Five Financial Fears to Face Head On

Ask your child what they’re afraid of, and they may say the dark, a monster under the bed, or their school principal. Turn to your friends, however, and you may find that financial concerns – not “things that go bump in the night” – start to top the list. In this piece inspired by “5 Financial Fears to Confront and Conquer”, we share five of our most frequently discussed financial fears and offer resources to help you face those fears head on.

1. Stock Market Volatility 

Speaking of “things that go bump in the night,” investing in the stock market is not exactly a smooth ride from one day to the next. Fears of this uncertainty are well-founded. Younger investors have witnessed two huge shocks to the financial system (the Great Recession and the COVID crisis) to start their careers, shaking their faith in the system. And retired investors rely on their portfolios to pay the bills, so volatility isn’t exactly reassuring.

There are two key ways we help Clients fight this fear: build resilience into their portfolios and approach investing with a long-term perspective. There will always be something that brings volatility to the markets. The world is full of unexpected events, and news is constantly being released that shapes the fortunes and trajectories of the thousands of companies that make up the global markets. To reduce the turbulence on your investment journey, it is important to diversify. This brief video shows how we build a resilient, all-weather portfolio that can carry you through whatever storms may come our way.

Equally important is to view investing as a marathon, not a sprint. Market volatility is often exacerbated by short-term thinking and reactionary decision-making. Developing a plan during the good times can give you the confidence that you need to stick with it during the bad times. In the words of Dr. Dave Yeske, “It’s better to be resilient than nimble.”

2. Identity Theft

As the world shifts further into the digital realm, and more and more of our data is stored and accessible online, the risk of bad actors exploiting these digital systems increases exponentially. Consumers now face privacy risks in every aspect of their lives, from their passwords to their browser histories to the software in their refrigerators.

In broad strokes, maintaining good financial hygiene is an area we care deeply about at Yeske Buie. Watch this webinar and review the attached checklist for suggestions and resources to improve your financial hygiene. In addition to the webinar, we have written many times in TheLiveBigWay^® Digest about identity theft, and we strongly believe in practicing healthy technology habits to keep your data safe. In particular, being proactive and staying informed are great ways to protect yourself against fraud. Acting as your own “human firewall” will stop a lot of criminals’ sly attempts to access your personal information.

3. College Costs 

Another common concern is the rising cost of college. According to the College Board, the average cost of attendance at public universities was nearly $22,000 for in-state students and was over $38,000 for out-of-state students in the 2019-20 academic year. These costs only increase for private schools.

Sticker shock can leave many parents feeling helpless. How can you best support your children and give them the opportunity to maximize the value of their college careers? The short answer is that it takes a balanced approach that combines setting aside savings, pursuing scholarship opportunities, and carefully weighing the costs and benefits of student loans. For the long answer, check out the education planning piece we compiled in honor of National College Savings month.

4. Talking About Money 

Potentially even more frightening than spending money is talking about it. A 2021 study by CreditCards.com found that 40% of respondents admitted to hiding a checking, savings, or credit card account from their partners. In fact, the aversion to talking about finances goes so far that previous studies have asserted that people are more comfortable talking about politics and religion than they are about personal finance.

Being transparent about one’s finances may be uncomfortable, but it can also minimize conflict between one’s heirs, build trust between family members, and allow younger generations to form healthy relationships with money. Consider these tips for structuring a family conversation around money.

5. Medical Expenses

Medical expenses are unpredictable and costly. In fact, health care is so expensive that it is widely recognized as the leading cause of bankruptcy in the United States. Knowing this, it is no wonder that the thought of medical expenses is a grave concern for many.

The easiest response to concerns about the cost of health care is to make sure you are appropriately covered by your health insurance policy. However, this is easier said than done, as there are plenty of decisions to be made regarding employer-provided benefits. We have written about some of them (including HSAs and FSAs) in previous posts, and we would be more than happy to help you think through your own employee benefits options during your company’s open enrollment period.

Health insurance is no easier to navigate in retirement, either. We encourage you to revisit our post from 2017 introducing health care costs in retirement, or this post, which explores ways to keep covered if you are retiring early. And, for those expenses that your health insurance just won’t cover, you will need an emergency fund. To determine just how much of an emergency fund you need, check out this recent post.

Conclusion

Unlike the monster under the bed, financial fears are all too real for many Americans. But as we’ve shown today, allowing your fear to paralyze you won’t change anything. The only way to overcome your fears is to face them head on. First, clarify your concerns by focusing less on “what if?” and more on “then what?” And once your fears become tangible, create a plan of action to conquer them. As you begin to make progress, your confidence will grow, and before long you may find that your financial fears become as menial as the monster under the bed.