Resolve to Prioritize Financial Wellness in 2019
December is not only a month to celebrate the holidays with family and friends, but the last month of the year—our final opportunity to look back over the past twelve months and evaluate our personal and professional progresses. Did you make any resolutions for 2018? How well did you stick to reaching those goals? What will you resolve to do differently in 2019?
The New Year provides us a fresh start to overhaul any areas in our lives that we wish to improve.
Year after year, physical health and personal appearance tend to top resolution charts, and the packed fitness clubs and high membership sales at the onset of the year are historical evidence of such. However, what many people fail to account for when mapping out their New Year’s resolutions is just how much our financial health affects our physical health, mental health, and overall quality of life.
What is Financial Wellness?
There is no single definition for financial wellness since each person has unique financial goals and circumstances, but one thing is for certain across the board: financial wellness is not just a number. It isn’t a destination you arrive at once you have reached a certain net worth. It is a multifaceted concept based on both objective and subjective factors.
Objectively, financial wellness can be understood as being financially secure because your income covers your monthly expenses and you still have leftover funds to invest in your future financial goals, such as retirement or funding your child’s secondary education. You have built a solid financial framework that can withstand unforeseen situations without disrupting your current way of life.
Subjectively, you have minimal financial stress and are able to enjoy your day-to-day life more fully than someone burdened with financial anxiety. You have the freedom to spend time doing the things you enjoy without worrying about your financial security.
Conversely, poor financial health can have real physical implications. The stress of an unhealthy financial life can cause depression, marital conflicts, a desire to withdraw from everyday activities, overeating, substance abuse, and even stress-related illness.
The reality is that our financial wellness cannot be divorced from our overall well-being and should, therefore, be considered an integral part of our New Year’s resolutions. Just like you schedule time to workout your body, schedule time to become financially fit, as well.
3 Steps to Take Toward Improved Financial Health in 2019
As mentioned above, each person’s personal values and goals determine what type of financial plan is best for his/her situation, so consulting a Certified Financial Planner™ is always in your best interest. However, we have listed a few resolutions here to help get you off on the right foot in 2019.
1) Update Your Budget to Maximize Investing in Your Future
No matter how wealthy you are, the only way to remain wealthy is to budget your money. Many people resist budgeting because it can be time consuming and overwhelming to initially set up, but the long-term benefits make it a worthwhile endeavor.
Budgeting allows you to:
- Differentiate between negotiable and non-negotiable expenses
- Re-allocate your spending to areas that may be more important to you
- Focus on long-term goals over short-term impulsivities
- Analyze your debt load capacity for major purchases
- Set limits to eliminate overspending
Because budgeting is the first step to deciding how much you can regularly invest in your future, it is far and wide the most effective way to determine if you are making the most of your money.
2) Automate Your Savings and Retirement Contributions
It’s no secret that it’s easier to save money you don’t see, which is the logic that makes automating your savings and retirement contributions so effective. Most people are more likely to stick to savings plans when they aren’t faced with the decision to “save” or “spend” time and again. If you have already allocated a certain amount to be deposited into your savings or retirement accounts, you won’t have to resist the temptation to spend it somewhere else each time you see income. And even if you are a superb saver, the regularity of automated contributions will help you predict how much you have the potential to save over a fixed period of time.
3) Make a Plan to Decrease Debt
Of course not all debt is bad debt and, in some cases, is downright necessary to avoid prematurely liquidating assets. But, credit card debt should be eliminated as quickly as possible, especially since the Federal Reserve continues to increase interest rates.
The first step is to identify which outstanding notes have the highest interest rates and work to tackle those first. It might be unrealistic to say you are going to eliminate all your debt in 2019 and still remain on track with other financial goals, but plan to eliminate as much debt as you can this year so that you can allocate those funds to be more fiscally productive in 2020.
The best way to follow through on any New Year’s resolution is to monitor your progress on a regular basis. Century Wealth Management is here to help you set financial goals that will have long-lasting impact this year and beyond. Let’s schedule a complimentary consultation to discuss how we can help you improve your financial wellness today.