Primary Food: Financial Wellness
Samvida Patel, IIN Content Editor, Class of February 2015
As a leader in the health coaching and holistic health education space, our curriculum encompasses everything that has a stake in our well-being: aside from the food that nourishes our bodies, this includes physical activity, career fulfillment, quality relationships, spirituality, and yes...financial wellness.
Many argue that money doesn’t buy happiness or fulfillment, and that may be true. However, financial stress is very real, and addressing it provides security and peace of mind while allowing us to focus on the things that actually matter. That’s why the Circle of Life tool has an area dedicated to finances.
To support you in moving closer to your financial well-being goals, here are 21 tips to take with you into the new decade to help you attain financial wellness!
On the mind-set front:
- Get clear on your priorities.
Manisha Thakor, MBA, CFA, founder of MoneyZen and one of IIN’s celebrated visiting teachers, emphasizes the importance of gaining clarity on what it is that we want to do with our money. Her advice?
“I am a huge proponent of focusing instead on what I call ‘joy-based spending’ – the practice of reviewing your spending with an eye not to deny you happiness but rather to plug up ‘money leaks’ [expenses that don't truly bring you joy] so you can reallocate that money to spending that really lights you up or for savings for fun in the future.”
Check out Manisha’s video interview with IIN!
- Create an accountability group.
According to a study by Capital Group, Americans would rather discuss politics, religion, and even drug use before money. In fact, money is the most avoided discussion topic.
Not surprisingly, despite being one of the strongest economies, the United States’s financial literacy rate is 57%, ranking at number 14. Financial literacy is not taught in most schools, which also leaves people feeling lost when it comes to managing money.
The easiest way to acquire knowledge around money and improve financial wellness is to talk about it! Gather a group of close friends you trust, share your struggles and successes, and learn tactics from one another. Accountability and support can make you feel more confident about the topic.
- Maintain a positive mind-set.
Although easier said than done, harboring stress and negative thinking patterns only sets you further from your financial goals. Find something that uplifts you and brings positivity into your life. Like anything else, approaching stressful matters with a sense of calm will let you think clearly and productively.
On the personal front:
- Track first, then plan.
Needless to say, the term budget might as well be a trigger word; it feels restrictive and, if anything, deters people from managing money. Instead, reframing the concept as a “spending plan” can be more empowering and make people feel like financial wellness is in fact an attainable goal.
But before coming up with arbitrary numbers, track your expenses over a three-month period and save receipts from every transaction. As tedious as it sounds, you need to know where your money is going before you can determine what you want to change about it!
- Prioritize your debt.
In the United States, 38% of families have credit card debt, and more than 40% of Americans are either not making payments on their student loans or are behind altogether. As daunting as the statistics are, staying current on payments and focusing on paying off debt carrying high interest rates (typically credit card debt) is beneficial in the long run.
Seldom will you feel like you have your ideal amount of money set aside to begin investing, but if you’re debt-free and have enough savings to cover an emergency, it’s never too early to start making your money work for you. You also don’t need to have the knowledge of a trader or an economist to invest: Plenty of online brokers offer helpful resources to get acquainted with stock market basics when you open an account.
Firms like TD Ameritrade, E-Trade, and Merrill Lynch have no minimum investment requirements to open an account. Others charge low annual fees to open an account but offer plenty of no-fee funds to trade: Vanguard, for example, has a $20 annual fee for each brokerage account but provides access to approximately 1,800 no-fee exchange-traded funds (ETFs).
There are also plenty of apps that make investing easy: The Balance rated Robinhood as the best app for free stock trades and Acorns for automated investing.
- Consider opening a 529 savings plan.
If you have or are considering having kids, investing in a 529 plan can be worthwhile, given how crippling student loan debt can be! Designed specifically for education savings, this tax-advantaged account can be used to pay educational expenses from elementary school all the way through college. Anything from tuition and textbooks to room and board qualify as long as the child is a full-time student at an accredited university.
- Look for interest-free installments.
When possible, paying in full is ideal as it often ends up being cheaper than opting for a financing plan. However, if you’re looking to space out purchases, Klarna partners with online retailers to let you purchase items with four interest-free payments instead of the entire amount at once. Similarly, AirBnB allows customers to pay for properties in two installments, less any fees or interest.
- Try the 50-30-20 rule.
If you don’t have a spending plan in place, following this rule can help you create a straightforward one. As part of IIN’s business curriculum, Manisha Thakor suggests the 50-30-20 rule:
50% of your income should be allocated to your essentials. This constitutes your mortgage or rent, utilities, groceries, and transportation costs.
