What to Do If You Feel Financially Behind (in Life)
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Do you feel financially behind???
In 2020, a survey conducted by Mint found that “approximately 40% of Americans felt financially behind” (with regard to saving money, homeownership, and achieving financial stability.
This probably comes as no surprise. As we become older there’s a tendency to assign milestones to ages. And if we’re not at a certain point by a certain stage, it can feel as if we’re falling behind.
Although goals are effective and provide focus, generic milestones can backfire. We might feel that we don’t measure up to our peers or that we have to play catch up. But in actuality, even when things aren’t perfect, we’re probably NOT doing as bad as we think.
If you can relate to any of this, here’s what to do if you’re feeling financially.
1. Pinpoint what’s making you feel behind
For this tip, be as specific as you can possibly be. You can’t overcome feeling behind until you understand what’s fueling the feeling.
Some people might respond by saying, “I’m not where I want to be.” But while this is a valid feeling, what does it really mean???
These types of statements are too broad. So dig deeper and bring the root problem to the surface. To do this, ask yourself: Where did I expect to be at this point in my life?
Maybe your friends are moving out or buying homes, yet you’re still renting or living at home. Or maybe you thought you’d have a certain amount in savings by this stage in life – but you have a lot less.
Not hitting a goal is demotivating (no doubt about it). But at the same time, our brains like to focus on the one or two things that we don’t have – completely forgetting about the multitude of things we do have. This first step can isolate why you’re feeling behind and help you gain perspective (which we’ll talk about in a moment).
2. Ditch generic benchmarks
One mistake a lot of people make is setting milestones based on what their friends have accomplished, or what their parents were able to achieve at the same age (in spite living in different economic times). And unfortunately, both can mess with our perception.
Of course, it doesn’t help when you have advice like “X Things to Do With Your Money Before [a specific age].” Not to say this information isn’t useful. But even though these articles can serve as a “guide,” there’s no blueprint on where to be by a certain age. So there’s no rule that says you have to buy a house by 30 or have a certain amount in savings by 35.
It’s not black or white because much of what we’re able to accomplish depends on numerous factors, such as how much you earn in your field, the economy or cost of living, and your personal circumstances. A lot of “benchmark advice” is often based on having perfect circumstances (or circumstances where most things work in your favor), so you have to take it with a grain of salt.
3. The playing field isn’t always even
No matter where you are in life, there’s always going to be a next level, and someone will always be one or two steps ahead of you. That’s just the way it is. Likewise, you’re going to be a few steps ahead of others.
I feel that part of feeling financially behind involves focusing too much on what others have, and then comparing ourselves to them. However, nobody has the exact same situation.
Even when two people earn the same money, Person A might be a better position to save, take vacations, or buy a house. Maybe they don’t have student loans, or perhaps they’re single or have side hustles. Then again, they might receive financial support from their parents.
The point is, a lot can go on behind the scenes. Besides, when you make comparisons you’re being unfair to yourself. You’re essentially downplaying your own accomplishments and how far you’ve come. So instead of focusing on the milestones of others, focus on what you’ve achieved.
For example, did you put money in savings last month? That’s something to celebrate because a lot of people don’t save. Or maybe you don’t have credit card debt. If so, that’s another thing to celebrate.
4. Set new goals (based on what you can do)
Goals are necessary, but you have to find what works for you based on your circumstances. So once you’ve identified what’s making you feel behind, come up with a realistic and doable plan to get to where you want to be.
Maybe you’re feeling behind because you’re 35 and haven’t bought a house yet. To achieve this goal, sit down and figure out how to make it happen. This can involve improving your credit score to qualify for a loan and a favorable rate, or increasing your savings rate to afford the down payment and closing costs.
Also, break larger goals into mini goals. If you need to improve your credit score, set a goal to pay your bills on time, dispute errors on your credit report, and pay down credit card balances.
To buy a house, you’ll also need a minimum 3% to 5% down, and another 2% to 5% for closing costs. Use a mortgage calculator to get a “rough estimate of what you can afford” based on your income, and then calculate how much you’ll likely need out-of-pocket for the purchase. Based on how much you’re able to save each month, set a realistic timeline for hitting this goal. A realistic plan puts you in control of your finances.