Finances are the number one cause of stress for Americans. This is confirmed by a recent study compiled by Capital One that shows 73% of Americans rank finances as the number one stressor in their lives ahead of politics, work and family.
Isn’t it crazy? Not really, I guess, when you consider most of us never received a financial education, pensions are a thing of the past and the cost of living is absolutely ridiculous. (Another fun study by Forbes in 2024 shows Carbondale, Colorado’s real estate prices having increased the highest of any other city in the U.S. over the past 20 years. 460%. Wowza.)
The stress study notes that only 16% of respondents know how to improve their credit score. I’ll throw in a tip at the end, assuming 84% of you need one. It’s no wonder then, that even when folks move up the ladder of income, they still wind up stressed and out of tune with their money.
Do you make more now, but feel just as strapped? Do you have big goals that you can’t seem to get closer to? Are you still waiting for that one day when you’ll finally look at your checking account and feel ready to start investing more than $100/month?
Again, 73% of Americans are most stressed about money! This can be due to “lifestyle creep” or to the mind-boggling “cosmic American joke:” you make a little more money one year and you are ineligible for the financial support programs you are used to and you wind up with less take-home than the previous year. Anecdotally, I’ll share that 100% of my clients that make north of $200,000 annually were (prior to Money Juice, of course) struggling to invest for their future. The lifestyle creep is very, very real, particularly in the Roaring Fork Valley. Here are three things you can do to course correct:
1) Look at your numbers every single week. Simply looking at what’s going in and what’s going out — without judgement or shame — is so eye-opening. It’s an education in and of itself. Do it. If it is a case of lifestyle creep, you’ll notice it with this exercise. You might see fancy pastries sliding into your weekly schedule, a new bike, lavish gifts for your nanny… If it’s a case of the cosmic American joke, you can start tracking the new things you’re paying more for (student loans, healthcare, etc.) and talk with a tax accountant to learn about writing off these expenses.
2) Make money buckets. Your money needs to be working for you in an account that is earning you interest beyond the inflation rate. Pick one to three goals and create sub-accounts for them and start auto-depositing money into them. Give yourself a timeline by when you want the goal complete and deposit the amount each month that will get you there. Then go to the Maldives, buy your ski pass or get your tooth fixed.
3) Decide to stay calm. Yes, it’s true that not having enough money makes life harder; it simply does. However, your response to your situation is the make-or-break component of your financial future. If you’re feeling stressed about money and you decidedly aren’t living within your means or won’t have the things you need in the future, decide to stay calm. Give yourself body drugs (endorphins), make some agua de jamaica and calm the eff down. Come back to the numbers when you have a clear headspace and create small, workable goals and plans. Figure out the number you need and get creative with how to get it. You’ll make it happen if the number is specific and your brain is relaxed.
Credit-building tip: Do not cancel any credit cards. Some people do this because they don’t want to be tempted to use their cards. However, credit history is a large portion of your credit score and when you cancel a card, that history goes the way of the dodo. Additionally, you can call your current credit providers and ask them to increase your spending limit. This will increase your overall debt-to-credit ratio which will increase your score, assuming you don’t go out and blast it all at Kemo Sabe.
Be well, money friends!
Megan Janssen is the founder of Money Juice (www.money-juice.com) and a financial advisor with Forum Financial Management, LP. The ideas and language written here are those of the author and do not necessarily reflect the views or opinions of Forum.