Whether we like it or not, most of our adult life is spent thinking about money. We keep thinking about whether we’ll have enough to spare for any emergency. In exploring adulthood, people will tell you what and what not to do financially.
Asking for advice from others helps you build an idea of what you should do with your money, and some of the things you will find out can feel a little scary. Here are some financial fears you may have and what you can do to make them less scary.
Credit is a financial sinkhole
Getting credit, or any form of financing is a way to get additional funding for whatever purpose with you paying it back. It’s essentially borrowing money with an interest rate. Examples of these are getting loans and using credit cards.
Loans are a means of borrowing money from lenders and paying it back in a specific timeframe. There are different types of loans, each accommodating specific needs.
On the other hand, credit cards allow you to borrow money (an amount shorter than what loans typically lend) that you will have to repay within a month, ideally. Hence, to fully utilize these tools, you must know different terms and deals, like the difference between pre-approved vs pre-qualified credit cards.
Since you have to repay these as this is debt, failure to do so can affect you in more ways than one. For example, failing to repay a secured loan makes you lose the asset you set up as collateral, and failing to pay back what you spent on your credit cards within a month will be charged with interest.
Yes, debts can be terrible and are a money sinkhole, but only if you mismanage them or have yet to think it through when applying for them. Getting a loan or a credit card is still a great option if you need to fund something important. You can pay the debt off just fine with proper planning and management of your finances.
Investing is only for the older and the wealthy
Investing is a means of personal finance that more and more people have been doing nowadays. The general idea is that you help fund a business and get a share of its profit. People can invest in different business entities, providing a wide range for anyone who can fund whatever they like.
One of the biggest myths people have about investments is that you must be wealthy. There is a reason why this statement is a myth. People on the internet are seeing all these multi-millionaires encourage everyone to invest in companies, stocks, and bonds and get disenchanted just seeing how much one share costs.
Moreover, there are also anxieties about investing. You sometimes wonder if the business you invest in will make good sales or if the stocks you bought might drop in value in the market. If you live on a paycheck, losing the money you invested can hit you hard.
Despite such fears, you don’t have to be a millionaire to invest. You can always make investments that fit your budget. There are cheaper options for you to start from, and when you think you’ve been getting good returns, you can always get an upgrade. Invest in something relevant in the long run, and know when to withdraw from it.
You can start planning on investing as early as today. Just remember that the amount you plan still leaves enough funds for your everyday needs and expenses.
Plan for your retirement now
Planning for retirement is the goal of the majority. Many people are pressured to save as much as possible to enjoy life when they retire at 60. It can be a stressful thought to bear, and sometimes you can’t help but worry if you can make it to retirement.
What if I get fired? What if I can’t save enough when I reach my 60s? These are the questions that plague the average employee. Only some people make it well in their retirement stage. In 2020, 10.6 million American seniors—people older than 65—were still working. When you’re at that age where you’re weaker and prone to more illnesses, you want to live comfortably.
With this, planning for your retirement as early as possible is essential. One of the ways that can help you do this is to be financially literate, where you can then assess what you want, what skills you possess, and what you could do to leverage yourself to a situation where you can become financially stable.
What if you get into a medical emergency
One of the things we dread from time to time is getting a terrible medical condition. What could make it worse is if it happens all of a sudden. What would you do if it happened to you?
The best course of action is to save part of your money for emergency funds. We are all prone to accidents, and it’s best to be prepared. A little change or what remains of your paycheck after all your expenses can go a long way.
Another option is to invest in something that can benefit you. Getting health insurance with good coverage can guarantee the funds necessary in the case of medical emergencies, especially if you suffer from any critical illnesses.
It’s normal to worry and be afraid of what may happen to our financial status as we go through our lives. Achieving financial literacy can help you overcome your fears and seek solutions. Learn what personal finance service works for you to achieve the security you need and deserve.