Americans aren't known to be great savers, and younger ones in particular have a reputation for spending recklessly and letting their savings fall by the wayside. But in a survey of U.S. adults aged 18 to 44, savings app Acorns found that a large chunk of younger workers are putting away money month to month. At the same time, 26% report feeling anxious about their financial future.
If you're worried about your long-term financial prospects, there are steps you can take to get to a more secure place. Here are a few to start with.
1. Build an emergency fund
There's perhaps nothing more stressful than the thought of facing unplanned bills in life and not having the money to cover them. If that fear is causing you to lose sleep, you can remedy it by building a solid emergency fund -- ideally, one with enough money to cover three to six months' worth of living expenses. You might need to tap that safety net in the next year or in a decade. The point, either way, is to have savings to fall back on, which will help ensure that you don't wind up with a large amount of debt on your hands. And that leads to our next point...
2. Stay away from bad debt
While some debts serve a responsible purpose (think student loans, which fund your education), others are downright detrimental no matter how you look at them. Such is debt of the credit card variety. A good way to feel better about your financial future is to avoid getting caught in the bad-debt trap. This way, you won't land in a cycle in which you're racking up interest and have little hope of breaking free.
3. Limit your mortgage debt
Housing is the typical American's largest monthly expense, and while mortgage debt is the healthy type to have, too hefty a home loan could spell trouble on a long-term basis. When your housing costs monopolize too much of your income, you often get caught in a situation in which you're struggling to save and have little breathing room in your budget. Therefore, make sure your monthly housing costs are kept to 30% of your take-home pay or less. That 30%, by the way, should include predictable peripheral costs, like insurance, property taxes, and known maintenance.
4. Steadily fund your nest egg
Not having enough money in retirement ranks as a top financial concern for Americans of all ages. If you're worried about falling short during your golden years, start funding an IRA or 401(k) effective immediately. You don't need to sock away tens of thousands of dollars a year to build an adequate level of wealth; you just need to give yourself a lengthy savings window and invest your nest egg wisely. In fact, if you were to set aside $420 a month over a 40-year period, and your investments were to generate an average annual 7% return (which is a few percentage points below the stock market's average), you'd wind up with $1 million for your golden years. How's that for peace of mind?
5. Map out your goals
Perhaps you're hoping to leave the workforce on the early side, put your kids through college, or buy a vacation home. Whatever goals you have, they're probably respectable -- but they can be daunting at the same time and leave you in a place of uncertainty as to whether they'll actually be met. A good way to ease your doubts, therefore, is to prioritize your goals and figure out what it'll take to achieve each one. From there, you can create a detailed plan that will increase your odds of getting to where you want to be. And if that path seems fuzzy, don't hesitate to enlist the help of a financial advisor who can help you bring your plans to fruition.
It's natural to feel nervous about the future, especially when you're relatively young and aren't as secure financially as you'd like to be. Just remember this: Getting your financial house in order can take time, but if you make it a priority, it'll happen eventually.