While money can’t buy happiness, in my years of experience, I’ve witnessed it buy a lot of peace of mind. Finances and health are interconnected on a variety of levels. From our ability to access quality health care to our stress levels to our ability to make healthier lifestyle choices – finances have an impact.
A recent study1 shows Gen Z, Millennials and Gen X all cite money as one of their top three sources of stress. And that stress can lead to depression and even physical symptoms. So, what can you do to ward off financial stress or resolve your anxiety about your finances?
These are the basic tools everyone needs for financial wellness:
Create a Budget
A budget is a spending plan that gives each dollar a purpose. A simple spreadsheet can help you track income, expenses and savings. Once you have a budget, it needs regular attention to monitor for inevitable continual changes. With a budget in place, you can set realistic goals, track your spending and make sure you’re prepared for the unexpected.
Reduce Your Debt
Unpaid bills can keep you up at night and elevate anxiety levels. Start by paying off the most expensive, highest interest debt first. Pay more than your minimum balance and take advantage of balance transfers. Stop credit card spending and delete your credit card information from online accounts to reduce temptation.
Save for Emergencies
A major home repair, car trouble or a layoff can send the best laid plans sideways if you haven’t set aside emergency funds. Aim to save for three to six months’ worth of living expenses. If your paycheck is delivered via direct deposit, set up an automatic transfer to a savings account, so you have recurring activity that you don’t have to think about.
Plan for Retirement
Almost every retiree says they wish they had started saving sooner, but it’s never too late to start. If your employer offers a retirement plan with matching funds, enroll and contribute at least the minimum amount to receive the maximum match.
Once you have these basic building blocks in place, you’ll likely feel a sense of relief that comes with understanding your complete financial picture. A financial professional such as an advisor or CPA – or a combination of the two – can offer guidance on more ways to invest and save to get your finances in shape and improve your financial health.