Many Americans had not even recovered from the financial crisis of 2008 when the pandemic hit. Between the two recessions, years of economic and job growth took place, but corporate ladders disappeared causing income loss, while other wages remained stagnant.
As a result, the number of households and adults who are potential financial burdens for others is staggering:
- Over half, 56 percent, of national consumers in the United States report living paycheck to paycheck, despite a higher average annual household income.
- Nearly half, 48 percent, report having experienced financial setbacks they didn’t anticipate in just the last three months.
- More than half dipped into their savings at the same time.
- One-third of those that dipped into savings did so to help out friends and family.
Many Americans are proving to be financial burdens on those closest to them, but most don’t want to be this way. So in order to avoid this, it’s important to know:
- The causes of financial stress
- The symptoms
- How to relieve the condition
- Specific ways to avoid it
What Causes Financial Stress?
When many people think of financial stress causes, their minds tend to drift towards situations such as their vehicle breaking down, an emergency room visit, or pipes bursting in their home. Of course, these scenarios are always possible and obvious sources of acute financial stress. However, most causes of financial stress are actually far more chronic in nature:
- Unstable Income: The ‘gig economy’ has been on the rise for years. Freelancing provides income options like never before, which helps many Americans fill in the financial gaps in their annual income. However, such work is rarely steady. It only serves to mask the holes in the traditional job economy.
- Can’t Retire: For anyone middle-aged, this might make the top of the list. How do you know you’re saving enough for retirement? That’s a stressful question to answer any day of the week. If you’re not saving for retirement at all, you will feel even worse.
- Not Having Enough for an Emergency: The earlier mentioned acute stresses don’t happen every day, but one thing that can happen every day is knowing you don’t have enough for an emergency. Living with a lack of reserve funds can take a toll on your health when unexpected non-medical costs show up.
- Paying Down Debt: This is top financial stress across state lines and genders. While debt can have some positive uses in being able to finance cars and homes, having a mountain of debt is a financial hazard. Considering how many people live paycheck to paycheck, many can’t keep up with credit card debt and the interest rates. Debt is one thing, but a debt that grows over time is much worse.
- Paying for College: Tuition costs keep going up year after year, which challenges nearly every generation of adults. Parents and grandparents who want to send kids to school fret over these direct costs, as do working adults that wish to get their own education. College-age kids and teenagers have to live with this quite directly.
- Aspiring for a Better Lifestyle: Much of the so-called American Dream has been about every generation has it better than the next. However, people live long enough that they should reasonably expect life to get better along the way. Many Americans wish to move up from starter homes, enjoy more vacations, and drive better cars as they move further into adulthood. It’s not nearly that easy, but the desire for improved socioeconomic status is genuine.
- Paying Rent/Mortgage: Very few financial stresses are more significant than keeping a roof over your head based on your individual income. Not having a place to call home can erode your sense of personal security quite quickly. Also, their rent or mortgage payment is the most significant bill they face every month for most people. Struggling to keep current on this one has a domino effect on the rest of your budget.
Symptoms Of Financial Stress
Financial stress is a condition you can be under without even knowing it. You might have just grown used to the symptoms of monetary duress, and they might have crept up so slowly in your life that you just didn’t notice.
While there are many potential symptoms of financial stress, think about these 10 when reviewing your own life:
- Overdue bills
- Mood swings
- Strained relationships
- Difficulty sleeping
- Living paycheck to paycheck
- Loss of appetite
- Lower sex drive
How Do You Relieve Financial Burden?
Solving all of your financial problems won’t happen in one day. You probably can’t get it done in a week or a year. However, the sooner you get started, the better off you will be. If you want to start getting some relief from your financial burdens, then consider these easy steps:
- Look for Insurance Premium Discounts: If you’re suddenly out of work or doing less work outside of your home, then you might be driving less. Given how that lowers your risk of vehicle accidents, it should also lower your premiums. Look for any discounts you get, be it through bundling policies or just adjusting your coverage.
- Change Your Data Plan: Is your current data plan from before the pandemic? If you and your family spend a lot more time at home, you’re getting more data off your local network than off roaming data. See if you can lower your data cap for savings.
- Review Your Memberships: Look over one monthly bill cycle of all your payments. See if there’s anything you can either drop, suspend, or downgrade. You don’t have to cancel Netflix or Disney+ necessarily, but maybe you could alternate back and forth. Gym memberships might be something you forgot you even had. For that matter, if you order a lot of food delivery, then adding a member, such as DoorDash or UberEats, might save you money over the delivery fees that you are constantly paying.
