Navigating financial stress

Rachel Lengel and her husband, Carl, certainly know the feeling of financial stress. Both were laid off in 2020 due to the pandemic shutdowns—right after the couple closed on their new home in Freeport, New York.

 “That was definitely a financial struggle right there,” Rachel says.

Moreover, her grandfather had just died that February, so the family was reeling from a number of losses, on top of a money pinch.

Gratefully, the couple received a call from Thrivent financial advisor Jason Rogoff in nearby Westbury, New York, to let the couple know about an inheritance from Rachel’s grandfather. This helped ease their financial struggles while they were laid off. The two have since gone back to work, and Rogoff has been helping Rachel set up an inherited IRA and is in the process of setting up college funds for the Lengels’ two young children.

“It was tragic losing my grandfather, but we were very lucky we had Jason to assist us,” Rachel says. “Carl and I still have some financial struggles, but we’re trying to navigate them, working as a team to get through it all.”

Many families are struggling financially, and the current economy isn’t helping. The pandemic negatively impacted many wallets, and now inflation and the threat of a recession are adding new worries.

Indeed, according to Thrivent’s 2022 Consumer Financial Outlook Survey*, 63% of Americans said inflation is pushing them off track financially, and 60% said it’s getting in the way of saving. One-third of Americans (33%) reported their current employment situation is causing them to feel financially off track. Additionally, 29% of people said their personal financial habits, family circumstances and physical, mental and emotional well-being, each respectively, contributed to them feeling financially off track.

“We’re seeing financial stress across the board right now,” says Mary Jane Fortin, president and chief commercial officer at Thrivent. “Due to inflation, many Americans don’t feel like they’re in a position to follow financial steps, like saving and budgeting.”

The good news is that there are ways you can manage your financial stressors and prepare for any uncertainties ahead.

A fair number of Rogoff’s clients experience financial stress from time to time, no matter their circumstances. Some, like the Lengels, were hit by unforeseen events, while others struggle to live within their means and are burdened with high amounts of debt.

“The first thing I tell people is that you have to go back to the basics, and the most important part of that is not to spend more than you make,” Rogoff says.

As part of Thrivent’s Dedicated Planning Services, Rogoff takes advantage of software tools like MoneyGuidePro to help clients better manage their day-to-day finances so they can meet their financial goals, like buying a house or saving for their children’s college tuition costs.

“I help them create plans for spending and saving, and tools like this show them if they are on the right track,” he says. “This also can help bring their stress level down.”

Findings from Thrivent's 2022 Consumer Financial Outlook Survey*

Our survey found that inflation is negatively impacting American's ability to save:

feel like they are currently living paycheck to paycheck

would be concerned if faced with an unexpected $500 expense.

are saving more than enough or a good amount right now.

Sherith Squires, a Thrivent wealth advisor in Thousand Oaks, California, also works with many clients who experience financial stress, from people just graduating from college and starting their first job with little or no savings, to retirees concerned that the current economic environment may set back the value of their nest eggs.

“I have clients who worry about a lot of things right now, but I tell them that it helps to break it down into steps they can take,” Squires says. “For example, nobody can control inflation and how the markets are doing, but there are things they can do to mitigate the risk and give themselves more control.”
 
Squires first recommends that clients establish an emergency fund if they haven’t done so already. She likes to call this her “Joseph strategy,” referring to when Joseph in the Bible set aside grain during years of great growth to feed people during years of famine. Ideally, clients should set aside three to six months’ worth of their expenses in an emergency fund.

For their retirement savings, Squires recommends clients should diversify and then segment their portfolio holdings into buckets that are in the market and buckets with limited to no risk, to go alongside their guaranteed income sources that include pension funds and Social Security payments. The goal of this approach is to have a bucket that is meant for near-term expenses and another bucket for long-term growth potential, she says.

“If we can set that aside in something safe and liquid, then that’s where we can pull income from, especially when the market is down,” Squires says. “Then we’re free to put the rest of the portfolio in diversified investments, which can replenish the fixed-income bucket in times of growth.”

Sometimes the stress that clients feel isn’t strictly about the numbers. Instead, clients may just generally fear the unknown—particularly uncertainty of the economy and how it could impact them personally.

“It boils down to figuring out the specifics of what they may be worrying about, instead of worrying about this big overarching cloud that is hard to pin down and control, so it then feels overwhelming,” Squires says.

Even before the pandemic, many Americans experienced financial stress for a number of reasons, many of which they actually can control, if they truly want to, says Mary Schmid, author of Make or Break Conversations and a coach for financial advisors.

“People know about self-help books—there’s a million and one tips out there—and they can go anywhere to figure out how to do budgets,” Schmid says. “I take a different perspective. I suggest to financial advisors that they ask their clients in a gentle way, ‘What are you willing to do about it?’”

Many people are embarrassed and even ashamed that they may not be managing their money well, even those with advanced degrees and high incomes, she says.

“But no one is taught about how to have a relationship with money, so people should give themselves a break. They’re not alone,” Schmid says. “Once you can normalize these feelings, then hold yourself accountable and ask yourself what you’re going to do about it. If you’re really willing to do that, there are people who can help you.”

These simple actions can help reduce stress of any kind.

1. Exercise—consider a walk or run.

2. Eat a balanced diet.

3. Connect with others.

4. Get enough sleep.

5. Pray or meditate.

6. Keep a journal.

7. Make time for leisure and volunteer activities.

8. Surround yourself with a supportive community of friends and family.

Thrivent financial advisors have a variety of advice tools that can help you understand your current financial situation. To learn more, contact your Thrivent financial advisor or find someone near you.