Ah, February. The month we all start to really find our groove that will set the tone for the rest of the year. It’s also a time that we tend to think about love and expressing our appreciation for those we care about. Of those people, oneself should be no exception. We’ll leave the mental and physical self-care tips to the health professionals, but here we’d like to highlight some habits that you can take on your own in order to practice some financial self-care this month and the year through.
Let’s begin with what financial self-care is. The practice of financial self-care is rooted in having a sound and healthy relationship with one’s financial situation and nurturing habits that will help improve your finances. Just like with mental and physical self-care, you are able to identify when things are in need of getting back in balance and you take steps to realign your actions with what your wants and goals are. Financial self- care involves exercising discernment with the comings and goings of your money. With that defined, let’s take a step further to see what is helpful in making this a consistent practice.
Know Your Money
This involves having a great understanding of what money you bring in and what money you have going out and for what reason. We all know how much gets deposited to us every paycheck, but it is also of great consequence to understand what has been withheld from your check for purposes of taxes and to help you monitor any contributions you’ve made to a job funded retirement plan. Do a deep account of all bills you have, even the ones that seem out of mind like monthly subscriptions and annual memberships so you have a full picture of finances. Not having a clear understanding of what’s going on is stress and worry inducing and that can lead to poor money decisions.
Save Money Wisely
Aim to start saving in these three categories 1) An emergency fund, 2) A savings account, and 3) An investment account. All working adults should have a savings account that they are contributing to regularly. You can arrange to have money directly deposited into one savings account for more short term goals and separate savings account just as an emergency fund (3-6 months’ worth of your monthly expenses). For longer goals and retirement, speak to a financial advisor about the best investment vehicle to help you get towards those goals. An IRA is a great option.
This starts with establishing a budget and living below your means. Everyone wants to build wealth and have the freedom to do what they want with their money, but as long as you have debt and rack up more, your money is not your own. After your essential expenses, your money is going to pay off debts instead of towards more savings and fun. The sooner you’re able to pay down debt and the better you are at refraining from using credit cards, the easier it will become to save, invest and build your personal wealth. We’ve mentioned this in previous blogs, but make sure you tackle the debt with the high-interest rate first. As you close out one debt and start on a new one, repurpose the money you were using to pay off the previous debt by paying more than the monthly payment due to the new one. This will help you pay it down faster and you can continue this process through to any remaining debts. You can also consider debt consolidation as a tool for debt reduction.
Choose Mindful Spending
What are you buying and what fulfillment are you getting by buying it? Think about how as a kid when you might have asked your parents emphatically to you buy you something you really wanted and your parents telling you you’d have to save your own allowance in order to buy it. Once you were able to buy it, you were either content with your choice or, after seeing the time it took to acquire that money, felt the item no longer seemed as valuable. You should think about this as an adult. How many hours of work did it require for you to have the money in order to purchase this item, whether it’d be an impulse purchase or planned? If you, in either case, feel guilt or it doesn’t still bring joy, leave it and be proud that you’ve made a mindful decision with your money. You’ll be freeing up cash to go towards savings that will propel you towards financial goals and/or an item that will bring you actual fulfillment.
Come From a Place of Gratitude
This is a good one. Be grateful for what you have now. You might be surprised when you start coming from a place of feeling like you have exactly what you need, how much your behaviors will start to shift to help you make sure that all you need right now is achievable. Set intentions for your finances. “I’m grateful I have money to cover my basics needs and I will make an effort to make my lunch every day this week to save money.” This level of gratitude will help breed peace, reduce money stress and help you see what is truly important.
As a recap you should, know what your money is doing, make an effort to save for emergencies and the extended future, stay away from accumulating debt, be intentional with your spending and be gracious about what you have now. Money itself does not bring happiness, but it can be a vehicle to the life you want; a life free of financial stress and filled with more time doing what you enjoy instead of working tirelessly for someone else. Good financial health starts with good financial habits, and those financial habits start with you educating yourself for success. Have a great financial self-care February and as always, if you need help with your financial journey, our doors and phone line are open Monday- Friday 9:00 am-5:00 pm. Take Care!