In 2015, the Certified Financial Planning (CFP) Board conducted a survey to find out how stressed Americans were about their finances.
The results were what they’ve always been: an overwhelming majority of people are stressed about money. The survey found 86 percent of Americans felt stress when it came to their finances.
That’s a huge portion of the population. Wouldn’t it be nice to help almost nine in 10 people feel less stressed in their lives? It would make for a much happier country.
So where does all the worry about personal finances come from?
The good news — if you want to call it good — is that the causes of stress are evenly spread out.
The leading causes in order are: debt, everyday expenses, health expenses and, finally, retirement — with debt causing 23 percent of everyone’s financial woes. This is good news because it suggests the problem comes from individual situations and is not a countrywide problem. If we want to start solving the problem, we have to do it individually.
If we dive even further into the data, we’ll see that women and young people in particular are more stressed. Eighty-nine percent of all the women in the U.S. are stressed about finances and 91 percent of young people, those aged 18-44, also feel stress.
Let’s look at what makes women more stressed first.
The simple explanation is gender inequality — and I’m not talking about the fiercely debated wage gap.
Women may experience more stress because they are the ones who are expected to take care of their kids. We’ve also seen more women ditching the stereotype of stay-at-home mom and joining the workforce over time. Now, there are many moms who work all day and then come home and are still expected to raise the kids.
They go from worrying about raising children to adding on the worry of financially supporting their children.
Another possible reason is women just don’t know finances as well as men. Financial Finesse reported that when it came to personal finance skills like basic knowledge of stocks, bonds and mutual funds only 66 percent of women were knowledgeable as opposed to 89 percent of males.
Psychotherapist and author Kate Levison summed these two theories best when she stated, “Women have been disenfranchised. Society doesn’t empower us. We’ve been acculturated to stay dumb about money — legally and culturally — for generations. It is so new for women to have so much access to and control over money.”
What Levison says should make you uneasy, but it’s true. The past few generations have given women more power when it comes to money than ever before, yet women, generally speaking, still lack the knowledge to handle money effectively compared to men.
My suggestion for women to reduce financial stress is to become more empowered with finances. Learn as much as you can about money to feel confident. Levison’s book “Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money” is a great resource for this.
So what about the young people? Why are we more stressed than the older generations in America?
In fact, millennials are the most stressed generation ever, according the American Psychological Association, and millennials attribute finances as the No. 1 reason for stress in their lives.
The ACA found millennials with high “money stress” are far more likely to use unhealthy stress management techniques including smoking, drinking alcohol, eating and watching TV for more than two hours than millennials with low money stress.
Most of this money stress comes from the time we grew up in. For many of us, our first interaction with money and finances was during the financial collapse of 2007.
Many people were coming out of college just as the collapse happened and were left overeducated and underemployed. Most of us currently in college were teenagers during the financial crisis and knew we’d most likely come out of college with debt and have to fight for a decent starting job.
Almost eight years later, the fear of not being financially secure still lingers with all of us.
The way for us to reduce the stress of money is something everyone, especially we should do: Make a financial plan.
Many people fell so hard during the financial crisis because they weren’t prepared. Having a financial plan will let you know where you stand financially and give you greater peace of mind because you can prepare for the worst and at least know what to expect if we go through another recession.
What I found most interesting from the CFP Board’s study was that 35 percent of young people are more confident having a financial plan will reduce stress than older people who were only 27 percent confident.
It’s great that more people than I expected knew the best way to reduce money stress is with a financial plan — besides winning the lottery, that is.
The next step is to actually make a financial plan. One great resource is LetsMakeAPlan.org which is a CFP Board website to help you find financial planners, which as a college student you don’t need right now, but there are lots of great resources on this website.
Sometime today, make a point to research how to make a financial plan and look at all the information available. Doing this will reduce your financial stress and in turn lead to a happier and healthier life.
Jay Cranford is a 20-year-old finance junior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.