Financial planning can be overwhelming. In fact, a recent survey conducted by Harness Wealth shows that over half of individuals between the ages of 35-60 feel they did not have a strong enough understanding of financial planning. Struggling to do something you feel you don’t do well is stressful, so it’s no surprise that 56 percent of those individuals reported moderate to extreme anxiety around financial management. And 73 percent said they spend several hours monthly managing money — which is a lot of time doing something that makes you anxious.
The good news is, there are solutions to reduce anxiety and stress around financial planning. Microstep habit-stacking is one of them. By breaking money management down into small mini-goals that are easily achievable, one can help form better money management habits and generate bigger impact. While the specific Microsteps to take will vary based on your situation, here are some ideas for micro-stepping your way to solving common financial areas of anxiety.
If your big financial struggle is getting out of debt, you can break this big goal down into Microsteps that are easy to achieve.
Start by figuring out what you owe and decide which specific debt you want to pay down first. It’s often best to start with the highest interest rate debt to maximize savings, but some people start with the lowest balance to score quick wins.
Once you know what debt to focus on, set a micro-goal to pay a small amount extra monthly. And, set other micro-goals to free up the cash for extra payments such as making lunch at home daily instead of dining out. Create a checklist to track progress until spending less and sending in this extra cash becomes a habit.
Saving for a secure retirement is a huge goal, so break it down.
Instead of saying you want to save $1 million by 65, figure out how much to save each year to hit this goal — then each month or each day. Make investing this daily amount a micro-goal and look for other mini-goals you can set to free up money. You could use some of the same ideas as for debt repayment, or create new streams of income and use all of those earnings to contribute to your savings goals.
You can also break learning about investing down into a series of micro-goals so you can best determine how to invest funds for retirement. Each month, you could learn about a new type of investment including ETFs, mutual funds, stocks, bonds, and CDs. Or you could research a new potential investment each week to find a diversified pool of investments to put your retirement nest egg into.
If you’re stressed about managing any aspect of your finances, there’s always a way to break down this big task into smaller ones. If you aren’t sure how to set big or small goals, a meeting with a financial advisor can help you to identify the steps you need to take today to be more financially secure tomorrow.
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