3 Biggest Financial Fears and How to Overcome Them
In 2016, a Northwestern Mutual study showed that 85 percent of adult Americans have financial anxiety. But what was the root cause of this anxiety?
According to GOBankingRates, Americans suffer from three financial fears – the inability to retire, living paycheck to paycheck, and not getting out of debt.
A more detailed look in the survey showed that the top five biggest financial fears in the US include unplanned emergencies, unplanned medical expenses due to illnesses, not enough savings for retirement, outliving their retirement savings, and being a financial burden. The respondents of the survey also voted on fears such as not being able to pay for healthcare, losing their job, identity theft, extended joblessness, and loss of breadwinner.
The good thing is that the three biggest fears can be dealt with by boosting the retirement savings, establishing financial safety, and paying off debts.
1. Making up for missed retirement savings
If you are seriously behind on your retirement savings but are still part of the workforce for a few more years, then have faith that you will still be able to catch up. Max out your 401(k) or IRA contributions.
You might not be able to save as much as those who were able to consistently do so at a much younger age, but at least you still have some left. You can always find part-time work as a senior, then you will still be able to retire and live a somewhat comfortable life.
2. Establishing an emergency fund
When you are basically relying on your paycheck every month to support you through the next month without any wiggle room for unexpected expenses, you would likely feel anxious, too. If you want to leave this lifestyle behind, start with some short-term savings. This will at least give you enough funds for if something goes wrong.
The ideal goal is to save enough to fund your living expenses for three to six months. It would take time to reach this goal, but you can get there if you set aside money religiously for your emergency fund.
Start with reviewing your finances, looking through which expenses you can live without, and saving the money intended for those expenses in your emergency fund. Instead of eating out, you can pack lunches; opting to workout at home instead of going to the gym; or moving to a cheaper apartment.
To further boost your emergency fund, look for a side job. It may take years to catch reach your goal, but not having that anxiety about what you might do if an emergency arises will be worth all the sacrifice and compromise it took for you to get to that point.
3. Getting rid of debt
Student loans alone are a huge burden to shoulder. Add to that the stress of a mounting credit card debt and you’d undoubtedly feel the stress building up, too. At first look, the debts might never seem to end, but if you can try to pay them off bit by bit while consciously trying to avoid racking up more debt, you might have a chance of breaking free from debts.
List your debts down, check which ones are weighing you down the most, those with the highest interest rate. Pay those off first and work your way down to other debts. And this is where you can spend some of your savings from your extra income or from the savings you got for cutting off gym membership and other money-saving measures.
Bankrate says that over a third of Americans with part-time jobs earn more than $500 per month, which is already a huge help in getting rid of your debt. If you can do more and take on more side jobs, imagine how much more you’ll be earning and how much it would cut off from the time you need to get your debt down to zero.
Invest some of your savings. You can only take on so much where side jobs are concerned, so when you’re able to save money, invest some using the right tools. Focus more on the long term, which should lead you to the stock marketing and high-quality stocks. These investment tools have been proven as the best sources of wealth creation. The historical returns from the stock market have been recorded at around 7 percent, which is higher than the historic inflation rate, which means you’ll likely earn and save more.
Are you in seek of financial counseling? You may also check this article “Avoid Asking These People In Your Life For Financial Advice”.