Let’s talk about wellness. Not about drinking more water, making sure you get enough rest, watching how much sugar you eat, or anything like that. A different kind of wellness that affects your wallet, your bills, your savings, and your financial future. I’m talking about financial wellness.
What is Financial Wellness?
Financial wellness refers to the overall health and well-being of your financial life.
Taking care of yourself financially is every bit as essential to an abundant life as taking care of yourself physically and mentally. Your financial success, not to mention your overall sense of comfort and stability, depends on your commitment to healthy money management.
Financial wellness includes a person’s ability to stay on top of their living expenses each month, pay off debt when necessary, and maintain a sense of financial security. Concrete metrics like a high credit score aren’t necessarily clear indicators of financial wellness, but they’re usually a good sign.
Long-term financial progress relies on sustainable long-term effort. Just like with anything that relies on long-term effort, we put ourselves in a better position to succeed when we pay attention to critical maintenance along the way. That’s where financial self-care comes in.
What is Financial Self-Care?
You take steps every day to look after your physical and mental wellness (or at least, you know, you’re going to start doing that next week for sure). Why shouldn’t you do the same to manage your financial wellness? (Except, don’t wait ’til next week for this one.)
Like those more familiar types of self-care, financial self-care is a practice of maintenance. Not necessarily sweeping changes and massive effort. Small steps, regularly applied, that contribute to healthy personal finances.
In the same way that everyone’s financial situation is unique, your financial self-care routine may not look the same as mine or anyone else’s. But the main focus should always be to keep your financial ecosystem running smoothly, your state of mind calm and focused, and your goals moving forward.
The main thing we’re focusing on here is simple, repeatable tasks that help you make your financial world feel a little better.
Why is Financial Wellness Important?
There are ultimately only two types of financial goals. First, there are the goals that give us new possibilities in life, like achieving financial freedom. Second, there are the goals that create financial stability and protect us from some difficult financial issues — for instance, building up an emergency fund to avoid having to go into credit card debt to cover an unexpected expense.
Financial wellness is essential to reaching both of these types of goals.
Most money goals are long-term goals. There’s simply not a lot you can do to significantly improve your cash flow overnight. That’s okay, but it means we have to watch out for burnout.
This is where I’d say, “it’s a marathon, not a sprint,” if I loved cliches, which I do, so I will. A healthy financial life is a marathon, not a sprint.
With long-term goals, there’s always the risk of fatigue and discouragement overpowering our drive to succeed. And that goes double for financial goals where it’s so easy to be overwhelmed by intimidating jargon, numbers to keep track of, and seemingly insurmountable obstacles.
That’s why financial wellness is so important. That’s why we need regular financial self-care if we’re ever going to pull off the big stuff like paying off student loans, saving for retirement, or starting to invest for the future.
Financial Self Care: 6 Tips for Financial Wellness
1. Check in on Your Spending
If you keep a monthly written budget, then you probably already do this. If not, that’s fine too because you don’t really need a budget. Either way, though, it is still a great habit to just take a little look-see at your spending once in a while.
What many people don’t realize about traditional budgeting is that most of the value doesn’t come from planning exactly what you’ll spend and sticking to it. Most of the value comes from awareness. Seeing what you’ve been spending, understanding where your money is currently going.
That awareness, moreso than a strict spending plan, is the basis for breaking the cycle of the hedonic treadmill. If you’re struggling to save money every month, simply tracking your income and expenses is a fantastic place to start.
2. Learn Something New
While healthy personal finance doesn’t need to be that complicated to be all that complicated, our financial education is never truly “complete.” There is always some new term or concept to learn about, and doing so is a great way to expand your financial literacy.
Engaging in continuous financial learning does two key things for you. First, it creates new opportunities to make more informed decisions and manage your money more wisely. Second, it reduces the unknowns. It leaves the financial world feeling like less of a big intimidating mystery.
This builds confidence and fosters a sense of calm in dealing with your money. The more you understand for yourself, the less you need to run to (and pay) your financial planner to solve for you.
Net worth tends to grow right alongside one’s financial knowledge. Once in a while, try picking up a great personal finance book or blog post, or listening to a money podcast. It’s a win all around!
3. Set (or Update) a Financial Goal
It is always astounding to me what one person can accomplish when they are focused on a clear target. And this is no truer than with money.
Nurturing your long-term vision is an important act of financial self-care. Know what you are striving for so that you can build a plan to get there and stick to that plan. Without this commitment, my wife and I would never have been able to pay off our $167,000 student loan debt.
Good financial habits can be challenging to stick with. And it gets even harder when you don’t have a clear aim. Take time to develop and clarify your “why,” and you’ll be able to build much more reliable motivation to take yourself to new places with your money.
And hey, it’s okay to update your goals from time to time to keep things in sync with where you are now and where you want to go next.
4. Do an Accounts Check-up
One of the main things we’ve been trying to tackle here with financial wellness talk is to cut through the noise to find a sense of order and calm. We don’t want our money matters to get out of hand. Good financial health is simple, and easy to maintain.
One thing that makes managing your money feel next to impossible is having a big messy pile of financial accounts — a checking account, nine credit cards, three retirement accounts, that one weird bank account with like 50 bucks in it and a terrible interest rate…you know what I’m talking about.
Periodically doing a check-up on your accounts is a gift to yourself. It’s important to be aware of where your assets and liabilities are. A check-up can also highlight if there are any accounts you don’t need anymore, or can combine. Simpler is always better.
5. Have an Honest Conversation About Money
If you share finances with a partner or your family, then you should talk to them about it sometimes. If not, then you should find a close, trusted friend or family member to talk to about your money from time to time. Either way, honest conversations about money are a massive boost to a healthy financial life. You don’t have to blast your financial situation to the world, but you also don’t have to navigate money alone.
Sharing your experience, as well as your fears and frustrations with others, is a great way to find validation as well as possible solutions. Hearing your story from someone else’s perspective can open up new possibilities, or at the very least allow them to empathize with you so you don’t have to feel so alone in the fight. Because you’re not alone. Each person’s financial situation is unique. But they’re all made up of similar struggles, worries, and dreams. And we’re all a lot better off sharing honest conversations about those things.
6. Celebrate Your Progress
This has always been one of my favorite pieces of financial advice. It has a huge positive impact on financial wellness, and brings joy back into the equation.
We are all working toward something with our money. For you, that may be getting out of debt, building good credit, growing your nest egg, or simply stocking up a savings account to be prepared for emergencies.
Managing your personal finances is hard. It takes time and energy, and sometimes it feels like the results are still miles away. That is why it is so extremely important to track your progress on these big goals.
When you do make progress, be sure to celebrate it! That can be something as simple as opening an IRA, setting up a repayment plan for your debts, or checking your credit report for the first time. Even small steps forward are steps forward, and that’s always something worth celebrating. Take pride in your wins, and the next one will never be far away.