- Threaten or Ask to Cancel Something: Cable and satellite television providers, and even some phone service providers, have what they call retention teams in their call centers. These dedicated professionals only deal with clients looking to cancel their services, and they’re often allowed to offer much better deals than are publicly available in a last-ditch effort to keep your business. Take advantage of the opportunity to haggle for lower prices.
- Defer Payments: Depending on the current legislation at the time, you might have options to get financial assistance from the government. You might be able to temporarily relieve financial hardship by deferring payments on anything from mortgage installments to student loans.
- Ask for Help: Whether it’s your spouse, your landlord, your bank, a lender, or a utility provider, never fear asking for help. There are almost always people, businesses, and organizations willing to work with you on things. You won’t know your options until you ask.
How Do You Relieve Financial Stress?
Even if you’re not an economic burden to anyone outside of yourself, being in a state of constant financial distress is no fun. Money is something you have to deal with every day of your life, but it never comes with instructions on dealing with it. Then again, there are many ways you can deal with financial stress, including but not limited to the following:
- Write Down Your List of Problems: This might not sound like fun, and many people can write out quite a long list. That’s okay. Just doing this means you can look at the trees instead of the forest. Once you do it, you can take two different approaches. You can identify some minor problems you can fix quickly for fast relief, or you can identify the three most significant issues to tackle your biggest hardships head-on. Doing both indeed starts minimizing your financial stress.
- Be Realistic: Your options for dealing with financial stressors might not be appealing. They might not even seem like they compare. Live and work with what you’ve got available to you.
- Do the Best You Can With Your Annual Income: Your bills likely happen in monthly cycles, but to deal with financial stress over time, you need to think longer than that. If you assume you don’t make enough money to meet your goals, you’ll be too demotivated ever to start doing anything. It’s easy to assume that you need to make more money, and it never hurts. However, getting smarter about your spending lets you keep more of your money or at least make it stretch farther than ever before.
- Communicate Frequently: If you have shared finances with anyone, especially if you’re a financial burden to someone, then communicate with them often. This simple step makes them feel valued and important to you. It can prevent many problems, and it goes a long way to minimize your financial stress. At the very least, you’re talking things out with someone who is impacted by all this.
- Automate Payments: Whenever you can, automate payments for everything. The fewer details you have to deal with every month, the less stress you will feel. This is one of the perks of starting to save even a little money because you know it will already be there when the payments are due.
- Be Honest With Yourself and Others: It’s easy to talk yourself into believing it when you have ideas and goals about doing better at money. You might also tell those you trust about your intentions. Just try and stay a bit grounded with all this optimism, however. It would help if you had their emotional support through this, and hoping they believe in you will never replace you believing in yourself.
- Expect Surprises: Life will throw you curveballs, so you need to be ready for out-of-pocket costs from acute financial problems and stresses mentioned earlier. Whether it’s replacing a blown-out tire or dealing with catastrophic spending on health care your health insurance coverage won’t cover, you need to have some kind of plan in place. Building up savings is crucial.
- Be Positive and Proactive: Identify the steps you can take right now to improve your financial stress, and then do them. The problem list you wrote down at the start of this list might be something you need to rewrite on occasion. However, you should notice it getting more manageable each time.
- Be Persistent: Much like how a crash diet doesn’t lead to sustainable and long-term weight loss, you can’t practice relieving financial stress for two weeks and be done. Willpower might get you started, but discipline and habits keep you going.
The Financial Burden On Parents And Children
Many cases of people being financial burdens on others happen inside the same family. For example, children can have a financial impact on their parents, and sometimes, the reverse also happens.
Parents who are raising kids are responsible for clothing, feeding, and housing them. They also have to provide for daycare, education, and medical care associated with high medical costs.
Depending on the region you live in, the overall estimated cost of raising a single child to their 18th birthday can range from $250,000 to more than $1 million. That’s not even including indirect costs.
Of course, parents with active marital status can split these costs, but more and more adults are single parents and bearing the brunt of it all alone.
Adult children can also prove to be financial burdens on their parents. This is commonly reflected through trying to afford a college education. Still, it’s after they graduate and are unable to get established on their own right away in many cases. Parents might try and help their kids with career training, new vehicles, household items, and even purchasing a home.
Adults run the risk of financial burdens on their children if they don’t take care of themselves. Saving enough for a safe and comfortable retirement can leave their offspring struggling to support their aging parents. Financial health isn’t the only factor in play here, either, as medical costs, costs of treatment, and expensive drugs for aging and infirm adults can quickly eat up anyone’s savings accounts.
