Many Americans are losing sleep over money, according to a January 2019 survey by Bankrate. The media may report a ‘strong U.S. economy,’ but many people experience stress outside of what’s happening in the broader economy. The survey indicates that a large number of Americans live paycheck to paycheck and continue to struggle financially year after year. The top five money stresses keeping survey respondents awake:
- 32% reported stress paying everyday expenses
- 24% indicated stress about not having enough saved for retirement savings
- 22% were concerned about being able to pay for health insurance and healthcare.
- 18% stress about settling credit card debt and making mortgage or rent payments (18%).
So why are more people feeling financial stress despite the strong economy we’ve experienced since the recession? Usually, wages increase during an economic expansion, but the rising cost of living is eating up more of each paycheck, leaving little leftover for non-discretionary spending. Working Americans make only about 10% more than they did in 1973, when adjusted for inflation, according to a 2017 Brookings Institute Report. If we aren’t making more money, what can we do to sleep better at night?
- Create a Spending Budget- if it isn’t in the budget, don’t make a purchase. Part of the budget process should be assessing what you can eliminate. Maybe it’s a satellite TV package that’s bundled with home phone and internet.
- Automate retirement savings directly from your payroll deductions and automate savings contribution increases.
- Seek employment at companies that provide health insurance and also have an HSA (Health Savings Account) as part of their benefits package. An HSA is yours to keep and can be rolled into another HSA if you transfer jobs to help you pay for unexpected medical expenses. Another benefit of an HSA is it can be used for long-term care after you retire.
- Create a plan to pay off credit card debt and “cut the card,” or so to speak. Discontinue using credit for purchases and stop using ‘rewards’ to justify credit spending. If you use credit cards to pay for emergency spending, work to create an emergency fund for unplanned financial emergencies.
- If you have a significant mortgage or rent payment, consider moving to a more affordable residence or geographic area within your budget.
Evaluating your spending and debt can reap greater rewards later, even on a stagnant wage if you don’t foresee making more money soon. Financial planning includes accessing your current situation and developing a plan so that you can save more and be financially secure.