Is there anything keeping you up at night? Are you worrying about your children’s safety or maybe your long to-do list? Some Americans toss and turn during the night due to feeling financially unsettled. Northwest Mutual found that 85% of the population has some sort of financial anxiety. Any type of unrest can be bad for your health.
The good news is you can take control of your financial situation, confront these money fears head-on and get in the driver’s seat of your financial future.
So, how do you address these fears? Here are some common financial concerns many Americans have and the proper steps to take to tackle them while preparing for your financial future.
Not Being Able to Retire
The sky is falling! The sky is falling! No matter what you read, you see doom and gloom about the financial state of your fellow Americans. How many times have you heard that Social Security is going bankrupt and there will be nothing left for the people that are currently working? Most likely, plenty.
Many people feel as though they won’t have enough to retire no matter how much they save. With the descent of Social Security and the extraordinary increase to health care costs, it seems impossible for anyone to even consider retiring. No wonder everyone is freaking out.
What to Do
First of all, know that the Social Security trust fund may run out by 2034; however, you will still receive benefits, just maybe not as much. But in order to really combat this fear, you must develop a personalized financial plan to reach your goals. Meeting and partnering with a financial planner and tax professional could be the best solution for tackling this fear. They can help you navigate the twists and turns that your financial journey can produce.
A financial plan can also help you prepare for unexpected situations. What if you need a new roof? What if you have a car accident? There are plenty of factors that could play a role in creating a strong financial future. Having a financial plan may help you sleep at night.
Living Paycheck to Paycheck
Some Americans are spending every dime of their paycheck. It’s a never-ending cycle and they can’t seem to get ahead or save for the future. It can seem almost paralyzing.
What to Do
Develop a budget you can stick to. Whether your focus is to pay down debt or work on increasing your contributions to your retirement accounts, decide how you can put it in the budget. A budget shows you what is coming in and going out. It will help you evaluate areas where you could cut back on your spending and what habits are keeping you living paycheck to paycheck.
For example, try canceling your cable bill and only using a subscription service. This may save you hundreds of dollars depending on your plan. Try focusing on one area of your budget every month. This way you will not feel overwhelmed. This process will slowly help you cut back your spending little by little.
By cutting back your spending, you will be able to shift your focus to some of your financial goals. Maybe your dream is to own a home. By evaluating your budget and finding ways to save, you could achieve this goal in no time.
Losing Your Job
At 4.1%, the unemployment rate is the lowest it has been in years, but this doesn’t mean that every job is secure. For example, if you work in the retail sector, layoffs happen every day. Or, your company might want to replace you with different talent. You never know what could happen.
What to Do
Build an emergency fund of 3 – 6 months of your expenses. You could either use those funds for an emergency or if you get laid off. Your emergency fund will give you a little bit of a cushion so you can get back on your feet and not stress about going further into debt.
Also, always look for ways to increase your skill set. This will make you more marketable if, in fact, you do lose your job.
Living in Debt for Eternity
The American debt crisis is real. Recently, the average American household credit card debt increased to $16,000 per NerdWallet data. With interest rates on the rise, this could cripple some Americans’ finances. We live in a society where we want to keep up with the Joneses, even if it’s financially out of our reach. It’s easy to get in the habit of living in debt. Or, maybe unexpected expenses left you buried in debt, and it can be hard to find a way out.
What to Do
Did your New Year’s resolution consist of tackling debt? If so, you have taken the first step toward debt recovery: recognizing there is a problem. You can pay off any amount of debt if you create a strategy to do so. No matter how much debt you have, develop a strategy for repayment.
One option would be to pay off your debt with the highest interest rate first. Some credit cards can charge upward of 20% annually.
You can also pay off the smallest debt first. This will make you feel as though you are crushing your debt that much faster. It will leave you feeling accomplished and motivated to continue and do more.
Once you have paid off your debt, keep it that way. Create positive spending habits. This could include waiting 48 hours to make a purchase. If you give yourself time to think about buying an item you may not need, you’ll most likely forgo the purchase.
Financial fears are real, but with a little time and effort you can combat them. If you have financial fears that keep you up at night, create different ways you can help prevent them from happening. How can you plan now to put your mind at ease? It may not happen overnight, but you can work toward relieving your financial stress one day at a time and enjoy sweet dreams.
What are some ways you plan on taking control of your financial future this year? Let us know in the comments below!
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