How to Overcome Financial Insecurity

How confident are you about your financial situation?

According to this infographic from Masters in Accounting, only 50% of Americans feel financially secure.

57% aren’t ready for a financial emergency, 71% are worried about paying incoming bills, 69% don’t think they have enough money to retire on, and a whopping 83% have anxiety over a lack of savings.

Whether you’re worried about paying off your debt, making your rent or mortgage payment, or saving enough money for a rainy day (or retirement), it’s clear money is a huge source of stress for many Americans.

It doesn’t have to be that way. There are a number of actions you can take today to create a secure financial future for yourself and your family. If you want to ensure you don’t become part of these statistics, follow the steps below.

1. Know Your Numbers

It’s understandable to feel anxious about your financial situation when you’re in the red and dreading your incoming bills. Ignoring the issue is only going to create more stress. It’s better to face the numbers head on so you can create a plan of action for your money.

What numbers are we talking about? Do you know how much you’re earning each month? How much you’re spending? How much debt you’re in?

If not, these are the best numbers to start with. By gathering this information, you can empower yourself to make better financial decisions. You need a clear picture to work with before you start creating a plan.

2. Create an Emergency Fund to Avoid Financial Insecurity

This is a financial fundamental for a reason. Since 57% of Americans don’t feel prepared for a financial disaster, and 6 in 10 households had a large unexpected expense in the surveys cited from 2015, it’s a good idea to have one.

Creating an emergency fund can be difficult when you don’t even have enough to pay the bills, though. Try saving a little bit at a time, whenever you can. Any progress is good progress when you’re starting at $0. Having funds in reserve means you won’t have to go into debt should anything happen, and it will help you sleep better at night.

3. Make a Plan to Get Out of Debt

Is your paycheck already spent before it hits your account because you’re overwhelmed with the amount of bills you have to pay? It’s time to change that. Paying off your debt will give you more freedom and more breathing room in your budget.

Everyone’s situation is different, so do what will work for you. Either focus on paying off your lowest balances first, or your balances that have the highest interest rates. Chip away at your debt until it’s gone.

By not having to worry about so many monthly payments, saving for emergencies and retirement will become easier.

4. Figure Out a Spending Plan

Getting your finances in order might not be possible without a budget or a spending plan in place, especially if you’re spending more than you earn consistently. It can help to have your expenses and income laid out in front of you as a reference when you feel like you’re going off track during the month.

Keep yourself on task by tracking your expenses, either with an old-fashioned Excel sheet, or software such as Mint.com or You Need a Budget. You can even set alerts for when your spending is nearing the limit in each category.

If, after getting your spending plan together, you realize you’re spending much more than you earn, you need to figure out where you can cut back. Reevaluate your expenses and be honest with yourself about which ones are needs and which ones are wants. Reducing the amount you have to pay for things means more money in your pocket.

After that, switch your focus to earning more money, either through your current job, another job, or a side hustle. Earning more is limitless, whereas cutting back isn’t.

5. Automate Your Finances

Worried you can’t keep up with it all? After doing a thorough review of your financial situation and making progress, put payments and savings on autopilot (while still checking in, of course).

Autopay bills (as long as you have the funds in your checking account), set up automatic contributions to your retirement accounts, and set up automatic transfers to savings accounts.

This makes managing your money less burdensome, and everything will be taking care of itself in the background.

Putting It All Together

Once you begin erase that feeling of financial insecurity, it’s a good idea to get in touch with a financial advisor you can trust to discuss the future. If you don’t want to worry about affording retirement, an advisor can help create a plan to get you there. They’ll also help you identify which financial goals you should be working toward, and how you can achieve them.

Your financial journey isn’t a sprint -- it’s a marathon. Change takes time, so be patient with yourself while you find your footing. There are a lot of pieces you need to get in place before moving on to the bigger wins. Make sure you celebrate the smaller ones, too!

Here's the full infographic on financial insecurity, from Masters in Accounting: