Top Causes of Financial Stress

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Financial stress is something that will affect everyone during their life, whether they're making $6/hr or $600/hr. It has less to do with how much money we make and more to do with how much money we spend. If you spend 15% more than what you make every month, getting a raise will not help you. You will still spend 15% more than you earn because it's your spending habit. To fix that, you must fix the way you think about money and the way you spend your money. Aside from having problematic spending habits, here are the top causes of financial stress.

High Levels of Debt

It has never been easier to access debt in all forms – lines of credit, mortgages, credit cards, and more. Debt levels are rising faster than both assets and income. Even if you don’t have cash, you can now buy just about anything. Instant gratification is more important than saving up money or getting rid of debt. Delayed consequences are easier to swallow, making that impulse purchase more desirable. We have been programmed to spend even if we are spending money we don’t have.

Low Savings Rates and Fear of Never Retiring

In the early 80’s, the average savings rate was about 18%. However, since the rates have been declining steadily, savings have dropped to around 2% to 5%. Not only is this drop in savings massive, it isn't nearly enough to have a secure financial future, let alone retire on.  Since our financial future is mainly dependent on what we save now, this is a very serious problem. Without saving for the future, many people will be forced to work long after they should have retired.

No Money for Emergencies

This is an issue that also directly relates to the low saving rates. As we get older, emergencies become more and more frequent, and oftentimes, more serious in nature. As young adults in our 20s and 30s, we are less likely to worry about a trip to the emergency room or some other medical necessity popping up. However, as we are, especially in the 65 years and older bracket, a person is more likely to encounter major medical costs. 

Cost of Education

For many, they simply don't pursue higher education because of the cost or mountain of debt they will incur with student loans. Education costs are continually on the rise, and unfortunately, many graduates have a significant amount of debt placed on their shoulders immediately upon receiving their diploma. Added to that, finding a position in their degree field, or any entry level job is near impossible.

No Financial or Monetary Education

There is minimal formal financial education in our school systems, and very little is offered in the workplace. So, who’s teaching you about money? Family and friends are there to help, but many of them do not have the ability, knowledge, or resources to teach others about money. My Financial Stress Reduction® workshop is the cure for financial stress. To be successful, you must take action by taking control of your financial affairs and developing good financial habits.