Why does everything feel so expensive? Am I ever going to be able to retire? What if I run out of money? Am I on the right path with my investments? Financial nightmares like these are all too common, but they don’t have to keep you up at night. In this story, we take a look at five of the most common money worries and give you practical tips to help fight your fears.
Fear number one: Not having enough money to cover current expenses
Having a thoughtful budget is a powerful antidote to ward off this all-too-common fear. “Feeling like everything is just too expensive is a really common experience, especially as we hear in the news all about inflation,” empathizes Jessica Bole, VP, Senior Wealth Strategist. “A lot of our clients find it helpful to plan for a budget. We look at their necessities, wants and wishes to make sure they’re properly allocating those dollars. It’s not designed to cut out all the fun,” Bole emphasizes. “It’s to make sure you’re covering what’s most important.” Sometimes this means cutting back and reprioritizing.
Writing out your budget and organizing it in a spreadsheet or budgeting tool lets you see the facts in black and white. Then you have the right information to decide where you could stop spending for now, or even re-allocate funds from one usage to another. When you know what you have and where it’s going, you know you have nothing to be afraid of.
Fear number two: Not doing enough now to be ready for retirement
Maybe you’ve been following that FIRE guy on Instagram or YouTube who’s been retired since age 38 and is living the sweet life in Cali. Or you have this one friend who socked so much away in investments that he got his knees replaced at 50, retired at 52 and then flew off to hike the Camino de Santiago in Spain. Suddenly, you wake up in a cold sweat convinced you’ve been doing it all wrong.
“People really just fall into different categories,” soothes Bole. And you can’t know where you are until you know your desired destination and have a clear picture of where you are now. “Some of our clients are a lot further along than they expected, and it gives them a real sense of relief, or a little peace of mind,” she says. On the other hand, “Some of our clients are a little fearful because they’ve put it off for so long and they feel behind.” But you can always make a plan. “We can come up with a savings strategy in those cases,” says Bole. “Well, what if you start investing X amount of dollars every time you get paid, just straight from your paycheck, into an investment account and don’t touch it?”
Taking the time and space to really understand your reality and take control of what you’re able to in the here and now can go a long way toward turning off the worry soundtrack in your mind.
Fear number three: Not having enough money in retirement
Even very wealthy individuals struggle with this fear. “That’s the exact thing so many of our wealth planners spend a lot of time working on with our clients,” shares Bole. “And we start with a budget by asking: what do you spend and what do you think you’ll need to spend?” You can ask yourself the same questions Bole and our other Wealth Strategists ask their clients:
- What do you earn?
- What do you save?
- What do you already have saved?
- How is it growing?
- What are you spending?
- What big-ticket items do you plan to spend on now or in the future?
“It’s not an exact science, but once we have the answers to these questions, we can use financial planning software as a tool to help our clients plan for that future,” explains Bole. “We can run Monte Carlo scenarios, which is a mathematical calculation that looks at how your investments would do in 1,000 different market performance scenarios.” In basic terms, if your investments survive in 90% of the scenarios, you can feel confident your money won’t run out in retirement. Which means your nightmare just became a sweet dream.
Fear number four: Not being able to afford long-term care
If you’ve ever had a loved one with a long-term illness or cognitive decline, the fear of paying for long-term care can feel very real, and extremely scary. “This has been coming up frequently with our clients… what if I need care later in life? Where will that money come from? Can I afford to pay for it myself, or should I buy insurance to help cover that?” shares Bole. “It’s often triggered by that client having to provide care for a parent, or seeing someone they know enter a nursing home where there was a significant impact on their finances and the legacy they were able to leave to their children.”
Understanding your options can help alleviate this concern. A financial planner can make basic assumptions about length of care and approximate projected costs to estimate if you’d be able to cover the cost with your assets. Long-term care insurance policies may also be right for you. Modern long-term policies are different from what’s traditionally been available. “These aren’t the old policies people were buying two decades ago, today there’s often a return of premium. So if you don’t use it, the benefit that you get back is that you have a life insurance product that comes back for what the premiums are that you paid for it,” explains Bole.
Fear number five: Investment accounts tanking
“Especially because of what we hear right now with market volatility, many of our clients call and say, ‘I’m worried about the market,’” says Bole. “And we say, ‘Well, we can’t tell you that the market is going to perform one way or another. But we can say that when you work with a portfolio manager, your portfolios are built to withstand the storm. That’s why we don’t put everyone in 100% stocks. We put some downside protection in your portfolio to weather this storm if there is market volatility. And guess what? There’s going to be market volatility,” she explains. Ironically, though, the worst thing to do in the face of fear is to yank all your assets out of the market and park them in cash. “If you’re out of the market, you miss out on all that opportunity,” explains Bole. “So our portfolio managers spend a lot of time talking with clients about how to properly construct their portfolio to give them more opportunity to participate in the market.”
Next time you feel that anxious twinge about market ups and downs, just remind yourself it’s much more of a nightmare scenario to be out of the market and miss out on the peaks just because you’re a little scared of the dips.
Conclusion: Fight fear with facts to find financial freedom
“Sometimes I begin client meetings with this question: ‘What’s keeping you up at night? And what’s allowing you to sleep?’ For our clients of the most modest means to even our very affluent clients, there are always fears around their money,” shares Bole. Fear is totally normal, even healthy. But you don’t have to live fearfully. Make sure you have someone you trust with whom you can openly share what scares you about your money, without fear of judgment. From there, understand your reality, and make a plan to work toward the things you can control. Suddenly your finances won’t seem so scary after all.
