9 Financial Fears and How to Overcome Them
Over the past few months, financial issues rose to a new level of concern as the pandemic altered the way we looked at jobs, borrowing money, and saving for retirement. While not everyone worried about keeping their jobs, others struggled to find ways to pay rent or house payments and put food on the table.
Regardless of a person’s socioeconomic status, virtually everyone harbored some level of financial fear as conditions around them continued to change in unpredictable ways. Even though many concerns proved to be unfounded, others had merit. Here are nine common financial fears along with strategies people can use to overcome them.
1.) Losing a Job
As a rule, losing a primary source of income is the number-one financial fear people have. Even people with large nest eggs worried about losing a job, as that steady paycheck provided a sense of security that’s hard to replace. With no regular income, paying rent, purchasing food, and taking care of utility payments quickly become major problems. However, financial experts suggest there are ways to mitigate relatively short-term unemployment.
The first recommendation is to have an emergency fund that’s sufficient to cover your typical bills for six months. That’s not always easy, but putting money away for such an emergency is a must. Another suggestion is to plan ahead and have alternate income sources available. Again, that’s not always easy, but explore other employment options as well as ways to generate income through a side business.
2.) Getting Sick or Being Injured and Unable to Work
COVID-19 caused many people to lose time at work, with many of them requiring weeks, or even months, to recover. At the same time, workers in many occupations will be injured and unable to work. Workers’ compensation payments help injured workers to survive financially while recovering from an injury, but most people don’t have any type of coverage to take advantage of during a prolonged illness.
To get past these situations, that all-important emergency fund again comes into play. Even in instances where workers’ compensation coverage or disability insurance help, those plans rarely provide sufficient income to get by without having some savings to fall back on. If you’re unsure how you would survive for several months due to an injury or illness, discuss those concerns with your employer or a financial advisor. They may recommend options you had not considered, including a private disability plan.
3.) Facing a Sudden Financial Emergency
Over the past few months, news stories from around the nation highlighted tragedies that left countless people homeless or facing extreme financial emergencies. Those stories of tornados, floods, and wildfires created new fears in people everywhere. So, are there ways to plan for those types of major catastrophes? The short answer is yes.
Financial planners have always recommended people take steps now to prepare for unpredictable events. Verify your insurance covers the types of events you’re likely to experience. Make sure you are saving money to cover emergencies. Monitor your credit to ensure you have the capacity to borrow money to cover an emergency should the need arise.
Remember, it’s okay to get good debt when an emergency situation arises.
4.) Fear of Being a Burden on a Loved One
No one wants to rely on someone else for financial support at any point in their life. This is another issue that’s proven to be all too real in recent months as the pandemic took away the financial independence people were accustomed to having.
So, what can a person do to reduce the necessity of relying on a loved one for financial support? Of course, having savings available will help, but those funds tend to disappear quickly. The trick here is to be agile and willing to explore alternative sources of income to replace all or part of that lost income. Take the time now to explore new options even if they’re not needed today.
5.) Never Getting Out of Debt
Today, it’s common for people to carry quite a bit of debt. Credit card debt, car payments, and house payments or rent consume far too much of most people’s income. In many cases, borrowers see no light at the end of the tunnel and feel they’ll never be free of those debts.
Getting out of debt can be hard, but careful planning can help. Don’t be afraid to ask financial pros to recommend strategies to get out of debt. While it’s never easy, it is possible to pay off your current debts and reduce the need for borrowing in the future by using proven strategies.
6.) Having to Support Someone Else
This is related to number four, but the shoe is on the other foot. Even if your current income is sufficient to meet your needs, having to support someone else could quickly decimate a budget.
Taking on a new financial burden could be relatively easy for some people and only require minor lifestyle changes. For others, supporting someone else could require taking on a part-time job or exploring new financial opportunities. Again, discussing how you’d deal with this situation before it actually happens makes it far easier to make necessary adjustments.
7.) Getting a Divorce
While divorce rates have been trending down for several years, they still occur. After a divorce, everyone involved may face making dramatic lifestyle changes when the same income must support two households.
Here, it’s always a good idea to work closely with your attorney and financial planners who’ve helped other divorcing couples adjust to their new financial realities. It’s possible to get through a divorce but doing so will require significant changes. Getting appropriate advice from financial pros it the best strategy.
8.) Not Being Able to Pay for a Child’s Advanced Education
Going to college or obtaining advanced training in other settings isn’t cheap. Even parents who diligently save for a child’s education frequently face expenses they can’t cover.
Saving for a child’s education must start early to guarantee there will be sufficient funds available when they’re needed. Take advantage of special savings options like a 529 savings plan and always seek advice from a financial planner.
9.) Not Having Enough Money to Retire Comfortably
Finally, everyone wants to retire and still have enough money to live comfortably. However, far too many people retire without having enough money available to do the things they’ve always planned to do during their retirement years.
Here, starting a retirement plan early in life is crucial, as the amount needed to retire in comfort continues to go up. Financial experts recommend working closely with a financial planner to develop a plan to generate the money needed to live in comfort after reaching retirement age.
Start Planning Now
Everyone worries about finances to one degree or another, but there are ways to mitigate risks and cover expenses when life throws you a curveball. Using all the available tools makes it easier to deal with emergencies and other financial concerns, and knowing how to plan for all contingencies is always important. Get the advice you need, and take the steps needed to overcome your financial fears.
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.