Consider Your Financial Personality

When thinking about investing you need to consider how much risk you are comfortable with and the timeline you are looking at for investing. The closer you are to retirement the less risk you should be taking. Over the long-term one of the consistently highest returns on investment over the last hundred years has been the stock market with an average return of 10% per year before inflation. That, however, is an average. The stock market has bad years and good years. There are highly successful stocks and those that fail. 

If you know that you'll be obsessing over your stock investments each day, worrying about whether to sell, panicking if there's even the slightest downturn, consider other investments. Investing in a whole life policy means you are becoming your own banker later in life, creating a pool of cash that you can access for emergencies and you'll have a policy that you may be able to access to pay for end-of-life care. Bonds that mature over 20 or 30 years are an extremely safe, low-risk investment that will pay about 3% per year as long as you leave the bond to maturity. 

Pay Yourself First

One way to mitigate stress immediately is to begin paying yourself first. Less than half of Americans have the finances right now to pay for a $1,000 emergency. Experts suggest having savings that can cover anywhere from three to six months' worth of expenses. While you definitely want to pay down any high-interest credit cards, it's still important to set this money aside as soon as possible. That's because if you have an emergency without the funds to cover it, you'll be adding more debt to those credit cards, creating an ugly debt spiral. Try putting aside about 20% of your pay until you hit your savings goal. Once you've got your savings, move on to the next tip until you can return to investing for your future. 

Get Rid of Debt

If you've already accrued debt, once you've paid yourself, pay off those credit cards. Part of creating less stress for yourself means making sure that when you have an emergency you don't have expenses that keep coming while your income is either diverted or gone. Start now by creating a plan to pay off debt, starting with high-interest credit cards. There are several plans available online, so do some research and find the one that works best for your style.

Your credit score is improved by using your card but then paying on time every month. Make sure you can pay off your credit charges each month by living within your means. Not sure what "your means" are? Set yourself a budget and stick to it.

Talk to a Financial Advisor

Whether it's investing in the stock market, figuring out how to use a whole life policy, or deciding whether a traditional or Roth IRA is right for you, a financial advisor can help you map out your financial future and give you the tools to get there. Discuss your financial personality with your advisor and they can find you investments that fit your needs.

Stress-free personal finances are all about planning. When you make allowances for emergencies and hiccups, life's slings and arrows won't feel like such outrageous fortune after all. 

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