Team Clark is adamant that we will never write content influenced by or paid for by an advertiser. To support our work, we do make money from some links to companies and deals on our site. Learn more about our guarantee here.
Do you look at your social media feeds and marvel at how your friends can afford those fancy vacations to tropical destinations or that new pool they’re lounging around in their backyard?
Do you sometimes spend more money than you probably should trying to “keep up with the Joneses” buying fancy experiences and things for yourself?
If so, you’re not alone — but you also could be making some big and long-lasting mistakes when it comes to your financial future, according to one recent survey.
Each year, financial firm Charles Schwab publishes its Modern Wealth Survey, which is basically an attempt at taking taking the temperature of Americans as it relates to their financial health.
According to the 2019 survey:
It’s that spending more than we can afford part that is especially troubling when you consider that 59% of us are living paycheck to paycheck, according to the survey, and only 38% have built up an emergency fund.
Add to that the fact that on average we spend almost $500 a month on “non-essential items” and you can see how the math doesn’t add up when it comes to financial stability.
But the survey does offer something of a solution to the anxiety and uncertainty so many of us face when it comes to our money: Planning.
“[M]ore than 60 percent of Americans who have a written financial plan feel financially stable, while only a third of those without a plan feel that same level of comfort. Those with a plan also maintain healthier money habits when it comes to saving.”
The first — and most important — step in financial planning is to create a budget. After all, if you don’t know where the money you’re making is going every month, how are you supposed to know how much you can save?
As money expert Clark Howard puts it, “A lot of people look at being told to do a budget as if their life is being restricted. But the whole idea of budgeting is freeing because you’re getting your life under control, creating more choices and reducing anxiety.”
Creating a monthly budget is the easiest path to identifying those “non-essential expenses” and hopefully diverting that money toward an emergency fund (if you don’t already have one) or savings for future big purchases or retirement.
“Get your expenses under control, free up some money and then the options start to become more clear about what you do with the money that you’ve managed not to spend,” Clark says. “Once you’re living on less than you make, there are no absolutely wrong choices.”
This post was last modified on May 31, 2019 10:18 am
Being invited to a destination wedding can be a celebratory affair for all involved, but…
Are you looking for a good cash back credit card with no annual fee? The…
A 401(k) plan is one of the best benefits you can receive as a full-time…
A recent warning from the federal authorities cautions drivers to be on the lookout for…
Even if you're a travel veteran, the thought of sprinting through the airport with your…
Vanguard, one of Team Clark's favorite brokerage firms, recently announced to its customers several "junk…