How to overcome financial fears and reduce money stress

With the spooky season of Halloween upon us, there is something besides ghosts and goblins that can send shivers down a person’s spine…money. Whether it’s mounting debt, a costly emergency, or the lack of savings, there are many financial worries that can lead to sleepless nights. Fortunately,  adopting healthy money habits and improving financial knowledge may take the scare factor out of personal finances and feel more empowered about financial decision-making.

Losing money from market volatility

Thinking about the market's ups and downs can be scary around 39% of Americans worry about the economy. Not understanding the market or lacking a plan can make it worse.

Solution: Create a diversified financial strategy

Combining financial knowledge with a spread-out investment plan can potentially lessen the impact of a market downturn. This might include adding a fixed index annuity to your overall plan, which can help grow your money while protecting it if the market falls.

Saving for a child’s education

Many parents worry about affording college for their kids (nearly 70%). Rising tuition costs, not saving early enough, and inflation can all make this a concern. With average college costs around $38,000 per year, it's no wonder this is a big worry.

Solution: Develop a college savings strategy

There are many options for saving for college, including 529 plans, savings bonds, financial aid, and scholarships. Another option is permanent life insurance, which allows access to cash value through policy loans, which are generally tax-free.

Facing financial hardship after an emergency

Many people (over 27% in the US) have no emergency fund for unexpected bills or lost income. This can be stressful when a sudden expense arises. Oftentimes, other financial priorities can get in the way of creating an emergency fund, but this can lead to a great deal of stress if there is a sudden need for money.

Solution: Build an emergency fund

Start small! An emergency fund is different from savings and is meant for short-term needs. Look at your budget and see how much you can set aside each month. Even a small amount can possibly make a big difference. Schedule automatic deposits to this account and only use it for emergencies.

Outliving retirement savings

Many people worry they won't have enough saved for retirement (20% of adults over 50 have no retirement savings, and 61% worry they won't have enough). Rising healthcare costs, inflation, and the need to supplement Social Security are all challenges. Pensions are also less common, so building a retirement nest egg is more important than ever.

Solution: Create a retirement income plan

To reach your retirement goals, creating a retirement income plan can help your savings last. This often starts with figuring out how much income you'll need and then building a plan around that number. This plan might include 401(k)s, IRAs, investments, annuities, and employer retirement plans. Fixed index annuities can also be helpful because many offer guaranteed income throughout retirement. One of the best things you can do is start saving early for retirement and keep your future self in mind.

Not being here for loved ones

Thinking about leaving your family behind is frightening for anyone, especially if loved ones depend on your paycheck to keep up with the day-to-day costs of living. Around 38% of Americans say their household would face financial hardship within six months should a wage earner die unexpectedly—while 30% would struggle financially within a month.¹ Losing an income earner without a financial safety net can cause a family to have to make tough decisions.

Solution: Consider purchasing life insurance

Life insurance can be a valuable way to protect your loved ones. Getting coverage is often less expensive than most people think and might work into many budgets. The insured can rest assured knowing their loved ones can pay for final expenses, keep up with bills, and still reach the goals they set together.

Failing to leave a legacy

Many people are busy and don't have time to think about an estate plan (only 32% of Americans have a will). Not having a will can make things difficult for your family.

Solution: Design an estate plan

An estate plan can help you leave a legacy, not just financial burdens, for your family. A well-thought-out estate plan can help reduce stress, minimize conflicts, and lessen the chance of probate delays.

Getting help from a financial professional

If you're feeling overwhelmed by your finances, a financial professional can help. They have a lot of knowledge and can give you advice, create a plan, and offer solutions specific to you. They can explain complicated financial matters, create a clear path to your goals, and help you feel more confident managing your money.

1. LIMRA, 2023 Life Insurance Fact Sheet, 2023 https://www.limra.com/siteassets/newsroom/liam/2023/0859-2023-liam-fact-sheet-2023_final.pdf

Neither North American nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.

The primary purpose of life insurance is to provide a death benefit to beneficiaries. Because of the uncertainty surrounding all funding options except savings, it is critical to make personal savings the cornerstone of your college funding program. However, even a well-conceived savings plan can be vulnerable. Should you die prematurely, your savings plan could come to an abrupt end. To protect against this unexpected event, life insurance may be the only vehicle that can help assure the completion of a funding plan. In addition to the financial protection aspect of insurance, the tax-deferred buildup of cash values can be part of your college savings plan. Generally, if the policy is not a Modified Endowment Contract then tax-free withdrawals can be made up to the contract's cost basis. Moreover, if the policy is not a Modified Endowment Contract, then loans in excess of the cost basis are also tax free as long as the policy remains in force.

Estate planning is a complicated legal process, and you should consult an attorney for any legal advice and estate planning.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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