How to Care For Your Financial Health & Well-BeingJanuary 6, 2023
There’s something special about tapping into genuine financial well-being, and guess what? It isn’t just about accumulating more zeros to your bottom line. Genuine financial health is about accessing a sense of financial stability and opportunity that nourishes our physical and psychological well-being.
In this blog, you’ll explore:
- The meaning of financial health (and why it’s about more than just $$$)
- How you can build up your financial self-care
- How you can build up your family’s financial well-being
What is financial health?
Financial health is the state of having our finances provide us with physical and psychological comfort. Building a solid financial plan doesn’t just ease current stress – it lays a strong foundation for a secure financial future.
Imagine the difference between saying to yourself:
“Wow, I can’t believe I slipped on ice and broke my arm, but I’m so glad that I have health insurance and an emergency fund to cover my medical bills!”
“I don’t know how I’m going to manage my medical bills. Maybe I’ll need to take out a loan, but I don’t know if my credit score is high enough.”
While money doesn’t guarantee happiness, basic financial stability can greatly reduce psychological and physical distress. In a healthy financial state, we have enough money to meet our needs. This starts with absolute day-to-day essentials, like food and shelter, followed by accounts dedicated to our future well-being (think: health insurance, emergency funds, and retirement plans).
We can take stock of our financial health by asking ourselves 2 questions:
- Do my finances make me feel safe and comfortable now?
- Are my finances likely to make me feel safe in the future?
Physical and psychological well-being isn’t just about having enough money – it’s also about our relationship with money.
Say you received a major inheritance. Having a robust financial plan that helps care for large sums of money can have a huge impact on our emotional well-being. Without a plan, a large sum of money can feel like an immense burden. With a plan, a large sum of money can transform into a source of great opportunity.
While it’s important to have enough money to meet our needs, it’s equally important to remember that financial well-being is not just about the *quantity* of money at our disposal, but also the *quality* of our relationship with money.
How can I build up my financial health?
Start by getting curious. For many, managing money comes with mixed emotions that span from extreme boredom to total overwhelm. Approaching your finances with curiosity can help illuminate your goals and how your money tendencies do or do not serve those goals.
Here are 5 steps to cultivating financial self-care:
1. Assess your finances
Take stock of your finances, including your bank accounts, debt, investment accounts, budget, and estate planning documents. Get a lay of the land and have these handy for step #3.
2. Connect with yourself and your intentions
Pencil in a date with yourself, and pause to reflect on 2 things: your values and your goals. How would you like to embody your values? Let’s say “family” is a core value for you. What does carrying out this value look like for you, and what role might your finances play to help carry out this goal?
3. Compare your finances to your intentions
Assess whether your finances are ready to meet your intentions. Say you’ve decided that it’s time to organize a family reunion or draft a family estate plan. Begin to think about how your financial plan might need to change in order to meet your goals.
4. Make a plan that sticks
Plans are nothing, but planning is everything. Consider your timeline, tendencies with money, and income. Now ask yourself, “What do I need to change in order to meet my goals?” Do your best to make a financial plan that meets your goals, while understanding that plans can change as you move forward.
5. Get support when you need it
Financial planning can feel like a lot – and that’s okay! While the mainstream financial industry has trained us to believe that finance is just a matter of facts and figures, the reality can feel very different. Connect with a financial professional if you need support!
How can I build financial health for my family?
Whether you’re embarking on the journey of family life or you’re already caring for a multi-generation household, here are 4 key ways families can boost their financial health:
1. Build Savings
Emergency funds are for unpredictable moments in life, like an unexpected job loss or an illness in the family. Expect the unexpected by stashing away 3 to 9 months of living expenses, factoring in essentials likes housing, food, health insurance, and personal expenses. While we hope we’ll never have to tap into these funds, the least they can do is give us peace of mind. Learn more about how to build a family emergency fund here.
2. Consider Life Insurance
If you have children who are minors or a spouse who depends on your income, you may want to consider purchasing a life insurance policy. Life insurance can provide tax-free money to surviving spouses and children, which allows the family to maintain their current lifestyle. Read more about life insurance here.
3. Make a Budget
A family budget is a plan for your household’s incoming and outgoing money over a certain period of time. By budgeting your family’s income and expenses, you empower yourself to spend money intentionally rather than randomly. Let’s say your family values education. With a budget, you can specifically dedicate part of your savings to an education fund to ensure your finances are in alignment with your values. Learn more about how to create a family budget here.
4. Craft an Estate Plan
Estate plans are a series of documents that outline how your affairs should be handled in the event of your death or incapacitation. An estate plan answers questions like, “Who will care for my children in the event of my death?” or “Who will manage and distribute my assets?” While estate planning can be a challenging practice, it can also bring us closer to our core values and help us approach life with greater clarity. Learn more about how to craft an estate plan here.
Time to gently reflect, recalibrate, and refresh
The turn of the year can be a great opportunity to reflect, but it can also be a pressure cooker of “new year, new me” energy. This year, turn down the temperature and be gentle with yourself. Give yourself plenty of space to recalibrate, without invoking judgment or pressure.
And remember, you don’t have to do it alone! Whether you’re starting a financial plan from scratch or need a second pair of eyes on an existing plan, don’t be afraid to ask for support from a financial professional.