No two individuals have the same financial woes. Not only do financial situations vary in income, debt, spending and saving habits, but they also vary in the perspectives of those individuals and how they rank their specific money problems. After researching a few polls on the most popular money problems, we’ve created a list of what financial issues most individuals worry about the most and what you can do about it.
I spend too much. Without a doubt, the most worrisome financial problem people dwell over is the act of spending too much money, but why? While credit cards play a big factor in their ease and accessibility of use, scientists have actually proven that spending money makes us happy. Surprise? Probably not. Much like chocolate cake or kissing a loved one, the idea of spending money can release a feel-good chemical in our brains called dopamine. Overspending can also stem from poor planning or lack of time. So, how do you stop spending? It’s not easy but doing things like changing your daily habits, only having one credit card and using more cash, unsubscribing from catalogs and finding other inexpensive ways to be happy will help you curb your spending problems.
I save too little. You’re not alone! According to the U.S. Department of Commerce, the average American household saves 0.4 percent of its disposable income, down from 2.4 percent in 1999. Some blame low interest rates; if you’re making very little in your savings account you have less incentive save. Others blame spending too much. It’s obvious – when you spend too much you can’t save what you should. One nice way to make yourself save is to detail out a clear goal. Additionally, you can set up automatic deductions from your paycheck, open a 401(k), and start an immediate savings account.
Gas prices are absurd. Energy prices, in general, are on the rise, but gas prices specifically are up one-third in the past year. And with our economy depending heavily on other world markets, it is clear that gas prices are not going to drop any time soon. There are several alternatives to driving, like taking metro transit, walking, biking and carpooling. But if you must drive, check out the cheapest gas prices online, remove heavy junk from your car, and be sure to check the oil, air filter and tire pressure on a regular basis. If you can, investing in energy efficient will save you money in the long run.
I’m not sure how much to save for retirement. The standard number for your retirement planning is 15% of your income each year. However, each person’s financial picture is different, and there are many variables that need to be factored in. You can either contact a retirement specialist, or check out the countless online calculators that will do the math for you. Some tips for retirement planning include 401(k)’s, IRA’s, pension plans, investments and annuities.
I need a budget. Are you constantly finding yourself out of cash? Is your monthly cash cycle consistently inconsistent? A budget is simply a plan on how to appropriately spend your money. In order for it to work, though, you must realistic and stick to your plan. Budgets are relatively easy to calculate. Simply sit down and create a map of your monthly spending and saving habits. Follow it accordingly and revisit it at the end of the month to determine what’s worked and what hasn’t. Another tip is to sign up for an online money-tracking program. You can even link your bank accounts and bills for deductions itemizations.
I need a financial plan. Wait, didn’t we just talk about budgets? A financial plan is much broader than a budget. It’s a track to help you achieve those big things in life, like a house, vacation home or your child’s education. It encompasses your savings, investments and even your insurance. Creating a financial plan is much more complex than creating a budget. Do some research and hire a financial planner. The peace of mind in knowing your financial future is secure and protected is worth the time and effort in hiring and educator to coach you through your big life decisions.