Money is the top source of stress in the nation, according to the American Psychological Association. Moreover, that’s not new: Americans have cited it as their top stressor overall since shortly before the Great Recession in 2007.
But people in the U.S. don’t just worry about money in the aggregate, there are 3 top money stressors that provoke their anxiety.
Debt
The average person in the U.S. carries a large amount of debt – some $130,000 overall, including credit card debt and student loans. Payment on debt that large can eat substantially into one’s disposable income, leaving little for savings or retirement.
One solution is to pay down the debt as quickly as you can. You can keep careful track of your expenses and analyze how best to save. You can adopt a frugal lifestyle, with minimal spending on clothes, cars and the like. There are also useful solutions such as debt elimination software, which analyzes your accounts to prompt you to make occasional addition payments along with maximizing your cash flow.
A Financial Rainy Day
Financial emergencies happen to everyone. Perhaps your car breaks down on the way to work. You may lose a job. Your house may need a sudden, unavoidable repair, like a new hot water heater.
It’s a prudent idea to have from 3 to 6 months’ worth of savings to cover a rainy day. However, many people don’t have that given current economic times and debt levels. The solution? Save for an emergency fund, even if it’s just a bit at a time.
Retirement
Time was, people could retire on Social Security and live essentially as they lived before retirement. Not any longer. The skyrocketing price of healthcare, housing, and even food has meant the cost of living is advancing faster than Social Security.
As a result, young people are increasingly worried they won’t have enough to retire when they reach the age of 65 and older people are working past that age to have enough to live on.
The best way to eliminate this stressor is to save early and often. Compound interestcan help if you follow a disciplined savings plan and put it in an account that earns compound interest. If you save $5,000 over the next 40 years, for example, at 7% annual return, your $200,000 initial investment total will have become $1.1 million.
Please contact us for more information on debt management and saving.