According to a 2021 Capital One CreditWise survey, 73% of Americans rank their finances as the most significant source of stress in their life. This statistic shows that we could all use a little help overcoming financial stress—but how? Consider these six tips so you can move closer to financial freedom.
1. Create a Budget
Setting up a household budget can go a long way toward easing your financial stress and bolstering your financial wellness. How? It gives you a good handle on how much money you’re earning, spending, and saving. Think of it as a road map for your ultimate destination: financial freedom.
While it’s a good start, creating a budget is only one part of the equation. You also need to stick to your budget to achieve your financial goals.
“Even though most consumers (74%) say they have a budget, 79% of [those who have a budget] fail to follow it,” according to research cited by CNBC.
Fortunately, anything from an old-school spreadsheet to a new-school budgeting app can simplify the entire budgeting process.
2. Decrease Your Debt
One of the greatest sources of financial stress in our lives is debt. This might include your mortgage, student loans, or credit cards.
The average American has $52,940 worth of debt as of May 2021, reports Business Insider. Whatever the source of your debt, you should constantly strive to reduce it.
Unloading some or all of your debt can free up money for things like an emergency fund or retirement savings.
3. Start an Emergency Fund
If you don’t already have an emergency fund, then you shouldn’t wait to create one. Setting up an emergency fund that covers at least three to six months of living expenses can ease your mind and cushion the financial blow of a costly hospital stay, a major car accident, or another unexpected event.
An emergency fund can help alleviate financial stress. Think of an emergency fund like a life raft on a boat: Set sail without one, and you have no safety net. Set sail with one, and you’re better equipped for any storms that may come your way.
4. Save for Retirement
Wondering what your financial status will be during retirement can cause a lot of sleepless nights. Want to slumber peacefully? Shore up your retirement strategy by addressing these questions:
- Am I contributing enough money to my 401(k) or another employer-sponsored retirement account?
- Am I putting enough money into my traditional or Roth IRA?
- Am I taking advantage of annual catch-up provisions that let someone 50 or older put more money into retirement accounts?
Remember, it’s never too late to ensure that you’re financially prepared for retirement.
5. Diversify your Portfolio
Let’s say you’ve got some money put aside in both a 401(k) and an IRA. Now, let’s say the stock market takes a nosedive. Is your portfolio diversified enough to weather such a stock-market storm?
Portfolio diversification prevents you from putting all your money in one basket, like the stock market. For instance, you may want to consider purchasing precious metals to diversify your asset mix and reduce risk. Bottom line: Spreading your money across several asset types like gold and silver can help you preserve your wealth.
Don’t forget that retirement accounts like a 401(k) and IRA offer significant tax benefits and that alternative assets such as gold and silver can be held in a self-directed IRA.
6. Think About Generational Wealth
It’s normal for a parent or grandparent to fret about their heirs’ financial future. After all, you want your loved ones to be physically and financially healthy throughout their lives.
Have you given thought to how much generational wealth you’re building for your kids and grandkids? Will it be enough to make you comfortable—and to make them comfortable when you’re no longer here?
Generational wealth can provide financial freedom for generations to come. Achieving generational wealth can be done in several ways, such as putting money into the stock market, buying real estate, or purchasing precious metals like gold and silver. Diversifying your portfolio offers the possibility of your heirs inheriting even more generational wealth.
If the future of the stock market or Americans’ growing debt causes you financial stress, consider alternative assets like precious metals. U.S. Money Reserve can help you get started with a free gold kit that includes everything you need to know.