It’s normal to get worried about money, especially if you're managing your finances. The Huffington Post presented a study by Northwestern Mutual that found that money is a primary cause of stress for 44% of Americans, far surpassing the problems associated with relationships and work. Handling finances subject us to hours of headache, overspending, debts, and overtime as we struggle to pay everything off.
But it doesn’t have to be that way. There are plenty of ways to help you overcome your love, mostly hate, relationship with finance and still reap its full benefits – here are some of them.
Create a Budget
One in 10 Americans says they spend $300 or more per week on personal needs like food, healthcare, transportation, and entertainment, which budgeting can help you with. Having a budget is going to help you decide how much money to save, and keep track of how much you spend to make sure that you don't exceed your monthly salary.
There are a lot of different approaches to budgeting, one example being the 50-30-20 rule. The rule states that after you receive your income, post-tax, divide it into three: 50% for food, bills, and other essentials; 30% for personal use like dining and entertainment; and finally, 20% for financial goals like savings and investments. The rule is very flexible – you can even go 50-25-25 or 40-30-30. Many financial experts recommend setting aside at least 10 to 15% of your annual income for a comfortable life in retirement. In any case, it's up to you to determine your priorities, so you know how much money to allocate for every expense.
Hire a Financial Planner
Many people handle their finances despite little financial knowledge. It’s manageable even without the help of an expert, but hiring one can help you reach your financial goals while taking a weight off your shoulders. We recommend looking for an advisor who's obligated to disclose any conflicts, factors, fees, and commissions that may influence the decisions they make. There are plenty of professionals out there to choose from, especially since Maryville University notes that the number of financial planners is expected to increase by 30% up until 2024. Consider all your options and do a lot of research, before making an informed decision. Remember, you’re trusting them with your hard-earned money.
Invest Your Money
There are two ways to make money: working for yourself or having your assets work for you. Money is a lot easier to manage when you’re not holding on to too much of it, and investing is the perfect way to do this while preventing any finance woes in the future. In our post Cost of Living: Changes a Lot Over Time we discussed how the cost of living fluctuates and it usually goes up, so it never hurts to have the money when the time comes. To unlock your love of finance and all its related aspects, you need to look at things from a long-term perspective. Invest at least 10% to 20% of your monthly income or even your annual salary; because even if it’s not a lot right now, it’s going to be in 10 years and even further in the future.
Nothing is keeping Americans from being wealthy except for their lack of self-confidence and a bit more discipline. Learn how to set your own goals, and follow them until the very end. By following the aforementioned tips you could stop your stressful love/hate relationship with finance and get your money working for you.
Recession – How to rebuild personal finance after the recession?