What do you think are the main reasons people are under financial stress? Price Waterhouse Cooper (PwC) conducts annual surveys of full-time employed adults in the United States to determine employee’s financial wellness. The categories given for the respondents to choose from are:
- Not having enough emergency savings for unexpected expenses
- Not being able to retire when I want to
- Losing my home
- Not being able to pay for college
- Not being able to keep up with my debts
- Not being able to meet monthly expenses
- Being laid off from work
According to the results of the PwC’s 2016 Employee Financial Wellness Survey of more than 7,000 people in all 50 United States and the District of Columbia, the leading causes of financial stress are:
- 55% – Not having enough emergency savings for unexpected expenses
- 37% – Not being able to retire when I want to
- 25% – Not being able to meet monthly expenses
- 20% – Being laid off from work
- 15% – Not being able to keep up with my debts
- 6% – Other
- 5% – Not being able to pay for college
- 5% – Losing my home
There were even differences in gender choices. For example, 60% of women are concerned with not having enough emergency savings for unexpected expenses versus only 50% of men who felt the same.
The results of the survey show that more than half of the respondents surveyed were concerned about not having enough emergency savings for unexpected expenses. Is there anything that can be done to alleviate or at least minimize this stress? Let’s look at each of the categories to see what steps can be taken to lower the stress.
1) Not having enough in emergency funds – Step up your monthly savings for the emergency fund for several months until you have saved up enough to cover 3 – 6 months of living expenses. This will give you a cash cushion in case of job loss or other emergency.
2) Not being able to retire when you want to – Increase weekly contributions to your retirement account. If your account is tax deferred, you will save money in taxes that will help offset the additional money you are investing. The net effect is less than the amount you are actually contributing.
3) Not being able to meet monthly expenses – One choice is to get a second job to help build up your savings and to help pay down your debt. Another is to decrease your monthly expenses.
4) Being laid off from work – While this is one of those events that you don’t actually have full control over, you can keep your skills current and have other ways to earn income such as creating a passive income stream like rental income. Make sure your resume’ is current and ready to be printed in a hurry, if necessary.
5) Not being able to keep up with my debts – Build that savings account up and pay off those debts as quickly as possible. Avoid getting into debt even further.
6) Not being able to pay for college – Start those college savings accounts as soon as a child is born and contribute to them on a regular basis. Have the savings amount automatically deducted from your checking account.
7) Losing my home – Keep your payments current and have a savings account that could be used to make payments under extreme circumstances.
Knowing the causes of your financial stress is the first step in taking action. Decide what concerns you most and deal with that area first to eliminate as much stress as possible. Don’t let your worries and concerns over money bring you down emotionally. Make a plan that you can follow to lower the stress and put the plan into action. Less stress results in a higher quality of life.