Fifty-six percent of employees in America are financially stressed, according to a 2017 Workplace Benefits report prepared by Bank of America and Merrill Lynch. If you’re one of them, figuring out how to stop worrying about money could make your life a lot easier.
Unfortunately, there are lots of things to stress about when it comes to your finances. A survey by CreditCards.com revealed that a wide variety of money worries are keeping people up at night, including concerns about student loans, healthcare costs, retirement, credit card debt, and high housing costs.
Luckily, looking at the big picture and making a financial plan can help reduce stress. “Many individuals think their financial scenario is actually worse than it is,” said Magdalena G. Johndrow, a certified fund specialist and associate financial advisor at Farmington River Financial Group. “Often individuals have many moving parts and haven’t looked at their finances all together in one place.”
If you’re not looking at the big picture, you may be worrying unnecessarily. “Most people I’ve worked with are stressed because they don’t know if they’re doing enough,” said Michael Solari, a certified financial planner at Solari Financial Planning, LLC. “I find that most people who stress about money haven’t really thought through a game plan.”
Although it can be challenging to determine how to stop worrying about money, here are a few key pieces of advice for alleviating some of your potential financial concerns.
1. Tackle healthcare costs
Insurance coverage can reduce your worries about healthcare costs, as having a policy limits the potential expenses you face if you get sick. If you’re under 26, you’re allowed to stay on your parent’s health insurance plan — a convenient option for many young adults.
You may also be able to obtain subsidized insurance coverage through the Obamacare exchange. While open enrollment for 2018 coverage has already ended in most states, you could still obtain coverage if you have a qualifying life event such as getting married, having a baby, or losing your existing coverage.
Even with insurance, you might have concerns about high deductibles. Thankfully, there are several options to lower healthcare costs. One good option may involve opening a health savings account (HSA).
According to the IRS, you are eligible to open an HSA if you have an insurance plan with at least a $1,350 deductible for an individual. You can open an HSA at a wide variety of financial institutions including banks, brokerage firms, insurance companies and credit unions.
Look for a no-fee or low-fee account that makes it easy to access your money. You can make a pre-tax investment into the HSA and withdraw money tax-free to cover qualifying medical expenses like co-insurance costs, prescription drugs, and dental or vision care.
You can also talk with your doctor about how to lower care costs. Researchers from Duke University found that in close to 50 percent of conversations with doctors in which costs were brought up, a solution was found to lower out-of-pocket expenditures.
2. Plan for retirement
Worrying about retirement savings is justified, especially with studies, such as this one from the International Longevity Center, projecting millennials will need to save more of their income for retirement than past generations.
“Unlike for many other items in life — such as a mortgage or student loans — you cannot borrow for your retirement,” Johndrow said. Because retirement savings is so important, prioritize investing for retirement even when you have other financial obligations. “By not saving for retirement early, you miss out on years of compound interest.”
Starting to save for retirement as early as possible means you won’t have to save as much money each month to end up with a big nest egg as a senior. Start putting money into a 401(k) or an IRA, both of which allow you to invest with pre-tax income. While a 401(k) is available only if your employer offers one, anyone can open an IRA online.
Though experts recommend saving 15 percent or more of your income, even investing a small amount can put you on the right path.
3. Manage your student loans
If you’re struggling with high student loan payments, figuring out how to stop worrying about money can be very difficult.
In this situation, making a plan can also be helpful. Use a prepayment calculator to see how extra payments towards student loans could shorten your payoff time, and use strategies like the debt snowball or debt avalanche methods to pay down your debts faster.
In some situations, you may not want to pay off student loans early. Early repayment might not make sense, for example, if you are eligible for loan forgiveness or if your loans are at a very low interest rate and you can get a tax deduction for student loan interest. If this is your situation, you might focus on keeping your payments affordable instead.
Switching to an income-driven repayment plan could be one option to lower payments if you’re struggling to afford them. An income-driven plan sets your monthly payments at a percentage of your income, and could result in some of your debt being forgiven after 20 or 25 years payments.
4. Decrease mortgage and rent payments
Although many financial experts advise keeping housing costs to 30 percent of your income or less, close to 39 million households are paying more than this amount, according to the State of the Nation’s Housing Report .
If your rent or mortgage costs are very high, getting a roommate or renting out a room using Airbnb could help alleviate money woes and help you learn how to not worry about money. In the biggest rental markets in the U.S., renters can save 13 percent of income on average by sharing a home with a roommate, according to Trulia.
If you have the flexibility to do so, moving to a different city where you can benefit from higher wages or a lower cost of living could also help you stop worrying about money. Some cities, such as Durham, North Carolina and Houston, Texas, are especially good places to live when trying to pay down debt.
5. Repay credit card debt
If you’re concerned about credit card debt, making a payoff plan could also be your answer to the question of how not to worry about money.
One way to reduce the costs of credit card debt and make payoff easier is to consider debt consolidation. There are two popular ways to consolidate credit card debt:
- You could use a balance transfer to consolidate debt. This involves paying a small fee to transfer your current debts to a balance transfer credit card that offers a low introductory rate, such as 0% for a year.
- You could also apply for a personal loan with a bank or credit union and use the loan to repay all of your current debts.
Either of these options often reduces interest costs and monthly payments, making it easier to get out of debt. A credit card consolidation calculator can show you exactly how much consolidation could save you.
Whatever approach you take to repayment, Johndrow recommends you automate your credit card payment to ensure you pay on time. “Timely payments compose roughly around 64 percent of your credit score, so it is important not to miss them,” she said.
How to stop worrying about money
Your money worries are unique to your situation, so ultimately it’s up to you to decide what steps you need to take.
For many people who have financial concerns, making a plan and looking at the big picture will go a long way towards reducing stress. By following these tips, you can tackle some of your money concerns so you’ll feel more in control of managing your money.
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