Money causes stress. According to a survey by Thriving Wallet, 90% of Americans say money impacts their stress level. Further, money disputes are routinely cited as one of the top reasons for divorce. But this stress runs alongside our proudly capitalistic tendencies in which money becomes a symbol of our American identity. Money is to be enjoyed, sure, but not at the risk of creating personal pitfalls.
If you are feeling a bit overwhelmed about money these days, here are a few quick tips that can hopefully give you more sense of control over your money.
- Know What You Have and What You’re Spending – This is always Iowa State Bank’s #1 piece of advice for consumers. We all know what we bring home in our paychecks each month. That’s the easy part. If you haven’t already done so, create a quick spreadsheet and list out all your assets with their value and your outstanding debts. Next, create a separate list of what your household spends on expenses each month and see if you’re cash flow positive with your take-home pay. Yes, this will take a couple of hours of your time, but it is incredibly valuable. The toughest part is being honest with yourself.
- Prepare to Trim Expenses – After you have sorted your expenses, take a hard look at what can be reduced. You know you need electricity; do you need 5 different streaming subscriptions? According to the Bureau of Labor Statistics, consumers spend an average of $3,500/year on eating at restaurants or delivery, and that was before the recent inflation crunch. If you are looking for one expense that could be reduced relatively easily, take a look at your food budget first.
- Save for an Emergency Fund – We have to know our expenses to accomplish this next step. An emergency fund can help when unexpected expenses come up (and they will!). Most experts recommend having three to six months of living expenses in your emergency fund. Iowa State Bank recommends setting up a separate savings account and establishing a recurring electronic transfer from your checking account to the savings account at least every month.
- Get Your Full Employer Retirement Match – If you work for a company that offers a retirement plan, typically a 401(k), take whatever steps necessary to take full advantage of any company match that is offered. According to the Motley Fool, 20% of retirement plan participants do not use their full employer match. It cannot be stressed enough: it is free money that will grow exponentially over time. Not utilizing this tool is probably the biggest retirement misstep you can make.
Money advice is not a one-size-fits-all topic, but hopefully, these are some items to ponder when looking at your own finances.
Contact Dylan Dinkla, J.D., CFP®, and VP Trust Officer at [email protected] or call 515-278-2442 to learn more about personal finance, budgeting, or retirement.