Many Americans are becoming more anxious about money.
According to the survey conducted by Northwestern Mutual, money ranks first as the primary source of stress in the US population. It is more stressful than personal relationships and career.
Money issues have caused so much strain on people, because, why not? It touches everything starting from your household down to your personal life. Hence, it is no wonder why it ranks first as the primary cause of stress and anxiety.
One of the major causes of financial stress is paying debts, which can be in the form of mortgages, personal loans, and credit cards. As stated by the Federal Reserve, credit card debts hit a record of nearly $1 trillion this year. Moreover, outstanding student loans have ballooned to almost 150% within ten years.
Hence, we are not only dealing with financial debts, but we also find it challenging to save money. According to the Federal Reserve’s report, 4 out of 10 Americans do not have a minimum of $400 in cash for emergencies.
On the other hand, we cannot simply conclude that all of us do experience financial stress. Certain groups in the population are more likely to be stressed than others, particularly women, millennials, and parents with financially-dependent children, according to a survey.
And we will get to know them all one by one below.
Americans vs. Financial Anxiety
- More than half of the US population agree that “thinking about my finances can make me feel anxious”
- As many as 44% of Americans acknowledged that “discussing my finances can make my heart race or make me feel stressed”
According to the 2018 National Financial Capability Study, over 50% of Americans feel that personal finance is their primary source of stress and anxiety by just thinking of it, while 44% agree that talking about personal finances is stressful. However, there are many factors that contribute to why people suffer from financial anxiety, which will be discussed later on.
In the said study, different demographics were surveyed to know which group of population is the most financially stressed. From the gathered data, it showed that millennials are the most stressed generation among them all.
And aside from them, listed below are the other groups of population who are also affected by money stress.
Women are more financially anxious than men
- 57% of women said they felt financially anxious, versus 47% of men.
- And 49% of women feel stressed when discussing their finances, versus 38% of men.
In terms of gender, a study showed that women are more likely to experience anxiety over their finances than men. The causes are sadly anecdotal and elusive, but historical and current pay inequity plays a vital role. According to the Bureau of Labor Statistics data, women earn 81.4% of the amount their men counterparts make. Besides, women are traditionally responsible for day-to-day household duties, childcare, and other domestic duties that may also add to the burden of women being more financially stressed than men.
Millennials is the most stressful demographic
- A whopping 63% of millennials, defined as those 18 to 34 years old, said they are financially anxious,
- and 55% of millenials feel stressed
In terms of demographics, millennials, aged 18-34 are the most financially stressed among young adults, aged 35-54, and older adults, aged 54 above. That is because millennials are dealing with high student loan debt and the lack of savings since they are just starting in the real world, finding a stable job. Meanwhile, in research, it showed that millennials as a whole gain less trust from employers, government, and the stock market, which puts them in a bad light.
- 31% of Americans are financially fragile; they could not come up with $2,000 to address an unexpected need within a month.
According to a study, the three main factors causing financial fragility are high debt, lack of assets, and low income. Fragility affects all age groups, despite the expectation that as they grow older, they can earn more money.
American Financial Plan
- Half of Americans said they are just getting by financially.
- Only 41% have tried to figure out their retirement savings needs.
- Many than half said they worry about running out of money in retirement
One of the biggest misconceptions among Americans is that financial planning and wealth management are only for millionaires. In a survey, 1,000 Americans aged 21 to 75 said that managing finances and investment are based on four factors: confidence in reaching financial goals, staying on track, saving, investing, goal setting and financial planning, saving, and financing.
According to the American Institute of CPAs (AIPCA) Personal Financial Planning Trends Survey, running out of money is the major worry among American retirees.
The said survey also showed the factors why many retirees outlive their savings, and these are due to healthcare costs (77%), market fluctuations (53%), and unexpected expenses (50%).
Other factors that can contribute to this concern include:
- lifestyle expenses (42%)
- the possibility of being a financial burden to the family (22%)
- planning to leave an inheritance to children (21%)
5 Tips for dealing with financial stress
Anxiety and depression are the two most common effects on people suffering from financial stress. Usually, these two conditions go hand-in-hand, and each of these conditions might drain you. For example, you find it hard to focus at work, don’t want to spend time with family, and difficulties in keeping up your monthly bills and other financial responsibilities.
Hence, here is a rundown of tips you can do to lessen your financial stress and make everyday work more comfortable.
Plan a budget
Creating a budget will help you plan and decide how you are going to allocate your hard-earned money.
Obtain an emergency fund
Having an emergency fund will help you cover unexpected expenses that might come along the way, so make sure to get yours.
Seek help from others
If you are struggling with money issues and do not know what to do, don’t be afraid to seek help from others.
Explore what you can do to change your current situation
If you already know why you are having financial troubles, don’t be afraid to spread your wings and look for other means to help you change your situation.
Take note of any progress.
Though it might not help directly in lessening your financial burden, tracking any progress can help you brighten up your day and reduce the stress you feel.
Suffering from financial stress might not put your bank account in danger, but also put your health at risk. Whatever age group you are in, financial burden happens. The good thing is that you can control your finances, no matter where you are on this journey. You can seek help from a certified financial planner to help you reorganize your situation and help you create plans that will reach your goals, getting you through good and bad times.
Keep in mind that feeling anxious over money is normal and can be treated. And one of the simplest ways to cope with financial anxiety is having a comprehensive and organized financial plan. You may also follow the tips mentioned above, whenever you find yourself dealing with financial stress.