The bad news is that we have many categories of financial stress.
The good news is that if we can prioritize and plan better, that financial stress can feel more manageable.
Anxious. Overwhelmed. Headache. Upset stomach. Insomnia.
What are all these symptoms primarily stemming from? According to a recent survey, financial stress. Try as they might, people can’t get finances out of their minds and it’s causing psychological or physical effects.
Conducted by Greenwald & Associates on behalf of John Hancock, the survey comprised of more than 2000 employees found a significant link between stress and finances.
Now, perhaps it’s not surprising that people stress out about money. However, it’s when we dive deeper into these findings at Fiduciary Financial Partners that we see the different ways people view their finances.
The bad news is that we have many categories of stress tied back to money.
The good news is that if we can prioritize and plan better, the stress we experience from finances can feel more manageable.
It’s not realistic to expect these worries to simply disappear – we care too much about a variety of goals for that to happen. That said, if you were to list out every possible need and want competing for your dollars, you might not know where to begin. Saving for retirement tops the list among participants for good reason.
However, if you think the stress that people feel is only connected to retirement planning, well, that’s just part of the total picture.
The Secret Weight Of Day-To-Day Finances
While most people in the survey noted that long-term financial matters were their biggest concern, including saving for a child’s college education and saving for retirement, we can’t ignore those issues in front of us every day that we have to deal with. There’s the stress of budgeting, paying for big-ticket items and wondering how we’re going to pay down credit card debt.
On top of that, there are external forces largely out of our control that we still worry about, such as the state of the political climate, what’s going to happen to Social Security and Medicare and the ever-present question of whether or not we’re still going to have a job several months from now.
Just seeing those stress factors listed alone may be stressful for you, right? You’re not alone.
Here’s the reality: There are many more immediate obligations competing for our paychecks, from the mortgage to the phone bill. Until you have a plan for addressing the “here and now” financial obligations, it’s going to be challenging for you to focus on retirement in a meaningful way.
Learning And Taking Action Helps Quiet The Fear
Where’s all this worry really coming from? Uncertainty about the future. Lack of control. A vague understanding of financial concepts. It adds up to a lot of questions without many immediate answers.
How can we change that?
A good (and essential) first step comes from the desire to learn about finance and how certain concepts relate to your goals. If you’re worried about your financial situation but don’t believe you could use more financial education, that’s a tough disconnect.
Consider the plan participant who says he’s on track for saving for retirement. Is he sure about that? Chances are, he doesn’t know exactly how much he’ll need in retirement at all. He’s likely going about the motions of contributing to a plan but he doesn’t have the necessary education to be in tune with his own investment strategy. No wonder he’s also feeling vulnerable and scared about the future.
Secondly, the step of taking action to exhibit greater control over our finances is empowering. Recognize that of all your financial obligations, the one that’s farthest off from where you are today – retirement – will undoubtedly be the easiest one to put off. The future will never come because we’re always living in the present.
Yet, when your values and goals align with true actions as part of a plan, it actually puts you in rare company. Case in point: The survey conducted by Greenwald & Associates found that 70% of plan participants believe they should saving more than 10% of their income.
Guess how many of those people surveyed who want to save more for retirement are actually following through with their plans to do so? Only about half.
It’s similar to the findings of parents saving for a child’s college education. Are they worried? Absolutely. 45% of those surveyed have concerns about saving for an education – but only 17% have started to save for it.
We can want, believe and even have the strong desire to move forward as much as we want. It’s the act of doing something as part of a plan that makes all the difference in causing some degree of financial stress to potentially subside.
7 Keys To Taking Control Of Your Financial Stress
Eliminate Unnecessary Expenses
So you belong to a gym and never go? Or pay for premium channels you never watch? Just a little bit here and there that’s trimmed from your monthly expense list can free up some extra cash. Wasting money on unused items can be a big source of frustration, no matter how much or how little the expense is.
Create A Budget And Stick To It
Yes, we all know that this is important. The question is: How many of us are actually doing it?
Pay Yourself First
In a time where many forces will be competing for your dollars, remember how important it is to make yourself the first priority.
Give Your 401(k) A Raise
The next time you get a pay increase, make sure to give your 401k a raise too! Put all or a portion of it to your future self in the form of a larger contribution to your retirement account.
Make sure you are allocated properly based on your time horizon and risk tolerance. How do you personally define risk? Depending on your time horizon for retirement, the risk may not be in being too aggressive – risk could actually come in the form of being too conservative.
Focus On Monthly Income
Again, most people think they know what they’ll need in retirement when it comes to their monthly income, but they’ll be quite off in making those projections.As a starting point, use your currently monthly expenses. How much monthly income is your current approach likely to help you on your path ahead? There are many online calculators such as the one provided by Bankrate.com that can give you a clearer picture of what you’re currently on track for – which should give you food for thought on where adjustments need to be made.
Review Your Progress Annually (At Least)
By reviewing your projected monthly retirement income at least on an annual basis, you’ll be giving greater focus to what you can control.
The 8th Key: Build A Customized Plan The Right Way With FFP.
Going it alone in investing can be a terribly stressful thought. There are plenty of important decisions impacting the goals you want to reach tomorrow while you navigate the financial waters today.
Let Fiduciary Financial Partners help you make greater sense of all of it with a no-cost, risk-free assessment of your financial statements and a conversation about goal setting. It’s as much a part of what can bring you peace of mind as anything. Start taking back control of your finances – and your stress level – by talking with FFP today at 630.780.1534 or email firstname.lastname@example.org.
Nick Economos, CRPS is a dedicated independent Financial Advisor and Chief Retirement Officer at Fiduciary Financial Partners. He has a wealth of expertise in designing qualified retirement plans and participant education programs.
1 The 2015 John Hancock Financial Stress Survey was commissioned by John Hancock and conducted by Greenwald and Associates. The data is exclusive to the experience of John Hancock's mid/large market retirement plan clients.