From getting eight hours of sleep per night to scheduling regular exercise to adopting healthy eating habits, most of us have figured out how to keep a pulse on our physical health. And yet so few apply the same care and attention to monitoring our financial health.
WealthCo’s Manager of Investment Advisory & Planning Services, Claude Spencer, likens financial health to economic security.
“Financial health, in essence, is the measure of someone’s ability to manage money and debt. Having good financial health equates to having financial security and financial freedom of choice.”
Much like how poor physical health can lead to a host of stress and complications, so too can poor financial health.
“Financial health dictates an individual or family’s ability to achieve goals, manage risk, and weather expected - and unexpected – life events,” Spencer shares. “Financial problems are a leading source of stress which impacts day to day living, negatively impacts mental health, and leads to other pressing health issues.”
Best Practices for Optimal Financial Health
Fortunately, there are several ways to take control of your financial health.
Work With a Financial Planner
The best first step in optimizing your financial health is to work with a Certified Financial Planner.
“Everyone’s financial situation is unique. Listening to well-meaning friends and family, or even the ‘water cooler office planner’ is inadvisable since they are not well-versed in your unique particulars and broader goals. What works for one person doesn’t necessarily work for another,” Spencer points out. “A Certified Financial Planner will work with you to set SMART goals - specific, measurable, attainable, realistic, timely – that consider your ‘why’.”
A financial planner is also well-versed in all aspects of finance and knows how to hone in on what strategies will work best for you and your financial situation. They are educated on the latest techniques and strategies when it comes to managing your money and investments. This means that with their help, you can access greater returns than you could alone, increasing both your short-term success as well as potentially lucrative long-term gain.
Manage Debt Responsibly
Daunting amounts of massive debt is a proven recipe for sleepless nights. But through prudent debt management, getting out of debt may not be as hard as you think.
First, make a list of all of your current debts, along with their interest rates and minimum payments - this way you'll have an up-to-date view on where you stand. Then set aside a portion of your income each month to pay off your debts, beginning with the accounts that have the highest interest rates. And finally, don't obtain more debt if you can help it.
Make a Budget…and Stick to It
Along with debt management, a key to good financial health is to embrace budgeting. Creating a budget is simply documenting your incoming and outgoing financial obligations, then establishing spending parameters. Once you have a good handle on regular income and expenses (including debt servicing as discussed above), you can allocate money each month to different areas: food, rent, utilities, entertainment - whatever fits into your spending plan. This is a good prompt to look into ways you can streamline or eliminate certain costs – perhaps by using public transport instead of driving? Or changing up your streaming services?
Make sure to keep the golden rule of budgeting top of mind.
“Step one in the budgeting process is to pay yourself first,” Spencer shares. “Determine what you can afford from a savings perspective and set up a regular contribution to the saving vehicle of your choice.”
Live Within Your Means
And finally, with debt management under control and diligent budget adherence underway, it's critical to avoid taking on excess debt by living within your means. Living within your means is a cornerstone of financial health and stability. As Spencer points out, “deciding between needs and wants can quickly improve financial health.”
While maintaining good financial health to require diligence and dedication, it is absolutely worth it and provides unparalleled peace of mind. Good financial health is essential for managing life’s important milestones, including buying a house, having children, and retiring comfortably. All in all, when you maintain good financial health, you are freeing yourself to make choices that truly shape an enriched life experience.
Could you use some support in developing your financial plan and ensuring your best financial health? Take the first step by connecting with WealthCo.
As Manager, Investment Advisory & Planning Services with WealthCo, Claude Spencer understands the importance of financial literacy and prudent financial health. One of the things that Claude likes best about working at WealthCo is the opportunity it provides him for building deep client relationships and seeing his clients thrive in both their personal and professional lives.
The Integrated Advisory community consists of a network of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help clients reach their goals.