In addition, being physically fit and healthy is vital for anyone. Still, many retirees and middle-aged adults closing in on their golden years are making sure they stay healthy so as not to burden their kids and even grandkids and a high quality of life.
27 Ways To Avoid Being A Financial Burden
Whether you’re tired of being a financial burden on someone else or you’re just tired of having financial burdens of your own, you need to take specific steps to deal with things. Use any of the following steps that apply to your lifestyle:
1. Set Goals
Your goals don’t have to be so big that they outweigh your problems. That’s just setting yourself up for failure. You need at least one goal that you find intriguing or desirable enough to get started. Don’t worry if you’re not motivated 24/7. You have to shower every day. But, you can find inspiration every day that you need it.
2. Make A Budget
It doesn’t matter if you don’t know how to create a budget. There are so many ways to create budgets these days there are no excuses. Whether you primarily do things on your smartphone, tablet, laptop, or personal computer, you can find something that lets you create a budget. Apps, websites, and software all await you, and many of them are free. If you’re still into pen and paper, you can head to the office supply store and find an old-fashioned ledger.
3. Save Money
If you’re living paycheck to paycheck, you need to stop that immediately. Find anything you can in your budget to trim or reduce, and then start socking that money away. Then, even if it’s just $10 a week, you’ll have started somewhere and can grow that over time.
4. Automate Your Savings
You probably have automated payments to simplify your life. Do the same thing with your money. Have it set up to regularly deposit a part of each paycheck into an interest-bearing savings account.
5. Start Investing
If you have full-time employment with 401(k) benefits or something similar, then take advantage of them. Even if you don’t have corporate-level retirement options available to you, there are apps and websites you can use to start a small portfolio of stocks you can invest in on the retail side.
6. Don’t Leave Money On The Table
Check out your employer benefits. If they match your 401(k) contributions up to any level, then take advantage of it. For instance, if they match your contributions dollar-for-dollar up to 5 percent, make sure you save at least 5 percent to get the entire match.
7. Negotiate Settlements
Your creditors would very much like to get their money back, but they might not need all of it back. Sometimes creditors are willing to negotiate settlements for a fraction of what you owe in order to get something from you, even if it’s just to get the money back faster. Call them and see what they’re willing to do if anything.
8. Stick To Your Budget
At least once a month, you need to sit down and compare your percentage of income made versus the percentage of income spent. Then, budget and make adjustments as need be.
9. Avoid Impulse Buys
It’s okay to think about buying something you see that you think you might need or want. What’s better is going home and sleeping on it before you do it. If you do it the second day, it’s probably something you need or can use.
On a similar note, don’t buy things just because they’re on sale. They might always be on sale just to create a perception of value that doesn’t exist.
10. Get Health Insurance
Even if it’s catastrophic insurance with a hefty deductible, it’s something. Medical expenses are going to happen sooner or later. Don’t let lack of coverage let you keep from getting medical care since that can make the costs of care more expensive in the long run.
Insufficient coverage might make you put things off until you have to visit the emergency room. They can’t turn you away for lack of insurance, but even they will bill you too.
11. Charge Only Things You Can Pay For In Cash
Don’t charge things based on expectations of future income. It might not materialize, and you might have other expenses that you need to cover. In the meantime, you’re going to have serious interest rates adding up. If you’re going to use a credit card, pay off the balance in full at the end of each month.
12. Don’t Co-Sign For Others
If others have co-signed for you, you might be grateful to them for that, even if it leads you to be a financial burden on them. Don’t try to pay things forward by doing the same for others. Minimize your risk of others hurting you financially so that you don’t wind up doing it again yourself.
13. Keep Your Housing Payments Small
Your apartment rent or home mortgage is likely your biggest monthly bill. This is the case for most Americans. The smaller you can keep it, the better off the rest of your budget will be. A good general rule of thumb is having your housing expenses, including insurance and utilities, stay under 33 percent of your overall monthly budget. If you can get it even lower, you create possibilities for saving money and paying down debts.
14. Refinance Your Vehicle Every Six Months
Vehicle loans tend to run between three and six years. On the other hand, the average driver owns their car, SUV, or truck for 11 years. Once you get six months into any vehicle loan, see about refinancing it. You’ll stretch the loan out another six months each time that you do it, but you’ll take advantage of lower payments every time. You’ll also hopefully get better interest rates as your credit improves.
15. Avoid Risky Investing
Junk bonds, speculative real estate, and penny stocks prove alluring to anyone who wants lots of money. You can dabble in them, but you shouldn’t do it until long after you are no longer a financial burden to anyone and are saving lots of money for retirement and future expenses. Saving for those goals should go into certificates of deposit, blue-chip stocks, government bonds, and money market funds.
