As a parent, there’s little worse than worrying about your children’s health. Unfortunately, my wife and I have had this worry for the last several months. The unknown can carry a lot of stress and anxiety that will take a toll on your physical and mental wellbeing. Ultimately, we are so thankful and blessed that our worries turned out to be no more than just that. Worries can come in so many forms. Some of them we have no control over such as sudden sicknesses and others we can sometimes create through our choices. Through our recent issue, it got me thinking about the financial worries that so many of our clients go through and the stress those worries create. Often these worries can be prevented or reduced if some simple steps are taken to prepare for them.
Here are some common financial worries and ways you may be able to address them:
Living Beyond Your Means: This is one of the most common catalysts to financial worry. The simple solution is to create a budget and stick to it. Track your income and expenses to ensure that you are not spending more than you earn. This may cause some initial stress, but the long-term benefit will be well worth it.
Lack of Emergency Savings: The worry created by not having money in the bank for small emergency expenses can keep you up at night. Make your initial goal an achievable $1,000 and then try to build an emergency fund to cover three to six months’ worth of living expenses. Start by saving a small amount regularly until you reach your goal.
High-Interest Debt: Our world has learned to live on credit cards. This is an expensive and stressful option. If you have this type of debt, prioritize paying off high-interest loans first. Consider consolidating debts or negotiating with creditors to lower interest rates.
Inadequate Retirement Savings: A sufficient retirement savings goal can seem like a challenging amount to achieve. The easiest solution is to start where you are and take steps in the right direction. If you are lucky, you will be able to start saving for retirement at an early age. Take advantage of employer-sponsored retirement plans and matches to help you achieve your goals.
Unplanned Expenses: I don’t know what the unexpected expense will be, but I know it’s coming. Whether it’s a broken-down car or a major health bill, there’s a cost coming that I haven’t budgeted for specifically. However, I do budget for the unknown, so build a cushion into your budget. This can help you handle emergencies without disrupting your financial stability.
Job Insecurity: Do you worry where your next paycheck is coming from? If so, you should continuously invest in your skills and stay competitive in your industry. Network and build professional relationships to enhance your job security.
Ignoring Financial Situation: Do you fully understand your financial picture? Try to stay informed about personal finances, read books, attend workshops, and use reputable resources to increase your financial literacy. A fiduciary financial advisor will work to educate you and assist you in making important life decisions.
While we can’t necessarily avoid stresses about health situations, taking proactive steps and being mindful of your financial situation can help you avoid many common financial worries. If you don’t, financial worries can amplify our already stressful lives to a level that’s hard to handle. Think about most of life’s problems and how much simpler many would be if you were prepared financially. Find your trusted partner to regularly assess your financial goals and adjust your plan as needed. This will contribute to long-term financial well-being and a life of contentment.