We all have our respective financial worries. Even if, according to the data published on Conference-Board.org, the consumer confidence index is up last March, you can expect that people will still be worried about their finances.
Money is something that we constantly stress about. It comes in many forms and is usually influenced by your lifestyle and priorities. If you have children, you would be worrying about providing for their needs. If you are taking care of your elderly parents, you are probably thinking about medical bills and any future health-related costs that you might need to pay off. If you are fresh out of college, your worries are probably be centered around earning a living so you can pay off your student loans.
Regardless of the state of our country’s economy, the stress that we feel about our money will always be present. It comes in varying degrees but it does not really go away. The moment you think about where you will get the money to pay for something – that is already a form of money stress.
When you think about the financial worries of the Americans, the first thing that will come to mind is probably debt problems. While it is a part of what we constantly think about, it is surprisingly not the number one cause of our money stress.
What worries Americans about their finances
Gallup recently published a study that revealed the various money worries of Americans. It is actually a two-part series that says a lot about the financial behavior and priorities of the average American consumer.
In the first series, the article published on Gallup.com titled “The Consequences of Debt in America” revealed that financial worries are, admittedly, higher among those with debt. However, it is only true for some financial areas. For instance, people who have debt are more likely to worry about their retirement than those who are debt-free. In this same article, it is also revealed that debt itself is not really the main reason why they worry. They worry about their food, their expenses, their lifestyle – in general.
There are two important truths that are evident from this study.
People with debt are more likely to worry about their future and ability to pay off debt.
The study done by Gallup revealed that people with debt tend to be more anxious about their finances simply because they have a credit obligation to fulfill. It has to be taken cared of on top of everything else that they have to pay for each month.
Does that mean they have more financial worries than those who do not have debt? In some areas, like retirement, it seems that they have more reason to worry. They are also worried about how they can meet their debt payments – which is natural for borrowers.
People worry about basic necessities, regardless of their debt situation.
When you look into the stress that people feel in keeping up with their standard of living or being able to pay the rent – the anxiety is practically the same for those who are in debt and those who are not. Apparently, debt brings a lot of consequences but it does not really influence the financial worries that the average consumer goes through – at least when the basic necessities are concerned. We all stress about how we can provide for our needs at the moment and that anxiety is not fueled by our debt situation.
The same study also proved that indebted or debt-free people both worry about their ability to meet medical costs – both normal and serious illnesses.
These revelations allowed Gallup to arrive at the conclusion that being debt free does not make you worry less about your ability to survive financially. In fact, the main reason for financial worries seems to be rooted in the financial confidence of the average consumer. When they feel like that have enough money to live comfortably, they worry less about their finances. But if they are not confident about their financial position, that is what fuels the anxiety that they feel towards their finances.
One thing is for certain, those who carry debt are more likely to cut back on a lot of expenses just to make ends meet. Those who are debt-free do not have to make this sacrifice but that does not make them any less worried about their ability to finance their day to day expenses.
How to build financial security to avoid money stress
The key to removing your financial worries is simple – you have to secure your finances. Whether it is the effects of debt stress or the usual anxieties over basic necessities, only financial security can really give you peace of mind. It is not the income that you earn or the standard of living. When you have achieved financial security, that is how you can really tame all your worries about money.
Here are some tips to help you build financial security to reduce money stress.
Know and use financial plans.
Sometimes, the knowledge of the unknown makes us anxious. If you know your money and you know what you should be doing with it, then you will not feel stressed at all. Even if your income falls short in financial your current lifestyle, it will not matter. Your knowledge of your finances will help guide you on what to do so your resources can meet your lifestyle needs. Whether that is to lower your expenses or boost your income – it will all be based on what you know of your financial capabilities. Now the best way to get to know your personal finances is to use financial plans. There are so many out there that you can use. Start with a budget plan and follow through with a spending plan. You can also create a savings plan that will help meet your financial goals.
Build up your emergency fund.
The financial worries, according to the study from Gallup, is more evident on people who are not confident about their money. To build that confidence, you need to focus on your emergency fund. Being prepared for the unexpected is the best way to battle the uncertainties in your financial life. According to an article published on Forbes.com, 6 out of 10 Americans cannot afford to pay for an emergency expense that is higher than $500. If this is you, then you need to get serious about saving enough money for your reserve fund. Otherwise, you will always be worried about the unexpected events that you might face.
Invest in your future.
Just like the emergency fund, knowing that your future is financially taken cared of is another way for you to battle your financial worries. If you do not have a retirement fund, now is the right time to build it up. You can invest in stocks and bonds too. This is a great way to diversify your income – in case something happens to your primary source of cash.
Use credit cards wisely.
Financial security does not mean you have to completely out of debt. You can still use credit – but you should know how to manage it so it never becomes a threat to your finances. You can be a high-volume credit card user and still be debt free. Do not be afraid of these cards – instead, maintain your power and control over it. Learn how to use it wisely because it can be a great backup plan in case your cash emergency fund is depleted.
One of the ways to lessen financial worries is by creating multiple streams of income. Here is a video that will explain what it is and the different options that you have to open other sources of income.