According to a new report by the UN Global Crisis Response Group, a total of 52 countries are in “serious debt trouble,” and almost half of the world population  currently lives in countries that spend more servicing interest on debt than health or education.

Globally, household debt levels have also reached historical highs.

Spotlight On: US Consumer Debt

In the US, the Federal Reserve’s aggressive interest-rate increases, continue to squeeze consumers’ wallets. Borrowing costs have climbed, making payments on mortgages, credit cards, and cars more expensive.

Last quarter, US consumer credit card debt topped $1 trillion. U.S. household debt has risen by $2.9 trillion since the end of 2019, and today, almost 1 in 6 Americans are living paycheck to paycheck.

In an effort to keep their heads above water, more people are tapping into their 401(k) accounts. The number of people who made a hardship withdrawal during the second quarter of 2023 increased by 36% from the second quarter of 2022.

It’s no wonder that most of us are anxious about money. A new survey reveals that 70% of Americans feel financially stressed, and a recent Gallup poll found that the percentage of Americans who currently have or are being treated for depression stands at 17.8%, up about seven points from 2015. With stress mounting, U.S. employees’ overall financial health has plummeted to just 55%—down from 64% a year ago.

Keep reading if:

• You’re among the millions feeling anxious and uncertain about how to get a better handle on your money
• You’re intimidated by the prospect of creating a budget
• You’re wondering how to begin saving for retirement when you’ve gotten off to a late start
• You’re simply trying to make ends meet.

5 Steps to Getting Your Finances in Check

While financial stress is often the result of external forces beyond your control, there are ways you can mitigate it and improve your financial well-being. Here are some steps to help you navigate economic uncertainty and build a brighter financial future:

1. Control Your Discretionary Spending

Start by focusing on what you can control. Lowering your grocery bills is a good place to start, given that food prices are expected to increase by 6.5% this year and next. One way to shave a few dollars off your grocery bill is to compare prices on different brands—store-brand groceries tend to run around 40% cheaper than name brands.

When you order from companies like Amazon, you can comparison shop online and save even more by having items delivered to your door rather than traveling to pick them up. With the Payactiv app, you can use your EWA funds towards buying essentials from Amazon. 

2. Find Ways to Increase Your Income

There are several ways you can supplement your regular paycheck. One is to talk to your employer about putting in a few extra hours each week if you’re paid hourly or entitled to overtime pay. You could also clear out your closets and garage and sell items you no longer need, such as old furniture, clothing, tools, and toys.

You might consider taking on a side gig like delivering food, tutoring, babysitting, or starting a blog—the monthly average and median income from side hustles in 2022 was $996 and $400, respectively, according to a Bankrate survey.

4. Prioritize, Reduce, and Eliminate Bills

Sort through your bills and decide in advance which ones you need to prioritize so you can set aside enough money to pay them on time every month. This exercise can also help you identify which bills you might be able to eliminate or reduce. Review your subscription services, only keep the ones that are necessary. Remember every penny counts. 

Some service providers may be willing to grant you payment extensions, which can come in handy during times of financial hardship. Just be sure you understand the terms of any extension agreements, such as if you’ll be charged any associated fees as an example.

Did you know? The Payactiv app has a bill-pay feature, which lets you pay your bills with earned wages so you can pay on time, every time.

3. Speak to Your Lenders

If you’re struggling to make debt repayments, approach your lenders. Many will be willing to discuss your situation and work with you to find a short-term solution.

In addition, they may be open to modifying your loans, like extending their terms or decreasing the interest rate.

4. Build an Emergency Fund

Committing to following a savings plan to build up an emergency fund will not only help you feel more in control of your finances, but it will also ease some of your stress. To ensure you remain disciplined about saving, set up an automatic monthly transfer from your checking account.

Once you’ve got into a savings habit, you can track your progress. A digital savings calculator is a handy way to determine how soon you can reach your financial goals based on how much you put aside monthly.

5. Talk to Your Employer about Earned Wage Access

On-demand pay models like Payactiv’s Earned Wage Access (EWA)¹ give you a lifeline between paychecks. EWA allows you to quickly access the money you’ve already earned before payday. It’s a superior alternative to taking out payday loans or other forms of high-interest credit when you’re short on cash.

In addition to EWA, Payactiv helps you plan your spending and saving and build your financial literacy. Our complimentary budgeting and financial wellness tools and resources allow you to automate your saving and flag incidents of overspending. Ask your employer to check out our solution today.

Final Thoughts

The best time to start getting out from under your debt and securing your financial future is today. Instead of focusing on the past, concentrate on the present and take the practical steps to reach your financial goals.

As you advance down the path to reach your financial wellness goals, remember to celebrate any small “wins” you achieve on a monthly, weekly, or even daily basis. Be kind to yourself and take pride in your accomplishments, no matter how small!

¹Earned Wage Access requires employer participation. Employees can only access a portion of the wages they have earned to date.

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