3 tips for handling financial stress in volatile times

Money-related stress is top of mind for most Americans, according to a new AICPA survey that shows more than 70% feeling either cautious or uncertain about their financial situation. Some respondents are taking steps to shore up finances with less spending or more saving, and the AICPA is offering advice for managing financial stress as part of National Financial Literacy Month.

The survey of 2,081 adults, conducted early this month by The Harris Poll on behalf of the AICPA, found that 37% of adults have felt cautious and 36% uncertain about their economic situation over the past 12 months.

“Money is one of the biggest stressors in many Americans’ lives, at times causing anxiety and tension with a spouse, partner, or other family members,” Dan Snyder, CPA/PFS, AICPA director–Personal Financial Planning, said in a news release. “Taking control of your financial situation and finding comfort with what you can and can’t control is a good starting point to help alleviate financial uncertainty.”

The AICPA recommended three strategies for handling financial stress during volatile times:

1. Take stock of your finances

It’s important, the AICPA said, to know your spending habits, debt levels, savings and investments, and credit scores. More than one-quarter (28%) of respondents said they have been charging less on their credit cards, and 27% have started saving or increased their savings rate over the past 12 months, according to the survey.

Other details to understand about your finances and budget include:

• How much you earn, where you spend it, and where you can cut expenses and increase savings.
• How much debt you have. Categorize it by type, institution held, interest rates, and maturity dates.
• How much recurring items such as utilities cost and what must be paid every month.

2. Know what you can (and can’t) control

Financial markets fluctuate, and those changes are out of your control. It’s important to know which financial issues you can deal with.

The AICPA release recommended building a financial plan by working with a CPA financial planner or a CPA Personal Financial Specialist credential holder to determine retirement and savings needs and investment growth targets. Then, build an investment portfolio that can help you reach those goals.

3. Use online tools to manage your finances

Take advantage of autopay options to reduce how many bills and payments you have to remember each month, the AICPA said. At the same time, set up automatic savings plans to build an emergency fund.

Take advantage of apps and other software to track spending. Alerts from bank or credit card providers can help you address fraudulent charges quickly.

Other survey takeaways

The survey showed that 27% delayed a major purchase such as a car or house in the past 12 months. Also, respondents were split on whether their situation would improve in the next 12 months: 33% said their situation would improve; 30% said their situation would be worse; and 37% said it would be neither better nor worse.

Resources

• The AICPA offers consumers financial literacy resources on a host of topics.
• PFP Section or Tax Section members have additional resources available, including a guide for financial planners to review year-to-date spending with clients.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.