These money scares shouldn’t make you hide under the covers.
Ghosts, goblins and monsters under the bed scared us as children. As adults, we tend to be more frightened by our finances. So instead of pulling the covers over your head this Halloween, why not face a few of those money fears head on.
Here are a few tips to help you from falling victim to the most common financial fears.
Budgeting. Let’s face it. Budgeting can be scary. Many feel that budgeting means depriving yourself of the good life – but it’s actually a framework for spending more purposefully. However, if sitting down to review your finances makes you break out in a cold sweat, face your budgeting fears by taking small steps first. For example, if setting a monthly or even a yearly budget is spooky, start by setting a budget for tomorrow. Over time, you’ll get a better sense of what’s working and what’s not so you can adjust along the way. There are also many apps or professionals like us here are Worthwhile Wealth Council that are more than happy to help!
Trapped by debt. Once you’ve accumulated student, credit card and auto loan debt, it can seem impossible to resolve it all. Even those who lack debt fear the possibility of it. Carve out some time to assess your overall debt, and devise a plan to pay off the smallest first. This method spurs immediate gratification and motivates you to keep working toward paying off your other debts.
Emergencies will drain my bank account. Like a haunted house, life is full of unexpected surprises, some of which can prove to be pretty costly. A car repair, illness or unemployment can catch you and your family off guard and leave you feeling financially stranded. To avoid this, it’s important to have money set aside in an emergency fund for when the unexpected happens. At a minimum, it should hold three months worth of your living expenses. If you pay $2,000 a month to cover the basics such as housing, utilities and food, then put aside $6,000 in your emergency fund. If you have dependents, your emergency fund should consist of six months of your living expenses. An emergency fund provides the reassurance of knowing you have money to fall back on during an unexpected life occurrence. If funding an emergency fund feels overwhelming, start small by setting aside even a few dollars a week to help build up a reserve over time.
Reviewing bills. It’s important to review your bank and credit card statements as well as bills to make sure you’re not being charged fees you don’t recognize or paying for subscriptions or services you never use. You should also consider looking at your insurance policies yearly. Some personal finance tools expose fees that are often hidden on statements or buried in the fine print to help you eliminate unnecessary fees and ultimately save you more money.
Not being able to retire. Fortunately, with some early planning, this is an easy fear to face. With most people entering the workforce in their 20s, time is on your side from the start. By opting into your company’s pension and retirement plans as soon as possible, you can ensure you will have enough money to retire when that day comes. Also, changing your mindset to prioritize your future over your immediate wants can empower you to save for retirement. Yes, it’d be nice to have a few extra hundred dollars a month, but just think – that $100 each paycheck in your 401(k) is just $100 today, but it will increase in value over time and provide more gratification in the future if saved. Be sure to take advantage of employer benefits, and always max out any matching your employer offers. Think of it as free cash on the table. Here at Worthwhile we love to educate clients about their 401k and ways to optimize their retirement savings!
With these tips in your back pocket, the only thing you’ll have to fear this Halloween is spooky costumes knocking at your door for candy.
**Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.