Don’t let financial fears turn into financial disappointments. Learn about the financial concerns that might be keeping you and your fellow Americans up at night, along with some tips from industry professionals for overcoming them.
Common Financial Fears
“To overcome a fear [about] your personal finances, you first need to ask yourself why you’re afraid,” writes David Weliver, founder of the website Money Under 30.
These days, economic strife has heightened some of the traditional financial fears among Americans.
One of the most significant concerns: 76% of American adults responding to a Harris Poll commissioned in March 2020 by money management app Tally said they’re worried about the U.S. plunging into a recession. Meanwhile, 68% of those surveyed reported feeling anxious about the financial markets.
Since the poll was conducted, some of Americans’ worries have come true. On June 8, 2020, the National Bureau of Economic Research released a statement declaring that the U.S. economy officially peaked in February 2020 and is now in a recession.
Other recent surveys show fears about:
- Losing a job
- Getting credit
- Keeping up with mortgage payments, credit card bills, and other debts
- Covering basic household expenses
- Dealing with decreased income
- Coping with higher inflation
- Setting aside money for emergencies
- Saving for retirement
Tips for Conquering Financial Fears
Given those concerns, what could you do to shore up your finances? Here are tips for calming six of the most common monetary fears.
1. Losing a Job
“[Job] insecurity doesn’t have to be stressful and negative. It can offer opportunities for growth and development,” notes Mind Tools, a website devoted to helping people build happy and successful careers.
If you’re afraid of losing your job (or perhaps you’re already out of work), it might be a good time to polish your résumé, update your LinkedIn profile, and reach out to your professional contacts. It’s smart to be prepared in case your employer furloughs or lays off you and your colleagues. You don’t want to be caught off-guard.
Overall, you can help to “reduce stress by preparing yourself for change. Invest time in keeping your skills up-to-date and in learning new ones,” Mind Tools adds.
2. Getting Credit
To counteract concerns about getting credit, be sure you’re in good financial shape. “The best way to do this is to take stock of where your finances stand,” David Weliver writes.
One way you can do this is by checking your credit report for errors that might be dragging down your ability to obtain credit, such as a credit card payment that was mistakenly labeled as being late. Under federal law, you’re entitled to free access to your credit reports.
You also should consider checking your credit score; the higher your score, the easier it’ll be to get credit with favorable terms, such as a low interest rate. Most credit card issuers and financial websites offer no-cost access to your credit score.
In 2019, the average FICO credit score in the U.S. reached an all-time high of 706. FICO, the most commonly used credit-scoring model, judges your credit on a scale ranging from 300 to 850. A FICO score above 700 is considered good.
3. Keeping Up with Bills
No one wants to get behind on paying bills. For one thing, it can harm your ability to qualify for a credit card, personal loan, or mortgage.
So how do you ensure that you stay on top of things?
Financial experts recommend establishing a household budget that maps out your monthly income and expenses. But, they add, you must stick to this budget, whether you’ve written it down on paper, compiled it in a spreadsheet, or relied on a budgeting app.
They also advise coming up with a list of all of your debts, including the amounts you owe and the interest rates for each. This overview can help steer you in the right direction when it comes to prioritizing which debts to focus on wiping out first, based on the amount you owe or the interest rates you’re paying.
Plus, “The mere act of starting to dig out of a financial hole is a positive first step that will make you feel better,” according to Debt.org.
(By the way, the average American carries personal debt in the amount of $90,460.)
4. Coping with Higher Inflation
When inflation goes up, that means you’re paying more overall for goods and services like housing, food, transportation, clothing, and healthcare. And that, of course, can put a dent in your bank account if your paycheck doesn’t go up along with costs.
A simple way to deal with higher inflation is to reduce expenses. For instance, you might consider eating at home more often than at restaurants. Home-cooked meals typically cost less than restaurant meals. Or you might explore cutting back on video-streaming services and other recurring subscriptions.
Buying gold also might help you handle a hike in inflation. Gold is considered a hedge against inflation. Why? It’s a physical asset that has historically outperformed other mainstream financial assets when the prices of several goods and services have gone up.
5. Setting Aside Money for Emergencies
A 2020 survey for GOBankingRates found that 58% of Americans have less than $1,000 in savings. For many Americans, that would fall far short of just one monthly mortgage or rent payment.
As a general rule of thumb, financial experts suggest creating an emergency fund with enough money to cover three to six months of expenses. This fund can come in handy if you lose your job, need to pay for unexpected car repairs, or face a last-minute hospital stay.
“Building a good emergency fund can take a few months, but having one in place can be amazing for your mental health,” advises Clint Haynes of NextGen Wealth. “It means knowing in the back of your mind that you can cover unexpected expenses when they happen.”
6. Saving for Retirement
Sadly, estimated household retirement savings for American workers sit at a median total of $50,000, according to research by the Transamerica Center for Retirement Studies. Among baby boomers, that amount is $144,000.
However, in a survey of 401(k) participants in the U.S., the average amount they believe they’ll need for retirement is $1.7 million. That’s well above the median household retirement savings for any age group.
If you feel like you’ve fallen behind on retirement savings, how can you catch up? Here are a few recommendations from financial experts:
- Maximize contributions to your employer-sponsored 401(k).
- Contribute the entire IRS-approved annual amount to your IRA; for 2020, that’s $6,000 if you’re under 50 and $7,000 if you’re 50 or over.
- Consider turning to gold as a safe-haven asset through a Self-Directed IRA.
- Look at purchasing gold to diversify your portfolio. Suggestions for portfolio allocations of precious metals range from roughly 5 to 20%.
- Find new sources of income, such as a part-time gig.
- Hire a financial planner to develop a retirement plan.
- Review your targeted retirement date and see if you’re still on track or need to delay it.
The adage is true: Knowledge is power. Take charge of your financial future by preparing yourself with an IRA. Call U.S. Money Reserve at 844-307-1589 to learn how gold can play an instrumental role in helping you work toward a future, especially retirement, that feels resilient enough to stand up to job loss, inflation, an unexpected bill, or any number of other financial fears. We'll provide you with a free one-on-one consultation.