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The Scary Side of Finances

by on October 28, 2018 5:00 AM

By Brittany N. Cox
Registered Investment Advisor at Nestlerode & Loy Investment Advisors

Haunted houses and scary masks aren’t the only things scaring U.S. consumers today. Many people find dealing with their finances scary or difficult. Whether it’s buying your first home or getting ready to retire, people face many fears with their money. This fear often causes people to just run away and avoid them.

This is one reason for which so few individuals and/or families have a budget or financial plan. According to a study by U.S. Bank, 41 percent of Americans say they use a budget. That leaves over half of Americans without a plan for their everyday finances. The lack of a budget can add to the fear and woes of finances. The unknown is scary, and a budget helps discipline spending habits and keeps families running more efficiently.

According to Northwestern Mutual’s 2018 Planning & Progress Study, Americans feel they are falling behind in their retirement planning and it causes stress. The study surveyed 2,003 adults and found that 78 percent of Americans say they are either “extremely” or “somewhat” concerned about not having enough money to retire. If that doesn’t seem scary enough, 21 percent of those surveyed have nothing at all saved towards retirement.

If you are feeling fear because you fit into one of these demographics, you should focus on taking the first step. Like physical fitness, often the hardest step to take is the first step. Once you start to see results after taking that initial first step and move toward your goals, you are more likely to keep working toward them. Some people believe once they reach a certain age that it is too late to start, so they convince themselves they will have to work forever. If you find yourself feeling like you are too far behind to start, you should consult a financial advisor and work on a plan to get you on the right track.

Another goal many people find frightening and put on the back burner is purchasing their first home. Buying a home represents one of, if not the, largest financial investment most people will ever make. Some of the fears of purchasing a home can be alleviated by doing some research online, talking to your financial advisor, speaking to a Realtor, and discussing with a mortgage expert, at your financial institution, for some guidance and education. Understanding the process often helps alleviate some of the anxiety associated with purchasing a home. Also, be sure to have a plan. You can set goals for how much money you need to save, when you would like to make a purchase, and when you will start looking for a home. Having a map will make the process seem like less of a maze.

Another scary thought is being self-employed without a retirement plan or steady paycheck. Self-employment and freelancing are becoming quite popular in today’s world. According to careerlancer.net, 35 percent of the US workforce did some sort of home-based or freelance work in 2016. They predict that by 2020, the number of temporary workers and freelance consultants will exceed 30 percent of the global workforce. People cite reasons for their preference to do freelance work as flexibility, being their own boss, and controlling their destiny.

Though freelancers seem to have a great deal being able to create their own schedule and be their own boss, they too experience some scary financial woes. They must be careful as they don’t have the benefits of a traditional employer in terms of health insurance, time off, and retirement plans. Another concern is their social security when retirement rolls around. It is important for freelance and home-based workers to have a team consisting of a financial advisor and a tax accountant who they trust to help them meet their goals and manage their finances.

Another fright for people is planning for their death. While this may be one of the scariest topics for Americans and their financial planning, it is a very important task. While thinking about your physical property, you should also consider your children. If you and your spouse were to both pass away, someone else will have to care for your children. While this is a scary thought, having an estate plan in place will ensure that your family is taken care of as you wish.

Dying without a will in the state of Pennsylvania is called “intestate”. There are laws governing what happens to a person’s property if they die intestate. The law states that the property of the decedent will go to the surviving spouse, children, and/or parents of the decedent and continues through the family tree if none of those are surviving. If the person who passes has no decedents including siblings, grandparents, aunts and uncles, grandchildren and their children, then it will ultimately go to the Commonwealth of the State. It is preferable to have a will so that your property is dispersed the way you wish and to avoid potential family conflicts. If you find yourself fearful and without a will, you should consult your attorney for further discussion on your next steps.


 



Brittany Cox is a Registered Investment Advisor who works for Nestlerode & Loy, Inc., State College. She serves clients in Centre County and all of Pennsylvania as a fiduciary, fee-based advisor. She is a graduate of the Pennsylvania State University with a BA in business with a focus on financial services. Brittany enjoys working with clients for retirement and college planning. Brittany can be reached at bcox@nestlerode.com.
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