6 Scary Threats to Your Finances

Whether or not it’s spooky season, managing your finances can be scary. Mistakes can have you peering from between your fingers, whether it’s failing to establish an emergency fund, forgetting to set a personal budget, getting caught in an identity theft scheme or asking yourself, “Do I really need life insurance?” All of these things can mess with your financial outlook. 

But there’s no reason to despair or run for the hills. With a little bit of forethought, time and work, you can banish scary threats to your finances. Here are some of the most common mistakes that people make with their money and how to ward them off for good. 

If you’d like to talk to an agent about your financial challenges and opportunities, reach out to Farm Bureau to see how we can help.

Mistake #1: Spending Without a Budget

In today’s busy world, only a little over half of Americans have prepared household budgets. But it’s almost impossible to make good financial decisions without knowing how much cash is coming in and going out each month. 

And that’s just what a budget can help you do: track your income and expenditures, identify potential spending cuts and discover savings opportunities. For example, eating out less could help you save more for retirement. An extra $100 monthly in your retirement adds up! So, don’t spend without a budget.

Mistake #2: Identity Theft

Thieves are out to steal your identity, using it to commit credit card fraud, loan fraud and other scary crimes. Identity theft keeps growing, with 25.6% of victims now managing two concurrent incidents at once. 

Avoid identity theft with identity theft protection! Shred documents such as receipts, credit card offers, bank statements and other papers that contain your personal information. 

With the rise of digital payments and online shopping, keeping your information safe online is more important than ever. Use strong passwords for all credit card companies, banks and other online accounts. And keep your Social Security number secure.

The Federal Trade Commission has more tips for safeguarding your identity, but the best defense is using common sense.

Mistake #3: Lack of Emergency Funds

Could you cover unexpected expenses, like medical bills or car repairs? Most Americans can’t — only about half of all households have three months’ worth of expenses in savings, the recommended minimum cushion. 

Building your emergency fund takes time, but you should start as soon as you can. Some good steps to take are setting (and sticking to) a budget, setting monthly savings goals and looking for ways to boost your income through a second job or selling unwanted items.

Mistake #4: Too Much Debt

The scariest number in your life might just be your credit card bill. The average American’s credit card debt is between $5,300 and $6,700, and Gen X has nearly $10,000 on average. Add in debt from mortgages, car loans and student loans and achieving debt-free status can feel impossible. 

How can you ward off the debt scaries? First, create a plan to pay off debt. Cut back on spending and continue making minimum monthly payments on all of your balances while focusing on paying off high-interest rate debts (like credit cards) first. It takes time, but eventually you’ll get there if you stay focused and disciplined.

Mistake #5: Poor Credit Score

Your credit score helps tell banks and lenders how risky it might be to loan money to you. Your FICO score can range from 300 to 850, and the higher your score, the better your credit. A poor credit score (under 600) could lead to rejections on loan applications (or higher interest rates on approved loans) — it could even affect your ability to rent an apartment or qualify for a job. 

How can you improve poor credit? In general, paying your bills on time, reducing existing debt and steering clear of new debt can help improve your credit score. 

Mistake #6: Lack of Life Insurance Coverage

Life insurance protects your loved ones, providing them with the resources to cover funeral costs, debts, estate taxes and other expenses after your death. It’s a wise investment, and depending on your policy, it may help you hedge against unexpected expenses when you’re living, too.

The amount of life insurance you need depends on your financial situation and number of dependents, but 40% of Americans believe they need more coverage. Talk to your Farm Bureau agent about whether your current life insurance coverage is adequate.

Make Your Future More Secure

Paying attention to these common financial mistakes can help make your future less scary. Still feeling unsure? Reach out to Farm Bureau to talk to an advisor.