2020 is coming to a close, and some might be excited to see this year in the rearview mirror.
But for others, this past year may have been an unexpectedly successful 12 months. Either way now is the time to look forward and plan for the coming year. It's also a good time to look back and take stock of your current state of financial health.
Committing to keeping a budget is the best start you can make to a new year. Shockingly, as many as 56 percent of Americans find themselves running out of money at the end of their pay period, and up to 78 percent of Americans are living paycheck to paycheck.
Given these statistics, it isn't surprising that only 41 percent of American households follow a budget. That’s a pretty revealing statistic when a full two-thirds of Americans would be hard-pressed to come up with $1,000 in an emergency. Having a budget and knowing where you stand financially means you can plan to improve your situation.
Fifty percent of Americans have less than one month’s income saved for a rainy day. Finding a trustworthy personal financial advisor who can help you decide what the best steps are for investing or planning for retirement, or even a deposit on a home, is an excellent plan. However, if you are not quite ready to jump into the investment market, then simply putting a sum of money aside as often as possible will very quickly pay off.
Making sure you understand your money, where it is, and what it is doing is extremely important. Therefore, being financially literate is a huge step in the right direction. It turns out, many Americans aren’t financially literate. And they’re stressed about it.
In fact, a FINRA study found financial capability, stability, and confidence aren’t improving. Over fifty percent of adults say thinking about their financial situation makes them anxious. Forty-four percent say discussing their finances is stressful.
Younger Americans are feeling the greatest burden. The study found persisting and widening gaps between those who are struggling and those who are prospering financially — skewing generationally. Those between the ages of 18 to 34 have the highest levels of financial stress (63 percent) and anxiety (55 percent).
Taking control of your financial affairs and understanding them completely is the best way to move forward into the New Year. Setting a budget and making sure all your bases are covered means that this next year should be far better than the previous one.
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