30% of your income should be set aside for your “wants.” Everything from travel to entertainment to retail, which don’t qualify as true “needs,” falls into this bucket.
20% of your income is what you should be saving ideally. This can also go toward investments or pending debt.
- Keep a record of your charitable giving.
If you’ve donated to educational nonprofits, religious affiliations, organizations that maintain public parks, museums, or any tax-exempt organization, you can claim your donations on your tax return. Make sure to inquire how much of your contribution will be tax deductible.
- Create a separate account for business-related transactions.
As straightforward as it sounds, roughly 32% of business owners don’t separate personal and business accounts. Having separate accounts makes accounting much easier. Plus, as you’ll learn in our Health Coach Training Program, having a separate business account can allow you to seamlessly claim tax deductions on business expenses. As an entrepreneur, this goes a long way in maximizing your hard-earned money and paving the way toward financial wellness!
On the banking front:
- Unlink your savings and checking accounts.
Nowadays, banks give you the option to easily transfer funds between accounts. While it’s convenient at times, if your financial stress is a result of unchecked spending, opening a savings account at a separate bank can help minimize the urge (and ability) to tap into your savings for everyday purchases.
On that note, keeping your savings account supplied with about three to six months’ worth of your living expenses is ideal in case of emergency.
- Monitor your credit score.
You are probably not actively thinking about this number, but monitoring your score is helpful if you want to know where you stand, track your progress if trying to improve it, and even flag errors in your credit report.
Many banks and credit card companies allow you to do a “soft check” – one that doesn’t lower your score – for free!
- Freeze your card.
Not in a block of ice the way Rebecca Bloomwood’s character in Confessions of a Shopaholic does (although that will certainly deter you from using it), but by having your credit card company place a freeze on it. Though typically used for lost or stolen cards, this tactic proves useful when trying to minimize spending and incurring additional debt.
- Write down due dates.
You can maintain good credit just by making sure your bills are paid on time. If you’d rather not opt for auto pay, setting calendar reminders and writing down payment deadlines is an easy solve against late fees and interest charges.
- Select the right credit card.
If paying the statement balance is not an option or you’re going to make a large purchase, selecting a credit card with a 0% APR, no annual fee, or cashback rewards will make paying off debt a quicker process. Check out NerdWallet's comparison of their ideal low-interest and 0% APR credit card picks.
On the employee front:
- Make use of your retirement account.
One in five Americans doesn’t contribute to their 401k account. Many employers offer some type of match program, where if you contribute a certain percentage of your salary to your 401k, your employer will do the same. While you may feel hesitant to take money from your paycheck, once you hit retirement, the money saved up from this tax-advantaged account can make all the difference.
If you don’t have access to a 401k or related employee benefit, consider opening a traditional or Roth IRA, a retirement account allowing you to contribute pretax dollars.
- Opt for direct deposit when possible.
If given the option, choose direct deposit. You’ll be less inclined to spend money if it routes directly to your bank account. You can even make arrangements to deposit half your paycheck into your checking account and half into your savings (or whatever ratio best suits you)!
- Negotiate salaries and raises.
A 2018 survey of 2,800 Americans found that 45% of people did not negotiate higher pay in their previous job, and of those who didn’t negotiate, 55% were women. Aside from closing in on the gender gap, the sooner you start asking for more money, the higher your salary jumps will be as you switch careers, resulting in more money saved over time.
If you’re your own boss, knowing and owning your worth can help you confidently increase your rates. Especially in a field like health coaching that’s constantly evolving and gaining more recognition, it’s important to realize the value you bring and the long-lasting impact you’re creating in others’ lives and ask for what you deserve.
Financial expert and IIN visiting teacher Kate Northrup shared: “Work on your own self-worth. No one will value you more than you value yourself. When you do the work to value yourself, you'll also increase your financial well-being.”
- Set aside more as you earn more.
Every time you get a raise, remember to set aside a little more for your savings or retirement account. If you’re earning more, you can afford to invest in your future financial well-being.
- Focus on earning more instead of just saving more.
Revant Himatsingka, Integrative Nutrition’s 30 Under 30 winner and author of Selfienomics, shares how we tend to get so caught up in saving money that we overlook increasing our earning potential. Beyond asking for raises or a higher salary from the get-go, assess what you can do to earn more money. Perhaps that’s investing in educational trainings or learning coveted skills that will qualify you for higher-paying jobs and asking for more money with ease.
We hope you feel more encouraged to strive closer to your financial goals! What financial planning tips have proved successful for you? Share in the comments below.
In the spirit of financial well-being and working toward abundance, check out our free Abundance Guide and cultivate a mind-set of success!