It’s safe to say 2020 has been one of the more stressful years for a lot of people. While feelings of stress and anxiety are certainly heightened amidst the current pandemic, feeling financial stress is certainly nothing new.
A study by the American Psychological Association found that 72% of Americans have felt stressed about money at least some of the time during the first few months of the COVID-19 pandemic. Financial stress can be a constant burden for some, but especially during a global crisis like this.
Here are five financially stressful events that you may be experiencing and how you can work on overcoming them.
Stress #1: Financial Decision Overload
Making financial decisions can be overwhelming. Trying to make multiple financial decisions at once can be even MORE overwhelming. Writing each decision down, staying organized, and figuring out where your priorities are can be helpful. Decide what can wait (the new kitchen) versus what can’t (replacing the transmission on your car).
Taking on everything at once is a great way to get stressed out quickly. Breaking down each decision into bite sized pieces make the whole thing easier to swallow.
Stress #2: Not Tracking Your Spending
In today’s world with online shopping and virtual payments, it’s easy to lose track of your spending. Just because you’re not taking physical cash out of your wallet doesn’t mean real amounts of cash aren’t flowing out of your bank account.
The good news is that while there is so much technology to help you SPEND your money, there is also plenty of technology to help you TRACK your spending. Keeping track of your spending in the first place can really help reduce the stress and anxiety you feel when it comes time to check your account.
Stress #3: Credit Card Debt
Having too much credit card debt goes hand-in-hand with letting your spending go unchecked. While it’s nice to build good credit, and many credit cards offer reward points based on how much you use it, you still need to track your spending. Using your credit cards for the sole purpose of trying to build up points is an easy way to let spending get out of control.
Credit card debt can rack up quickly. Making sure you can fully pay off your credit card balances at the end of each month is the best way to keep your credit card debt in check. Credit card companies make millions off the interest of unpaid balances, meaning paying at least the minimum payment each month should be a priority of yours, while paying off the full balance being priority #1. Credit card debt can creep up quickly, and nipping it in the bud is much easier than trying to tackle it later down the line.
Stress #4: Paying for Tuition
College tuition is always on the rise. In fact, the cost of college has increased by more than 25% in the last 10 years. While COVID-19 has presented some new challenges with college and tuition, this isn’t a problem that is going away anytime soon. This is a huge financial stress on many families, especially those with multiple children. While it may be a goal of yours to pay for your child’s education, it just isn’t always possible.
Many students have to take out student loans and apply for financial aid, which adds to the mounting student debt around the country. More than 40 million people collectively have over $1.5 trillion in student loan debt. To help reduce the amount of debt your child may have to take on in the future, you can start working now to help save. Options like a 529 plan are designed specifically for funding future education. Work with your financial advisor to determine how else you may be able to prepare.
Stress #5: Costs of Raising a Child
In a recent survey, 53% of those with dependent children say they are financially stressed. Beyond funding their education, other costs include:
- Diapers and formula for infants
- Childcare for younger children
- Doctor visits
- Family vacations
As any parent knows, the list goes on and on. You want nothing but the best for your children, and for many families, this may mean spending more than you have to support them and provide for them in the best way that you can. The best way you can do that is to plan, plan, plan! AND be ready to adapt that plan when things inevitably change.
To help alleviate some of the stress, revisit your family budget – or make one if you haven’t yet. Laying out all upcoming expenses on paper can help make them feel more manageable, and it can give you a sense of how much you should expect to spend. Budgeting puts you back in control of your family’s finances, especially when it comes to caring for your kids.
These are just a few of the financial stresses people face every day. The first step is identifying what YOUR financial stresses are, and figuring out a plan to overcome them. If you are having trouble formulating a plan tackle your personal financial stresses, talking with a financial planner can help. We would be happy to speak with you. Click here to schedule a time to talk to one of our team members. There is no cost or obligation.