16. Find Something Else To Do Than Spend Money
If you want to have a meal with a friend:
- Skip the restaurant and do a picnic in the park instead.
- Check out free days at museums.
- Use the library instead of buying or renting books, music, and movies.
- Check out the Freebies section on Craigslist, and shop your local Goodwill from time to time.
- Find ways to fill needs without spending much money.
17. Face Your Fears
You don’t want to do it, but you must: write down all the debts you owe, who you owe them to, and how much you owe each of them. You can’t make any progress on this without this information.
18. Choose Between The Snowball And Avalanche Methods
In terms of managing your debt, you need a solid plan of dealing with them. If you have many debts with various interest rates, you might want to start by paying off the debt that has the highest rate of interest to curtail the overall growth; this is known as the avalanche method.
The snowball method is more applicable when you have debts with relatively similar interest rates, as you would pay off the smallest balance before moving to the next smallest balance and so forth.
19. Listen To Experts
Suze Orman is just one financial guru that millions have listened to and done well with following her advice. One of her best nuggets of wisdom is “People first, money second, things third.”
Make sure that you and your family’s needs are taken care of first and foremost, and then save money and pay down debts. Finally, use what is left over for vacations, a meal out, or some fun on the weekend.
20. Save In The Right Place
Until you have a sufficient emergency reserve fund established, you need to save your money somewhere you can get to it easily. You need it available in the event of an emergency because it’s your emergency fund.
A savings account or money market fund is a great idea, but stocks and bonds should wait for more long-term investing to come into play. Use your budget to calculate your minimum living expenses for three months, and then save up that much.
Start putting money into retirement or college funds only after you get six to nine months of living expenses saved up.
21. Expand Your Income
You should always be looking to save money in two ways: actual savings or just saving on your expenses. Still, it’s also helpful to just make more money. The gig economy is real and here to stay. Whether freelancing and consulting online, selling things or doing food and grocery delivery, there are many options available where you can put in as much or little effort and hours as you want.
At the very least, having multiple income streams gives you more financial stability should another income source dry up and get drastically cut back.
22. Check Your Credit Score
The most important thing is knowing what your number is. The second thing is knowing which direction it’s headed. Look over your reports for inaccuracies and anything that might be dragging your score down. This score impacts your available credit and your interest rates. Getting it higher can mean cheaper mortgages and vehicle loans, lower credit card interest, and even more affordable insurance premiums.
Dispute all inaccuracies, and prioritize dealing with debts that are willing to remove negative marks on your report.
23. Downsize Your Debts
Whether you choose the avalanche or snowball routes mentioned earlier, one thing that always helps is minimizing the total number of accounts you have where you owe money. Use loan consolidation to bring debts together or transfer balances to lower-interest-rate cards. As you progress with all of this, your credit score will go up, which can save you a lot of money over time.
24. Downside Your Home’s Clutter
You don’t need to sell anything you want to keep or need, but if you’re a financial burden to anyone, then one of your problems might have been overspending on things you just don’t use. So go through your closets, basement, garage, and attic.
See if you have anything you can sell online, to a pawn shop, or through a yard sale. If you rent storage units for extra stuff, then try to free yourself of enough things to at least get a cheaper unit or terminate the lease when it’s up.
25. Stop Using Your Credit Cards
Put them away and just don’t swipe them. Freeze them in blocks of ice. Physically cut them up. Whatever tactic you use, stop putting more things on your balances. Otherwise, paying them down is just a never-ending revolving door of credit card debt.
Make sure you and your technology don’t remember the numbers either. You might do more 2 a.m. shopping than you think.
26. Cook More Often
Some people enjoy cooking, but even those that don’t always have time for it. Restaurants, delivery services, and take-out options all thrive because they get people out of cooking. In addition, the more you can cook at home, the more money you can save.
For example, a slow cooker that you fill in the morning can have a meal ready for you and others at dinnertime and save a lot of money in the process.
27. Have Some Fun
When you sit down to make a budget, you might be shocked to see just how much you spend on entertainment and recreation. This can be a great source of potential savings if you cut down on the expenses but don’t eliminate the category. You might be able to go through simple stretches of tight spending on sheer willpower, but you also need to deal with your financial stress.
Having fun once in a while keeps you moving through life. Your splurges here and there should be little tastes of your larger financial goals. Instead, reward yourself for your successes, so you have something to look forward to later down the road.
If you feel like you’re a financial burden to others around you, you’re far from alone, given how many Americans live the same way. Fortunately, there are ways to identify the symptoms and sources of financial stress and many ways to avoid being a financial burden to anyone.