Not sure how much money you have—or how much you owe? You’re far from alone, according to a new study from Prudential, the financial services company. The study shows that many American families are struggling with finances.
In its first Financial Wellness Census, the company found that one-third of American don’t have an “accurate handle” on their finances, believing they are better or worse off than they really are. According to the survey, respondents said their most pressing financial worry was the thought that they’ll never be able to retire.
Meanwhile, more than 50 percent of respondents believe they are on track to meet their financial aims, though less than 50 percent actually are making plans to achieve those goals.
Many respondents indicated they are confused—and troubled—as they struggle with finances. The survey also found, for example, that:
- About 17 percent of Americans thought they were in good financial shape even though they weren’t.
- Another 12 percent thought they weren’t doing well, though they were.
- And women feel less on track than men when it comes to meeting their financial goals. For example, 36 percent of women believed they’d have enough savings to last through retirement compared to 51 percent of men.
Understanding the basics of your financial situation is a critical part of maintaining strong financial health. If you’re not sure how much money is in the bank or how much you owe, how will you ever be able to save for retirement or dig yourself out from debt?
If you’re already behind and not certain where you stand financially, it can take some time and dedication to get things on course. But, once you do, and if you continue to stay on top of it, watching your finances is something you can easily integrate into your monthly household duties.
Seven things you can do to stop struggling with finances
Gather all the paperwork
Pay stubs, bills, credit card statements, bank account statements, evidence of other sources of income. Pull all of it together from the past year into one place. A simple binder or folder can help with this process.
Determine how much you really earn
Now, look at your pay stubs, along with any other sources of income, such as child support, alimony or revenue from a side business. Add it all up to determine how much you’re taking home, minus the taxes that you might have to pay on any of your earnings.
Figure out how much you spend, how much you owe
Now, look back at your spending from the last year. How much are your monthly bills? How much money do you owe? Don’t forget to comb through your credit card statements to determine where you’re spending your money. You might be surprised to find more impulse buys than you expected.
Don’t forget to include any money you might be saving for retirement or storing away in an emergency fund.
Decide if you’re living within your means
Now that you have details about your earnings and your spending, you can determine if you’re living within your means. How will you know? You’re living within your means when your earnings are about equal or more than your spending, which should include covering your daily expenses, paying off debt and saving for retirement and emergencies.
Set some goals
Now that you have the lay of your financial land, it’s time to set some goals. Would you like to be saving more? Do you want to help your kids go to college? Do you hope to buy a home? Will you need a new car soon? How much money will you need to retire? Once you set life goals like these, you can begin to map out the plans necessary to achieve them.
Make a budget
With your information in hand, it’s time to make a budget that incorporates your earnings and your spending and accounts for the savings you need to reach your goals. Then, it’s up to you to stay on top of your spending to ensure you remain on target.
Get some help
It’s easy enough for us to list all the steps required to stop struggling with finances. The work, however, can be much more difficult. Pulling together hard-to-find documents can be a challenge and take time. Tough decisions are required as you look for ways to cut back. A financial advisor or credit counselor can provide the professional expertise to help get you back on track.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.
