As companies continue to navigate the uncertainties that have come with the Coronavirus pandemic and employees figure out their often changing daily routine, financial stress triggers are bound to occur. While feelings of stress and anxiety are certainly heightened these days, feeling stressed about your finances isn’t anything new.
An American Psychological Association (APA) study found that 72 percent of Americans have felt stressed about money at least some of the time during the first few months of the COVID-19 pandemic.1
Here are six financial stress triggers that you may be experiencing and our tips on how to overcome them.
Trigger #1: Making Too Many Financial Decisions at Once
Making financial decisions can be overwhelming. Where you can, try writing down and organizing what needs to be done and how quickly. Decide what can wait (maybe a home renovation project) versus what can’t (such as car repairs or maintenance).
Figuring out where you can minimize decision making and space out your financial obligations can help ease the stress of dealing with everything at once.
Trigger #2: Losing Track of Your Spending
It’s easy to lose track of your spending, especially when using credit cards or contactless pay. The problem is, when the bill or bank statement comes around, it can be shocking to see how much you’ve spent. Keeping track of your spending in the first place can help reduce the stress and anxiety you feel when it comes time to check your account. Try utilizing online spending trackers to do the heavy lifting for you! Once you have a firm grasp on your monthly cashflow, you can begin to take control of your finances.
Trigger #3: Credit Card Debt
Having too much credit card debt goes together with letting your spending go unchecked. While it’s nice to build good credit, and many credit cards offer reward points based on how much you use it, you still need to track your spending.
Credit card debt can add up quickly. If you can’t pay off your credit card, interest will grow—and fast. Credit card companies make millions off the interest of unpaid balances, meaning paying at least the minimum payment each month should be a top priority of yours. Credit card debt can creep up quickly, and addressing it now is easier than trying to tackle it later.
Trigger #4: Paying for your Children’s Tuition
College tuition is always on the rise. In fact, the cost of college has increased by more than 25 percent in the last ten years. This is a tremendous financial stress on many families, especially those with multiple children. While it may be a personal goal to pay for your child’s education, it just isn’t always possible.
Many students must take out student loans and apply for financial aid, which adds to the mounting student debt around the country. More than 40 million people collectively have over $1.5 trillion in student loan debt. To help reduce the amount of debt your child may have to take on in the future, you can start working now to help save. Options like a 529 plan are designed specifically for funding future education. No matter what vehicle you choose to save for your child’s college education, the key is to start early and to make systematic contributions out of your monthly, quarterly, or yearly cashflow. Work with your financial advisor to determine how you may be able to prepare.
Trigger #5: Paying for Healthcare Expenses
You never know when a sudden medical emergency will arise, and when one does, it can be a major financial stressor for many families. Aside from the general doctor visits and prescriptions, an unexpected hospital visit can set a family back, and it can take months or even years to pay back these expenses.
If you have health insurance, take the time to reevaluate your coverage. Run through potential “what if” scenarios. This will help to determine how much you could be left paying out of pocket for you and your dependents. If you know you’ll be responsible for paying a significant amount in the event of a medical emergency, focus on padding your emergency fund. Add to it regularly and determine if you’re able to be contributing even more.
Trigger #6: Costs of Raising a Child
In a recent survey, 53 percent of those with dependent children say they are financially stressed. To help alleviate some of the stress, revisit your family budget—or make one if you haven’t yet. Laying out all upcoming expenses on paper can help make them feel more manageable, and it can give you a sense of how much you should expect to spend. Budgeting puts you back in control of your family’s finances, especially when it comes to caring for your kids.
Getting your finances in order is not an easy feat. Start by identifying your financial stressors and determining how you can start to address them. Doing so can help you and your family in the long run by providing a stronger financial future and peace of mind. If budgeting and forecasting is a stressful endeavor in itself, this is where hiring a financial advisor can come in handy.