Many Americans are stressed over money issues related to COVID-19, according to a 2020 Survey by The National Endowment for Financial Education. The media may report a strong U.S. economy is emerging, but many people experience stress outside of what’s happening in the broader economy. The survey indicates that many Americans continue to work during COVID-19 but live paycheck to paycheck and struggle financially year after year. The top five money stresses keeping survey respondents on edge:
- 41% having stress about not enough money in emergency savings.
- 39% are concerned about job security.
- 29% are experiencing income fluctuations.
- 28% have trouble paying their utility bills.
- 28% are concerned they won’t be able to pay their mortgage or rent payment.
Before COVID-19, people were already feeling financial stress despite the strong economy we experienced before the recession. Usually, wages increase during an economic expansion, but the rising cost of living was already eating up more of each paycheck, leaving little leftover for non-discretionary spending. What can we do to relieve our money stress?
- 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 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 HSAs is that they can help pay for long-term care after you retire.
- Create a plan to pay off your credit card debt. Discontinue using credit for purchases and stop using credit card rewards to justify credit spending. If you use credit cards to pay for emergency spending, start 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 if you are able.
Evaluating your spending and debt can reap greater rewards later, even on a stagnant wage, if you don’t foresee making more money soon. Remember that working with a financial professional and engaging in financial planning includes accessing your current situation, too! Work together to develop a plan to save more and feel more financially confident.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
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