Job losses, health scares, major repairs and unplanned bills can put an enormous strain on relationships, household budgets, and financial confidence. There’s been a lot of attention focused on what happens when we feel this kind of financial stress or face an unexpected emergency as study after study suggests our sense of well-being and happiness depend on whether we feel a sense of security or insecurity.
And tellingly, when many families struggle to come up with $400 to weather a financial emergency, there is understandably a big gap between an anxious and confident mindset.
Poll results also released today by insurance giant The Guardian Life Insurance Company of America show only about 20% of Americans they surveyed exhibit confidence. (See the full study results here.) But here’s a surprise: a high income doesn’t help automatically, either. Yes, steady wages are an important ingredient associated with economic security, but Guardian Life found more than 60% of those who earned more than $250,000 a year lacked confidence.
“It suggests there are patterns of behavior and things you can do to incrementally improve your overall financial confidence,” according to Matthew Bryan, assistant vice president at Guardian Life about the findings.
So how confident are you? And what’s the connection between your financial stress, financial confidence and a sense of well-being? In addition to the poll, the firm released an online quiz today that aims to help us answer some of those questions. And while yes, it is a savvy bit of online marketing, it is also pretty worthwhile — take it here.
Some of the questions include basics such as your age, but also probe your sense of security by asking about concerns about losing your job in the next 12 months, overall feeling of safety, ability to balance work and life demands, general satisfaction with life and even whether your quality of life is higher than your parents’ was at your age. It’s designed to get the conversation started.
And if you did not fare well, don’t worry. With a little effort, these three activities associated with confident planners are remarkably easy to adopt:
Write It Down: Creating a written plan can be simple — it doesn’t have to be a 50-page-power point presentation. It can be something you draft with a partner, spouse or a financial advisor, but it should help examine your financial objectives, explore risk tolerance, financial time horizon for big goals and confirm basic beneficiary designations.
Find A Good Partner: Developing a partnership or strategic relationship can be a key part of instilling confidence. Those who worked with an advisor or someone who held them accountable by taking a role in their financial life akin to a personal trainer or workout buddy are also more confident, Bryan says.
Boost Financial Knowledge: Those with more education, a four-year-college degree, who had developed a sound understanding of financial concepts such as compounding, asset allocation, dollar-cost-averaging, budgeting and who understood the role different financial products including 401(k) plans, insurance and annuities might play in achieving financial goals also showed greater confidence.