It can be hard to start making money moves when you're hesitant to talk about finances. But unfortunately, this is a common problem for many Americans.
While talking about financial stressors can help lead to money solutions and better financial planning, 40% of Americans don’t feel comfortable talking about them, according to a survey from Motley Fool Money.
Whether the reason is shame, overwhelm, or naiveté, many consider talking about finances to be faux pas. However, when financial planning problems go unaddressed, the stakes can be high: missed opportunities for growth, mounting debt, inadequate retirement savings, and increased vulnerability to financial emergencies.
In this post, we'll explore 5 financial planning challenges that impact everyday individuals and how working with financial professionals from Brown & Company can help you tackle them with confidence.
Issue No. 1: Budgeting & Cash-Flow Problems
Creating a steady budget can be a game changer for those who have cash-flow issues – one of the most common challenges in financial planning – but it can also be unrealistic. That’s because not everyone has a consistent income stream that remains the same on a month-to-month basis.
Having a handle on your fixed expenses can be one way to gauge how much money you need each month. This can help prevent overzealous spending, which can lead to excess debt. If you do have a habit of overspending, separating your expenses into needs versus wants can help you identify where to make cuts. For example:
- Needs: Monthly mortgage, credit card bills, groceries, utilities, student loan payments
- Wants: Dining out, streaming services, retail therapy
Cutting down on unnecessary expenses (your wants) can help you spend within your limits, divert cash toward paying off debts, and save for emergencies. And by building up that emergency fund, even if you're only putting away a small amount of cash each pay period, you can gradually build financial stability that helps you weather income fluctuations or unexpected costs.
Issue No. 2: Unclear or Unrealistic Financial Goals
Setting financial goals that are specific, measurable, and realistic can help keep your budget and plans on track. But if goals are vague, overambitious, don’t serve a specific purpose, or don’t have a timeline attached to them, you may find yourself facing financial planning problems.
Separating your financial goals into short-term vs. long-term can help identify small, successive wins that compound into impactful gains. Let’s explore:
Examples of High-Impact Short-Term Goals
- Putting 5% of your paycheck into savings each month until you have three months’ worth of living expenses saved up
- Paying off a high-interest credit card, freeing up several hundred dollars per month for other goals
- Creating a monthly budget that eliminates unnecessary subscriptions, saving you $100 per month
Examples of High-Impact Long-Term Goals
- Paying off a mortgage loan, so that you own your house in full
- Putting the maximum annual allowance into a 529 account for your children’s college education to help them avoid student loans
- Investing a certain percentage of your income into a 401(k) so that you can retire by a certain age
Your goals will likely change and evolve over the years as you pay off old debts and acquire new assets, or even as your family situation changes. This is where a financial professional can help. To help your money adapt to your circumstances, investment financial planning with an advisor can provide the framework to balance short-term needs with long-term wealth management issues like retirement preparedness and legacy planning.
Issue No. 3: Insufficient Savings & Retirement Preparedness
Saving for retirement can seem like an impossible goal, especially when inflation, rising costs of living, and lifespans continue to increase. That’s why it’s important to start your retirement planning as soon as possible.
Putting your funds into an interest-bearing retirement account as soon as possible allows you to take advantage of benefits like compound interest.
How Does Compound Interest Work?
Compound interest is one of the most powerful tools for building wealth over time. It allows you to earn interest not just on your original investment, but also on the interest you've already accumulated. This creates a snowball effect that accelerates your wealth the longer your money stays invested.
Here’s an example:
Scenario: Let’s say you earn $100,000 per year and divert 5% of your salary – $5,000 per year, which can also be viewed as approximately $417/month or $208 per bi-monthly pay period – into a retirement account that yields an average annual return of 7%. Here’s what the long-term impact could look like:
| Year | Contributions To-Date | Interest Earned | Account Balance |
|---|---|---|---|
| 1 | $5,000 | $350 | $5,350 |
| 5 | $25,000 | $4,005 | $29,005 |
| 10 | $50,000 | $22,800 | $72,800 |
| 20 | $100,000 | $118,900 | $218,900 |
| 30 | $150,000 | $355,400 | $505,400 |
The reward: After 30 years, compound interest could earn you more than twice what you actually contributed. That's the power of starting early and letting time do the heavy lifting.
