If you’re stressed about your finances, you’re not alone. In fact, money is the top sources of stress for American adults and 25% of us worry about money all the time.1Fretting over money occasionally is normal but when we get so overwhelmed that we simply ignore our finances, it can cause long-term financial pain. Ignorance is not bliss when it comes to your financial affairs so if the thought of keeping a budget sends shivers down your spine, here are 6 reasons you shouldn’t be afraid of your finances.
1. Your financial situation isn’t going anywhere – You can ignore your financial situation today but it will still be there tomorrow, next week and when it’s time for retirement. It’s never too late to take control of your financial affairs and become more financially literate. Your future self will thank you.
2. You can’t fix what you don’t know – You’re entitled to a free copy of your credit report every 12 months but 65% of Americans haven’t glanced at theirs in the past year.2 Afraid of what’s in there? It might not be pretty but you can’t take charge of your financial future unless you know what you’re dealing with. Experts also suggest keeping track of every penny you spend for a few months to get an idea of where your money is going. With this basic information, you can start to plan for a healthier financial future.
3. Saving feels better than spending – It’s hard to believe that putting $200 in a savings account could feel better than splurging on those fabulous new shoes but it’s true. Sure, there will be some short-term pain but that will quickly be replaced by the excitement of watching your savings accumulate. Even if you only save $10 a week, you’ll have more than $500 after a year and the confidence boost from knowing that you can do it.
4. Budgeting sets you free – When you’re not used to a budget, it’s easy to feel deprived, especially when your monthly entertainment stipend runs out and it’s only the middle of the month. But, balancing your outgoing funds with your incoming funds is the only tried and true way to make sure you don’t spend more than you earn.
5. You can’t predict the future – Spending every cent you make and paying only the minimum balance on credit cards might work for a while but if you lose your job or get seriously ill, you’ll have no backup plan. No matter how rosy your current situation is, it’s prudent to have even a small rainy day fund to cover expenses in an emergency situation.
6. You are not alone – You may feel like the only person in the world with financial troubles but according to a recent survey, 62% of Americans admit to a big financial mistake3 and 63% said it cost them $10,000 or more3. There are support networks to help people get out of debt and build a healthier financial future. The National Foundation for Credit Counselling can connect you with a debt management expert who can review your finances and provide advice for little or no cost.
Not sure if you’re afraid of your finances? Take the National Foundation for Credit Counselling’s quiz “How do I know if I’m in financial trouble?” and poke around the website for tips and guides on how to turn things around.
1American Psychological Association: Annual Stress in America Survey, 2014
2 Source: National Foundation for Credit Counseling: Financial Literacy Survey of US Adults, July 2013
3 Consumer Reports Money Advisor, February 2013