January is Financial Wellness Month. Financial Wellness should be about pursuing the financial freedom you want in your life. Financial wellness has everything to do with your personal relationship with money, and how you feel about that relationship.
What does wellness mean?
Wellness is an active pursuit, a state of being only achieved through deliberate and continuous effort. Including your health insurance company promoting Financial Wellness Month with a barrage of links to “discounts” and more!
At Envision Wealth Planning, we start every new client engagement by seeking to gain a holistic understanding of the role of money in our client’s life. Consider for a moment how you’d respond:
Are your values aligned with the way you spend and save money?
For instance, are you passionate about empowering women and girls? How do your giving, spending, and investing habits reflect this value?
- Are you shopping at companies that promote women in leadership?
- Are you investing in companies that promote women in leadership?
- … and within the organization,
- … and donating generously to causes that support women and girls?
The same questions can be asked for other values that are important to you, such as the environment, racial justice, animal welfare, religious tenets, and more.
Most of us really don’t know what we’ve invested in through the workplace 401(k)/403(b)/457 plans and individual accounts such as IRAs. It’s very likely, in fact, to be unknowingly invested in companies that run completely counter to your personal values. You have the power to alter your investing behaviors to align with your personal values! You may even exceed your returns by doing so.
What are your passions in life?
If you love to travel, make room in your budget to do just that. If reading, hiking, visiting with friends, and cycling are the things you love best, are you in fact spending your hard-earned money on books, boots, brunches, and bikes?
Align your discretionary purchases in pursuit of the things that make you happiest, rather than directing your money toward items and activities that bring you less joy.
What are your goals in both the short and long term?
Perhaps you want to buy a house in a few years. You need a financial plan to achieve the goal, which requires answering many questions. For example, how much of a mortgage might you qualify for? How much of a down payment will that require? Can you save that amount of money within the time you’d like to buy?
Most of us have the goal of retiring at a certain age. Again, do you know how much money you need to save, and for how long? What rate of return to live carefree in retirement?
Only by knowing the answers to these questions regarding your goals, and then working toward resolving them, can you feel a sense of financial wellness rather than nagging doubts.
What relationships are important in your life?
For parents, children immediately come to mind when we think about the financial care of those we love. Parents may wish to help their children with the exponentially rising costs of a college education or leave some sort of financial legacy for them when they pass.
Of course, not all people have children. But single people do have other loved ones – parents, partners, other dependents, friends, etc. – who they care deeply for and wish to be able to assist financially.
At the very least, it’s important to check your beneficiary designations on insurance and retirement plans. You should consider a will if you’d like to direct who receives your money and assets when you pass. Long-term care insurance would be a good idea if you want to make sure you don’t become a financial burden on your children.
What is your “money mindset?”
Growing up, what lessons were you taught about money? What makes us who we are, our thoughts and feelings about money depend greatly on how we’re raised. We may even have different money philosophies from the environment that raised us.
For example, two kids raised in a family without a lot of extra money to spare may come out of the experience with polar opposite money mindsets. Sibling #1 may move into adulthood with the belief that money should be spent. They have the “spend it while you have it because you never know how long it may last.” Sibling #2, on the other hand, may believe that money is a fleeting thing and that it should be “squirreled away.”
Aligning the answers to these questions with the actions of your financial life can move you into a state of mindfulness and financial wellness.
Are you ready to get started on a new journey toward (your definition of) financial wellness?