A survey by psychologist and author Dr. Robert Epstein found that 25% of our happiness is determined by how we manage stress. Epstein also found that one of the magic bullets in reducing stress is planning.
Tell that to the 40 million Americans who are struggling with student loan debt and consider it a leading cause of anxiety.
Financial planners, like Dr. Epstein, say it’s in those anxious moments, however, that good planning will see you through.
“It may seem like there’s no light at the end of the tunnel,” says Maddie Brooks, a financial professional with Prudential Advisors. “The key is to keep a level head, come up with a plan and stick to it. Student loan debt is a very emotional area. Spending all of that time and effort on your education and ending up in debt is frustrating. You have to first change your mindset and keep it in perspective. Having a plan helps that happen,” she adds.
Brooks says there are 3 things to consider when creating a plan.
1. Look at your total financial picture: Figure out everything you have coming in and your monthly expenses. When you see what’s coming out and going in, it’s an eye opener. A lot of people don’t know where their money is going. When those numbers are known, you can develop a course of action. You can see what adjustments need to be made in your financial choices and lifestyle. It’s about mind-set. It’s changing a value system, it’s all of that. It’s changing the way you think about money. If you don’t get to the root of the problem, you won’t change your behavior. Knowing your numbers help you see what you’re really doing.
2. Know your retirement number: When you know that number, you can back into a plan. Many of us get so caught up in paying the loan back that we short change that saving. As far as figuring out how much to save, that is going to be determined by where you want to live. If you plan to live in the Northeast for example, you need a plan to save at least 80% of what your income is. You’ll need 60% if you plan to live in Texas. Also consider how much you can expect from things like social security and 401 (k)’s. When it comes to paying off student loan debt and saving for retirement, you must do them at the same time. One is not more important than the other.
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