Are your finances making you sick?

Worrying about money is something a lot of us do on a regular basis. Your electricity bill is higher than usual. Your car needs repairs unexpectedly. Your landlord increases your rent or your property taxes increase. It’s easy enough to let life’s many expenses push you around, but there’s a difference between reacting to specific trigger events and walking around day in and day out feeling endlessly stressed about money. Unfortunately, the latter describes the reality that most Americans face.

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According to a 2016 Northwestern Mutual study, 85% of American adults suffer from financial anxiety. What’s more, over the past three years, 36% of Americans have become increasingly worried about their finances. More than a quarter of Americans say they worry about their finances at least once a day, and 67% say financial anxiety impacts various aspects of their health. Not only does financial anxiety make many of us sick, it also affects everything from our home life to our social interactions to our careers. And unless we do something about it, the problem is likely to get worse.

What are we all so stressed about?

While unexpected expenses are the number one source of financial anxiety for most Americans, daily expenses come next. In addition, nearly a third of Americans worry about not having enough money in retirement, while a quarter or more are stressed by health expenses, housing costs and credit card debt. credit.

Of course, these are all extremely valid concerns, but spending time actively worrying about money won’t do you as much good as taking action to address your fears. If you are suffering from financial anxiety, here are some steps you can take to address it:

Have an emergency fund

Americans’ biggest financial fear is having an unforeseen emergency, which is not surprising given that an estimate 28% of Americans don’t have a dime in emergency savings. Having an emergency fund will help you sleep better at night, and just as important, it will potentially save you from financial disaster in the event you lose your job, get sick, or find yourself unable to work for an extended period of time. .

If you don’t own a home or don’t have children, you should try to save enough money to cover three to six months of living expenses. If you own a home or have kids, aim for six to nine months of spending. When calculate how much to save in your emergency fund, be sure to include everything from your rent or mortgage payment to your grocery bills to find the right amount. Plus, don’t forget about costs that could go up if you’re not working, like higher health care premiums.

Once you’ve built up your emergency fund, put it somewhere safe, like the bank. While this won’t help you grow your savings, you can rest assured that your capital will not go down.

Live below your means

Just over 50% of Americans are stressed out about their daily expenses. If you’re tired of feeling like every penny you earn is already counted by the time it arrives, you’ll need to take a close look at your finances and find ways to cut costs. It could mean reducing your living space, swapping your vehicle for one with a lower monthly payment, or cutting back on some luxuries, like your landscaping or cleaning service. The more money you free up in your budget, the less worry you will have to worry about if you can cover your monthly bills.

Make a long-term plan

Lack of retirement savings is a huge fear for many people, and it isn’t helped by the fact that one in three Americans have nothing saved for the long term. One of the best ways to relieve some of your financial stress is to create a long-term savings plan. Once your emergency account is fully funded, start putting money aside every paycheque for retirement. It’s okay to start small and eventually increase the amount you contribute, but you should start saving as early as possible to give your money a chance to grow. Saving $ 100 per month starting at age 35 will earn you about $ 136,000 at age 65 if your investments have an average annual return of 8%. But if you wait until you’re 45 to start putting that money aside, you’ll only have $ 55,000 by the time you turn 65.

No matter what you do to improve your financial situation, the key is to take action rather than sit back and let your money fears consume you. As long as you save wisely and stay on a budget, there’s no reason to let financial anxiety rule – or ruin – your life.

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