Why Do Individuals Often Fall Short on Retirement Savings?
Unfortunately, many people start saving for retirement too late, forfeiting years of compound growth and employer matching benefits. This can translate into missing out on tens, or even hundreds of thousands of dollars, depending on your situation. Remember: Time is your greatest asset when investing – the earlier you start, the higher a return you’ll receive.
By forgoing retirement savings when you’re young, you may be missing out on one other important benefit: employer matching benefits. Employers will often provide a matching contribution to employees who choose to participate in company-sponsored 401(k) plans, which is essentially free money in your pocket. Some employers may also have incentives for those who are getting a late start to participate in catch-up contributions.
Scenario: Take the same salary and investment contribution from the example above. Now let’s say your employer gives you a dollar-for-dollar match for up to 3% of your salary. Since you are contributing 5%, you would receive the full 3% employer match ($250/month or $125 per bi-monthly pay period).
| Year | Your Contributions | Employer Match | Total Contributions | Interest Earned | Account Balance |
|---|---|---|---|---|---|
| 1 | $5,000 | $3,000 | $8,000 | $560 | $8,560 |
| 5 | $25,000 | $15,000 | $40,000 | $6,408 | $46,408 |
| 10 | $50,000 | $30,000 | $80,000 | $36,481 | $116,481 |
| 20 | $100,000 | $60,000 | $160,000 | $190,241 | $350,241 |
| 30 | $150,000 | $90,000 | $240,000 | $568,627 | $808,627 |
The reward: In this scenario, your employer's match gave you a 60% boost to your retirement savings at no additional cost to you.
Issue No. 4: Limited Financial Literacy & Misunderstanding of Risk
It's no secret that Americans lack financial literacy. According to a survey by the Pew Research Center, only 27% say they are confident in their ability to create an investment plan to build wealth. Meanwhile, a 2025 survey from the TIAA Institute and the Global Financial Literacy Excellence Center revealed alarmingly low financial literacy among U.S. adults. Respondents scored an average of just 49% when tested on their personal finance knowledge.
Even more concerning, scores dropped significantly when it came to understanding risk. A lack of knowledge when it comes to risk can lead borrowers down the road of taking on too much debt or high-interest loans that are difficult to pay off. On the flip side of the coin, risk-averse individuals may miss out on opportunities to make smart investments and build upon their wealth.
This is where financial education and having someone trustworthy to hold your hand can come into play. A financial professional can provide guidance on making wise decisions in terms of investments, tax planning, savings, and more.
Issue No. 5: Life & Market Uncertainty (Job Loss, Health Costs, Inflation, Volatility)
While budgeting and saving for retirement is important for future financial security, preparing for the unexpected is equally critical. Life-changing circumstances like job loss, chronic illness, and economic uncertainty all have financial implications that are often out of our control.
For this reason, consider having a financial plan in place that can help you cover your bases when the unthinkable happens. Aside from having an emergency fund, having an adaptive financial roadmap and risk management strategies in place can allow you to adjust your budget and savings goals when plans go awry. If you aren’t sure where to start with these strategies, a trustworthy financial advisor can help.
How to Navigate Financial Planning Issues
If you don’t have a budget or a financial plan in place, it’s not too late to start making your money work for you. For those who have challenges with debt and overspending, starting with a needs vs. wants budget and small, short-term goals can help you make impactful baby steps before diving into long-term, larger ones. These financial planning challenges and wealth management issues may feel overwhelming, but breaking them down into manageable steps can make them more approachable.
While some aspects of financial planning, like automatic bill payments and direct deposits into savings accounts, can have a set-it-and-forget-it approach, other elements require ongoing revision and updates. Revising your goals as you hit milestones can allow you to build upon your wins. A professional advisor can also help build a flexible, personalized plan to align with both your long-term goals and lifestyle.
Looking to take the next step into a successful financial future? Contact us and become a client today.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.