Stop Financial Fears From Blocking Your Path to Retirement
A shift in mind-set helped me to grow my nest egg. Here’s how I learned to sidestep the anxiety triggers that keep us from building wealth.
If worries about money keep you up at night or prevent you from taking action, know that you’re not alone. Many Americans struggle with financial anxiety. Their biggest money worries concern a lack of money for retirement, maintaining their standard of living, medical bills from a serious illness or accident and paying for regular health care. A Gallup Poll earlier this year showed that 40 percent say they are either running into debt or barely making ends meet. Among households with people in the workforce, only a fourth say their rate of savings is on track for retirement. Eighteen percent report they have saved nothing.
My earliest money anxiety was about my ability to outearn my reckless spending habits. I was in my 20s, living a lifestyle way above my pay grade and beginning to feel the squeeze on my finances. For years, I would make and spend more money until I finally decided that I wanted a different, more stable life for myself. Thankfully, by my 33rd birthday I was completely debt free, my husband and I were well on our way to achieving financial independence and we were sharing our story on our blog Rich & Regular.
Control Worry, Take Action and Gain Control
Though I’ve matured since my days of overspending, I still don’t live a life free from financial worry. Between motherhood, aging parents and a wobbly economy, there is no shortage of events that trigger deep feelings of uncertainty. But I’ve learned a few key lessons about managing them along our debt-clearing and wealth-building journey.
1. Manage what you can, accept what you can’t. Looking back, I know that my anxieties were just my brain wanting certainty where certainty doesn’t exist. I’ve learned to focus on the variables I can control, making it easier for my mind to choose action over worry.
2. Shift your focus from goals to behaviors. I saw the biggest improvements in my sense of confidence and control when I did this. Put simply, the goal is the “what” and the behavior is the “how.” For example, your goal may be to save more money while a behavior may be to prepare lunch the night before. The reason paying attention to the goal may trigger anxiety is because there are so many factors out of your control that impact your ability to achieve it. By taking the baby step of shifting your focus, you gain the ability to objectively learn from the results of your actions.
3. Get rolling and build momentum. We all know that being consistent is easier said than done. But as you repeat your chosen behavior one day at a time, you develop a streak. The magic of streaks is that they create a positive internal pressure to keep them going and, as a result, can supercharge progress toward a financial goal. Your streak may be as simple as the number of consecutive days you make coffee at home or the number of weeks you set aside $25 for an emergency fund.
4. Focus on the present. Even with the power of streaks, it still took five years to pay off all of our debts. When I would encounter setbacks, I experienced crippling anxiety that told me the process was never going to end. I decided to attack my plan in sprints. A sprint is a project management term that refers to a short, designated period of time in which a team commits to completing work. I broke down our five-year journey into 100-day periods. I then purchased a 100-day tear-off countdown calendar (available where office supplies are sold) to put on my refrigerator. Each morning, I would rip a page off to show the number of days left. The calendar became a physical reminder that each day was moving me forward. The finite time frame and the action of counting down to a foreseeable point stopped me from extrapolating our present circumstances far into the future.
5. Track your progress and review it when setbacks occur. It’s important to know that whether your goal is saving for retirement, paying off debt or getting started with investing, your journey won’t be linear. There will be days where it feels like you’re taking a step backwards. When this happens, it’s helpful to look at your progress. Keep a diary of your thoughts and actions as you progress. Rereading it can remind you of the steps you’ve already taken and give you the confidence to keep going.
Now, at 35, I can say that my husband and I are just a few years away from reaching financial independence. We have an emergency fund, a robust retirement portfolio, income-producing real estate and a steadily growing taxable brokerage account. While credit can be given to having a vision and courage, I know that much of our success came from the little things. The commitment to daily patterns of behavior, focusing on the present and treating my brain like a muscle in need of day-to-day exercise is what helped me overcome my anxieties.