Five financial fears and how to overcome them
It’s normal to be worried about your money. In a recent Bankrate survey, 36 percent of the respondents said they’re losing sleep over money concerns.
Money matters don’t have to be nightmare-inducing, though. Here are five common financial fears and now you can overcome them.
Unexpected medical costs
According to a Gallup survey conducted this year, 58 percent of those polled said they were at least moderately worried about not being able to pay unforeseen medical costs if they were involved in an accident or diagnosed with a serious illness.
Even with a solid health insurance plan, pricey out-of-network visits and increasing deductibles can be frightening. A Bankrate survey in August found 22 percent of Americans said they or a close family member avoided a visit to a doctor in the past year because of the cost.
It’s important to not only have a solid health insurance plan that will cover you in your worst-case scenario, but also to get familiar with the terms.
“Let’s start with, if this happened tomorrow, what should you have that would protect you?” said Amy Irvine of Irvine Wealth Planning Strategies in Corning. If you know exactly what you’ll be expected to pay in the case of a medical emergency and where to expect coverage, you can better prepare, both financially and mentally.
Medical emergencies aren’t the only surprises that can strain finances. A Northwestern Mutual study from 2016 found 55 percent of Americans’ financial anxieties stem from general unexpected expenses.
Those can be medical costs and layoffs, but also smaller costs like car maintenance or a broken hard drive.
For unplanned financial emergencies, it’s key to have an emergency fund. Ideally, that covers at least six months’ worth of expenses, including insurance premiums, mortgage payments, groceries and utility bills.
If unexpected financial burdens are still giving you nightmares, direct more savings to your emergency account even after you’ve reached the six-month threshold.
“The fear of something happening, if it’s not planned for, will keep you up at night,” Irvine said. “Knowing that you’ve planned for that situation to happen and just need to pull it off the shelf if it does bring a lot of people enormous peace.”
Losing a job
A Northwestern Mutual study from 2018 found 28 percent of respondents cited fear of losing their jobs as a source of their financial anxiety.
A report released last year by Udemy found that 43 percent of Americans stressed at work attribute their stress to a fear of losing their jobs because of artificial intelligence.
Like other financial fears that stem from an inability to anticipate the unknown, some uncertainty can be eased by creating an emergency fund. It’s also helpful to have a backup plan.
“Think about what you could do with your knowledge and experience. What’s the backup plan if that were to happen?” Irvine said. “Could you teach? What would be a side hustle if you lost your job?”
Lack of retirement savings
According to Gallup’s survey, not having enough money saved for retirement was the No. 1 fear (accounting for 63 percent of respondents) among non-retirees. A Bankrate survey found 61 percent of Americans don’t know how much they’ll need to be able to retire.
It’s never too late to begin saving for retirement, though, even if your contributions start small. Evaluate your financial plan and make room in your budget for retirement savings. Take advantage of employer plans and catch-up contributions if you’re eligible, and set up direct deposits so you won’t miss the money before it goes into your retirement account.
To get a full portrait of her clients’ financial health, including retirement savings, Irvine conducts a yearly progress evaluation. “We sit down and we say, this is where you’re at and this is where you were last year. So look at your progression, look at any gaps that might exist,” she said.
Dragging debt to the grave.
Being buried under mountains of debt affects nearly half of Americans: 42 percent of respondents to Northwestern Mutual’s 2018 study attribute their economic anxiety to debt.
Between student loan debt, credit card debt and auto and home loans, we are increasingly living beyond our means. According to Federal Reserve, Americans collectively owe $13.29 trillion. It’s often inevitable to carry some amount of debt. But fear can creep in when there’s no end in sight to mounting interest rates and monthly payments.
One solution to getting out of debt doesn’t exist, but there are steps you can take to ease your worries. Create a budget and stop taking on additional debt. Start with your highest interest rates and work your way down. Consider options like consolidation and balance-transfer credit cards.
Make sure you don’t let debt fears overshadow your savings progress.
Knowledge as a weapon
If you still find your financial fears getting the best of you, Irvine suggested a methodical approach.
“You have to admit what’s keeping you up at night; that’s step one,” she said. “Let’s face those fears, let’s write them down and let’s see how scary they could actually be. Is it ‘Friday the 13th’ scary or is it ‘It’s the Great Pumpkin, Charlie Brown’ scary? Become a sponge around those particular topics that are ‘Friday the 13th’ scary.”
Use online resources, read books, listen to podcasts. Seek out a financial adviser. Confronting your fear headon is the best way to defeat it.