Most of Americans are under money and financial stress.
Money and Financial Stress.
As inflation is at 40 year heigh, and interest rates are going high many American adults feel money and financial stress. People who have not made any emergency fund nor had habit of saving are facing lot of stress in managing there finances.
American Psychological Association ( APA) published report in February 2022, 65% of Americans surveyed feel significant source of stress with them is money management.
Some of main reason for financial stress and necessary solution to over come the same :
Failing to budget.
Younger adults in the age group of 20 years to 30 years fails to budget there expenses. As the inflation is at a record high 9.1% in June 2022 and still at level of 8.3%. The increase in inflation resulted into deep financial stress.
Our recommendation to overcome : Identify the expenditure which is basic need to live. Avoid unnecessary expenditure. Build your own emergency fund first before any heavy expenditure. Postpone the purchase for joy and luxury till you save for future and emergency fund.
Payoff your debt or transfer debt to lower interest.
Most of people all over America buy Cars and Home on loan with variable interest rates. Two years back inflation and loan interest rates were low. But now in last one year interest has raised to more than three times what it was a year ago. Due to which interest paid against loan has increased and is cutting big hole in pockets.
Our recommendation to overcome : If one have saving to payoff variable interest rate debt. In the situation switch the loan to bank which ever offer low interest rate on loan. As loan interest rates are increasing switch to fixed interest rate. Avoid any avoidable costly purchase on credit card.
Insufficient emergency fund
There are significant number of people who have either insufficient or nil emergency fund. In the tough time of high inflation and higher debt rates, they are in significant money and financial stress to meet essential spending. As 10 year treasury and bank deposit rates has increased. The Americans who have habit of saving use this opportunity of high interest to grow there funds faster.
Our recommendation to overcome : From the monthly income first save money for emergency fund. Then use the remaining money for essentials. People need to develop the habit of saving for emergency and retirement.
Spending before earning.
Many of us has developed the habit of using the easy available money as credit card. I know that credit card is a debt extended by bank at 0% till the billing cycle. If I have irregular bill payment habit, then this using credit card can cost me very high interest rate. If someone have irregular source of income should avoid use of credit card. Any balance on card attract an interest of 24% to 36%.
Our recommendation to overcome : If you have a huge balance to repay on credit card, that attract an interest of 24% to 36%. Better would be to transfer fund to balance transfer offer card or convert balance to personal loan that will attract very low interest rate.
Conclusion
People having poor budgeting habit are significantly in Money and financial stress. To manage once personal finance stress free, we need to budget our activities. Save for emergency and retirement first, then utilize the balance fund for joy and luxury.
