What would you say is your biggest source of stress in life?
Is it managing your kids’ busy school and activities schedules? Caring for an elderly parent or loved one? Juggling custody arrangements and co-parenting with an ex? Is it arguing with your friends and family about politics and your worldviews?
While all of the aforementioned stressors are legitimate, about three-fourths of all Americans list a different number source of stress: money. That’s right, a whooping 73 percent of all Americans say that their finances are their leading stress in life, per a report from CreditWise in conjunction with National Get Smart About Credit Day. Just in case you were curious, the runner ups are politics, work and family.
The study goes on to explain that younger generations of Americans are more concerned about their finances than older ones, with 82 percent of Gen Z’ers and 81 percent of Millennials reporting that their finances are stressful. That’s not a big surprise, as it’s younger Americans that are more likely to be saddled with student loan debt that can sap any excess disposable income they may want to use elsewhere.
However, what’s perhaps most surprising about the study is that only about two out of every five respondents are optimistic about their financial situation, and even many of the ones who aren’t pessimistic about things moving forward indicate that they’re unaware of how to reach their financial goals.
Big Purchases Equal Big Stress
Again, unsurprisingly, many Americans say that the most stressful financial times come after some sort of big purchase, like buying a home or financing a new vehicle. While it wasn’t indicated in the CreditWise study, it’s probably safe to assume that money can become stressful after graduating from college when entry-level salaries must be relied upon to begin repaying student loans and, in many cases, be enough to get them started in their next phase of life.
A Troubling Trend
Like we noted above, what’s really troubling about the CreditWise report isn’t so much that people find money stressful — it’s more that many of the participants studied don’t really have a clear roadmap on how to make their financial situation more sustainable.
In fact, only about 16 percent of all those studied stated they’re familiar with the means and methods of how to improve their credit score, which is troubling. Being that credit is the key cog to low interest rates and approval on loans for major purchases, just having a good credit score can likely save consumers hundreds — if not thousands — of dollars on a big buy, possibly alleviating financial stress right there. But the good news is that about 60 percent of those surveyed say that they’re interested in learning more about how to improve their financial situation.
Tips to Improve Finances
- Improve your credit score: Like we noted in the opening, a bad credit score is going to cost you big bucks in excess interest fees over the course of a long-term loan. Make sure you take the necessary steps to improve it if yours is lacking, especially before you sign any papers on a 30-year mortgage.
- Start an emergency fund: Many people who worry about finances are those that know they’re bound to be in a tough spot if they get hit with an unexpected expense. In fact, most Americans say they wouldn’t be able to afford a $400 unexpected expense without charging it or borrowing money. Noting this, it pays to allocate money toward an emergency spending account to give you that buffer if (when?) the unthinkable happens.
- Eliminate unnecessary expenses: It seems like we all subscribe to so many services that we set auto payments for many things every month. Track your expenses for one month to see what you’re spending money on. Then ask yourself what you really need and what money is just going to waste. You’ll likely be able to reduce your spending by several tens of dollars at a minimum each month.
- Invest in your future: Be sure to invest in your future. Create long-term savings and retirement goals. Make sure you’re allocating at least enough money for a company match (if offered). Proper planning is often the key to financial prosperity.