Financial Advisor in Raleigh NC: Financial Anxiety
Financial anxiety can be a debilitating money monster that affects people of all income levels. It haunts someone struggling to make rent as well as someone struggling to make the right investments — and every financial situation in between. For some, fear of running out of money can be worse than fearing death.
What is Financial Anxiety?
Financial anxiety presents as general worry about money – how little you have and how much you can spend. People become constantly aware about what they consume and stress over every dollar. Worries about bills and when the next paycheck hits the bank keep people up at night and distract them throughout their days.
In addition to anxiety, many people have symptoms of depression as well. People feel sad, frustrated, and helpless. Financial anxiety prevents people from relaxing or being able to enjoy their hobbies. It dominates their lives.
Contributors to Financial Anxiety
Paycheck to paycheck
Constantly relying on one's paycheck to cover essential expenses is a major source of worry for people, as they are unable to set aside funds for unexpected events. This is demonstrated by the fact that almost half of Americans cannot afford an unforeseen expense of $400. The potential of a medical emergency, car accident or house damage can leave many people in debt, which explains why financial stress is so widespread.
Renting forever
Peoples’ living situations put a major strain on their finances, especially for those who rent. Over one third of Americans live in a rental property. That number skews heavily to younger people and poorer people. Two thirds of people under 35 rent their homes.
Over 85% of the poorest Americans rent. On top of that, 45% of renters spend more than 30% of their income on rent. This situation makes it especially hard for these people to build a savings or equity. Every monthly rent payment contributes to equity for someone else, depositing more money from the hands of the poor into the pockets of the rich.
Surging inflation
During the last 12 months, the rate of inflation has greatly increased and is now at its highest in the past four decades. Even those who have seen a slight increase in their salaries have experienced a decrease in their income due to the sharp rise in prices. Particularly, the prices of food and fuel have increased more rapidly than the general rate of inflation, leaving those with limited resources with the most challenges.
Tips for Managing Financial Anxiety
Identify sources of Financial Stress
If financial anxiety is weighing on you, start by identifying the specific issues keeping you up at night. Whether the problem is credit card debt or upcoming bill payments, pinpointing the source of your stress will help you determine your next move.
Create a Monthly Budget
A budget is a powerful tool for taking control of—and understanding—your finances. It can help you avoid spending more than you have as well as save for future goals. Once you have a full picture of where your money is going every month, you can look for opportunities to redirect some of it to the areas causing your financial stress.
Build an Emergency Fund
Having money set aside for an emergency—such as car repairs, job loss or illness—can go a long way towards relieving financial anxiety. However, building an emergency fund can seem overwhelming, especially one with enough to cover three to six months of expenses. Don’t get hung up on the amount—what’s important is that you’re consistently setting money aside.
Consider Outside Help
Even if you aren't in great financial shape, a financial planner, coach, or advisor can help you figure out what you need to do to be able to retire — without anxiety. A financial advisor or financial planner can give you guidance on long-term goals, such as saving for retirement or college. An advisor can help you make a financial plan and implement the plan with your goals in mind.
Bottom Line
Reducing financial stress isn't easy, but it's far from impossible. By gaining control over your finances through budgeting and goal setting, seeking professional advice when needed, and understanding how important it is to focus on short-term and long-term objectives, you can find ways to manage your money better and overcome any anxieties you may have along the way.
Sources
https://www.fidelity.com/learning-center/personal-finance/investment-portfolio-planning
Disclosures:
This site may contain links to articles or other information that may be on a third-party website. Advisory Services Network, LLC is not responsible for and does not control, adopt, or endorse any content contained on any third-party website.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
