Five fi­nan­cial fears and how to over­come them

Albany Times Union - Sunday - - SUNDAY MONEY - By Ken­dall Lit­tle (TNS)

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.

Money-drain­ing emer­gen­cies

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.

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