consistently poor, your financial health could suffer. 

Impaired Judgment 

Sleep deprivation can also negatively impact our ability to make informed decisions regarding your money. A recent medical study surveyed thirteen healthy adults between the ages of 21-35, found that sleepiness caused an increase in risky decision making. 

In terms of finances, this means you may be more likely to make decisions that negatively impact your budget, savings, or investments if you are suffering from sleep deprivation. Research shows we are unable to thoroughly understand the consequences of financial decisions when our cognitive abilities are impaired. 

What Can You Do?

To prevent sleep deprivation from negatively impacting your finances, you will want to carefully evaluate your current sleeping habits. Consider establishing the following to ensure you are getting an adequate night’s sleep: 

  • Create a regular sleep schedule –  To be sure you are getting the recommended 7 hours of sleep each night, create a bedtime and waking time you can stick to each night.
  • Bedtime Routine – Spending some time before doing a relaxing activity can help you fall asleep faster and stay asleep. When possible, avoid electronic screens from phones, televisions, and computers to help increase your body’s natural melatonin production.
  • Get Regular Exercise – Getting regular exercise during the day will help improve the quality and duration of sleep. 

In addition to getting better sleep, you may also want to consider making small adjustments to your finances that can help reduce your anxiety and stress levels. 

Financial Planning

Taking stock of your current income, financial obligations, and spending habits will give you a clearer picture of where you are at financially.

Once you have a solid understanding of your current situation, you can begin to consider your financial goals and create a plan for reaching them.

Having this plan in place will give you a stronger sense of control over your finances and decrease your stress over money.

Reduce Expenses 

Going over your current spending habits may highlight areas where you can cut back on unnecessary spending. Take stock of money spent on entertainment, eating out, and unnecessary consumer goods. These often go unaccounted for when considering a budget, but can have a big impact on our financial health. 

You may also want to consider the amount of money you are paying in late fees each month. These also tend to go unnoticed but can create a large financial burden. 

Build a Savings

Reducing the amount of unnecessary spending may free up money that could be put towards savings.

Consider starting a savings account that you pay a set amount into each month or each paycheck. Over time, you will begin to view these payments like any other financial obligation and the loss of these funds will be less noticeable.

Having money in a savings account can go a long way to reducing anxiety and improve your ability to sleep well. 

Poor sleep can have significant effects on our mental, physical, emotional, and financial health.

If you are unable to find the sleep you need to perform at your best, consider making some of these adjustments to your sleep habits. Your bank account will thank you for it