As a woman, are you feeling financial stress? You’re not alone. Financial Finesse reports1 that 55% of women ages 30 to 55, with minor kids and household incomes less than $60,000 a year, report “high” or overwhelming” levels of financial stress. They aren’t the only ones experiencing high or overwhelming stress. So what is causing this stress?
Causes of financial stress
In his 2020 blog post, Jim Yih, a Canadian Financial Advisor highlighted seven causes in his blog post, 7 Causes of Financial Stress:
- High debt levels.
- Low savings rates
- Volatile Stock markets
- Real estate won’t be our financial savior
- Demographics means more fear
- The financial marketplace is increasingly complex
- No formal education on money
Let’s examine debt, savings, and education further. Many people have the best of intentions to pay the debt. Unfortunately, many of those intentions were clouded by short-term desires or calamities. After the debt was added, then a breadwinner may have lost a job or a payment was missed while juggling other life issues.
Then ‘whamo!’, the interest rate doubled or even tripled overnight. An emergency fund seems like a nice idea but where would the funds for that come from?
Find relief by saving in your retirement plan
If you are like 50% of Americans with workplace retirement plans, you aren’t saving into it. If you are participating and your company offers a match, you’re not getting the full match. You may have either taken a loan on your 401(k) or depleted it and suffered the 10% penalty when a short-term need arose.
There is no formal education in the schools about money. There is a hope by some policymakers and voter, that your parents had good financial saving and spending habits, and was an expert in comprehending disability and life insurance, and actuarial retirement calculations. Yeah right!
Who’s teaching you about money? Herein lies the root of the problem. There is little formal financial education in the school system. There is very little offered in the workplace. So many people have to learn from friends or family but that creates its own set of problems because many of them don’t have the knowledge, ability, or resources to teach others about money. Financial stress is all too common in our society and we need to do something about it. The starting point is a little knowledge but true success comes from action. It comes from taking control of your financial affairs and developing good financial habits.
A good financial stress reliever
While financial education is great, it is time-consuming and doesn’t in itself provide a calming voice for your financial stress if it comes from reading books. If you are getting your education from the media, they may have conflicts of interest and are not held to the same standard as a financial professional registered with the SEC or FINRA. Moreover, what financial education should you start with?
If you are like most people you need an accountability coach and maybe someone to help you figure out how to pay down the debt. A lack of a sense of control is a primary factor for those employees reporting high or overwhelming financial stress. A CERTIFIED FINANCIAL PLANNER™ professional (CFP®) can help you get control.
Look for a CFP® professional who has a breadth of knowledge in financial fundamentals like setting up a cash reserve, and developing a spending plan to address your debt. If you are one of those stressed-out moms, they can help you address college planning and choosing a guardian for your child should something happen to you. This designation is one of a few accredited designations highlighted on the FINRA website.
A CFP to combat financial stress
A CFP® professional takes an oath to keep your financial interests ahead of their own. All CFP® professionals aren’t clones so you should spend some time learning about their business practices and themselves.
For example, some CFPs charge a flat fee for all of their services, some charge an hourly rate, and some a fee for planning and a fee for monies you invest with them. Look for one who is empathetic and understands behavioral finance. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.