7 Steps to Improve Your Family’s Financial Wellness

Welcome back to the Better Health Now Series! April can be a busy time for everyone. With Spring performances, Easter events, income taxes, planning for Summer vacations and much more – you might start to feel a bit excited yet scattered around this time of year. 

That’s why I designed the Better Health Now Series with month-by-month steps to give you the exact tips you need to thrive amidst the ups and downs of life.  This series helps you remain focused so you can keep your health and wellness goals in sight as you take care of all the demands of life. 

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The focus of this edition is financial health. We’re going to drill down into how to improve your family’s financial well-being for better health.  You may not think of it much but your financial situation can be a huge factor in your physical and emotional health. When your finances are out of whack, it can ripple over into other areas of life.  Financial imbalance may lead to an imbalance in other areas of life such as managing stress, relationships, or work – and it can cause physical health problems too. 

What is Financial Well-being?

We’ve adopted our definition of financial well-being from the Consumer Financial Protection Bureau. They define financial well-being as a state of being wherein you: 

• Have control over day-to-day, month-to-month finances
• Have the capacity to absorb a financial shock
• Are on track to meet your financial goals; and
• Have the financial freedom to make the choices that allow you to enjoy life.”

Does this sound like your financial situation right now? If it’s not, then you are normal. Many people find difficulty in this area of well-being but the great news is there are many ways to get your financial well-being on track. But first, let’s take a look at why financial well-being is so important to your health.

The Relationship Between Financial Stress and Your Overall Well-being 

 There are many sources of stress, but one that often goes overlooked is financial stress. Financial stress can affect many areas of your life including your home, career, and relationships. But financial stress can also have a direct impact on your physical and emotional well-being.

Your financial stress may be the result of mounting credit card payments, unemployment, student loans, medical bills, or various other sources. Financial stress that is ongoing can lead to physical health problems and mental health issues like depression and anxiety.  Both of these conditions are serious and should be treated. If you are experiencing any of these, seek medical attention right away.

Whether it’s having too much debt, not enough income or having unexpected expenses like a sudden home or vehicle repair – finances play a role in the way we feel every day. But there are steps you can take to address and improve your financial well-being. 

7 Steps to Improve Your Family’s Financial Well-being

1. Get to know your financial habits. 

One of the first steps you can take towards financial well-being is to learn more about your spending and saving habits. It may seem scary and possibly overwhelming to do this, but it’s a critical first step. Stress often comes from a fear of the unknown. When you face your financial situation, you are empowering yourself with knowledge.  This allows you to start making better decisions about how you earn, spend, save, or otherwise use your money.

2. Create a budget.

Once you know how much has been coming in and going out, it’s time to create a plan of how you want to use your money going forward.

Make a plan of how you will start to use your money. Identify areas where money has been leaking or where you’ve been mindlessly spending money. You may also find that you are paying a lot of money in services or fees that could easily be reduced or eliminated. Or perhaps you are paying a greater portion of your credit card or other debt payments towards interest rather than the actual balance. Whatever the case may be, it’s time to start taking control of your finances and develop a monthly budget.

Some people may view a budget as confining, but it doesn’t have to be this way. Making and sticking to a budget actually gives you the freedom to choose how your money is spent and allows you to stop the vicious cycle of racking up debt.

3. Work on paying off your debt.

If you have debt hanging over your head now is the time to make a plan for how you will reduce it or eliminate it altogether. There are many ways to do this. Personally, when I was paying off student loans and credit card debt that I racked up after buying my first home, I just put everything on a simple excel spreadsheet and made a plan to pay off one line of credit at a time until it was all gone. There are many debt payoff theories floating around and we can spend all year exploring them all, but what matters is that you start to pay off the debt as soon as possible. I’m sure there are many other things you’d rather do with your money than send it to creditors every month.

4. Increase your income.

An easy way to improve your financial well-being is to increase your income. Having more income can do a lot for your financial peace of mind. You can pay off debt faster, save for your family’s future, and reduce a lot of stress around money.

There are many ways to go about increasing your income. You can consider getting a part-time job or starting your own business. Most people have a hobby, skill or talent that they can turn into income as well. Creating additional sources of income will help your family to build financial security and increase your general well-being.

5. Spend less than you earn.

You may have looked over your spending and realized that you’re spending too much money in certain areas. You may even be spending more than you earn each month. Oftentimes we don’t notice that we’re overspending on groceries, entertainment, eating out, or other places.  Money is just slipping through the cracks all the time. When you start to look at your overall spending for the month, find areas where you can reduce unnecessary spending.

If you are able to increase your income you’ll naturally start spending less than you earn, provided you don’t also increase your spending just because you now can.

6. Prepare for the unexpected.

Oftentimes we think of debt as the result of reckless spending, but it’s not always the case. Many everyday families have debt due to unexpected life events such as a death in the family, job loss, a medical emergency, or something else. Create an emergency fund to ensure that one momentary setback doesn’t derail your family’s financial well-being.

An emergency fund is money that you save up separate from your regular savings or retirement. Having an emergency fund is a way to reduce the impact of an unexpected emergency on your family’s finances. It also allows you to keep your savings intact if an emergency does arise. One easy way to get started is to set aside a small percentage (such as 10%) of your earnings each month.  Keep stashing this amount away until you have reached the goal amount for your emergency fund.

7. Establish a savings plan.

Having a regular savings plan is one of the most important things you can do for your family’s financial well-being.  Although it may seem impossible if you’ve been living paycheck to paycheck, even a small change to your budget can allow you to start saving. 

Get into a habit of saving a portion of your earnings every month, or from each paycheck. An easy way to guarantee you’ll save is to set up a portion of your income for direct deposit or automatic transfer into your savings account. 

These are just a few tips to improve your family’s financial well-being. If you have debt that is crushing you consider getting help from a financial professional. Also, if your financial situation is causing you mental health problems, get professional help from a counselor or therapist.  

Sources

https://www.smartaboutmoney.org/Courses/My-Financial-Well-Being-Plan/What-is-Financial-Well-Being

https://www.everydayhealth.com/news/how-avoid-health-risks-come-with-financial-stress/ 

http://www.apa.org/monitor/2015/04/money-stress.aspx