7 Pillars of Financial Wellness and Fitness in the New Year
by Chinyere Okoli, B.S.E. | 29 December 2020
Financial wellness can be yours if you truly want it. But first, you must make the decision to make it a priority. Consider this a pre-step if you will. The dirt on which your financial wellness house will be built.
Without it, your financial house won’t be built on solid ground. And any strong wind, rain, or storm is liable to knock it down.
So make the commitment now to make a change. Did you do it? Really? Ok. Cool.
Let’s get started building a strong financial foundation. To do so, we need to go over the seven key pillars of your financial wellness.
First up – a deep dive into your past with an eye to the future.
1. Know Thyself
Your Relationship With Money
There isn’t much that you can accomplish in life without first knowing who you are and what makes you tick. When you know yourself on a deep level, you can truly understand why you do the things you do. And more importantly, how to stop doing the things you don’t want to do.
And so it is with money. That’s why the first pillar to creating financial wellness is for you to really become clear about your current relationship with money. When you get money, how long does it stay? Is it gone all too soon?
Do you have a love-hate relationship with it? You’d love to have it but hate it because it’s never around.
Unpacking your relationship with money may take some time but it will be worth it in the end. The clarity in knowing where you are now with money will help you see the steps you need to take to get to where you want to be.
So, how would you describe your relationship with money?
Now that you have some understanding of your current relationship with money, it is time to dive a little deeper and figure out why.
Why is it that you have a love-hate relationship with money? Why is it always gone too soon?
Think back to your childhood and recall how money was treated in your household. What did you learn from your parents or your environment about money?
Your current financial situation is the result of all that you’ve learned growing up. The beliefs that you inherited from your parents, friends, and environment have essentially shaped your reality. And if you ever hope to change this reality, you’re going to have to start by changing your beliefs. Now, there are some core beliefs that have seemed to become truths in this day and age like, “It takes money to make money.” But they are just BIG fat Lies. So don’t believe them!
Just because something is said often and believed by most of the people you know, doesn’t make it true. And that lie you’ve been telling yourself is truth for decades may just be what is holding you back from the financial wellness you desire.
So kick those money myths to the curb. And open yourself up to the world of possibility that surrounds you.
In order to truly change your relationship with money, you must first uncover your beliefs about money then you’ll have to monitor your thoughts. Like a hawk. After all, you don’t want them constantly reinforcing negative beliefs.
Once you get in the habit of thinking one way, it will take constant awareness andwork to change it. You must always be aware of your thoughts about money. And change them immediately should a negative thought pop into your head.
Instead of thinking, “I never have enough money to pay the bills,” think “I always have enough to pay the bills.” I know. This may feel like a stretch at first but in time you will start to notice a shift. And soon enough you will be able to pay your bills with ease.
The thing you want to remember is that you want to cut these negative beliefs off as soon as they start. That way, you are not continually reinforcing it. Then you’ll want to replace it with a positive statement.
Making statements that just aren’t true like “I have plenty of money,” may seem weird at first and feel totally untrue, but one day, it will be true. And that day, is the one you are preparing for today.
So be sure to lay the right groundwork for the future you desire.
If you ever want to be in control of your finances you’re going to have to know a thing or two about money. So building your financial tree of knowledge is a must. Luckily for you, you live in a time where knowledge about any and everything is literally a click away. Thanks, Google Sensei.
Need to know the best places to visit in the summer? Google it. Not sure how to roast Brussel sprouts to perfection? Hey Google.
In addition to that, there are free finance courses you can take online with sites like Coursera. And there are thousands of Youtube videos, Podcasts, and blogs you can sift through to build you financial know-how in a matter of weeks.
Pst, check out the Quizzes in the Nav.It Community feed.
For those of us who are really ambitious, you could get into more advanced topics like how to trade options, foreign currency exchanges, and more.
And let’s not forget – BOOKS! I highly recommend grabbing some finance books for your library. Here are my top recommendations. These are the books that got me started on my financial wellness journey and are the reason I am here talking to you now.
With all this information and knowledge at your fingertips, there’s no reason not to be able to learn the fundamentals of finance and more. So get out there and start growing your own financial tree of knowledge.
3. Improve Your Income Streams
Cash is King. It is the lifeblood of modern society. A necessity that shouldn’t be overlooked or undervalued. Cause if you don’t have any money coming in, there’s no way you can survive. For anyone seeking financial wellness, you need to make sure your money is right. That means you need to make sure you have more than enough money to live on.
There are two ways you can do this.
By increasing your income and By diversifying it.
Increase Your Income
You may have money coming in now but is it enough? If it’s not, you will want to take some steps to ensure that it is.
Everyone needs a side hustle. And not just for the extra income it brings. But also for the sense of freedom, it gives you. When you do your own thing, you begin to see what the world could be like if you were to go into business for yourself.
In my humble, biased opinion, side-hustling is the best way to go if you’re looking to increase your income and, more specifically, I’d go with blogging.
As a blogger, you have the opportunity to delve deeper into a topic you already love. And you can go at your own pace because you’re the boss. Oh and did I mention, there are at least 7 different ways you can monetize your blog? Now I will admit, blogging isn’t easy and it’s not for anyone trying to make a quick buck. But the income you make from blogging is unlimited and can potentially last forever.
And once you get the ball rolling, it doesn’t take much effort on your part to maintain.
The point is you are making a decision and taking action to increase your income stream.
Diversify Your Income
Another thing you’ll want to consider – is your money secure? I think, for many of us, the one thing this pandemic taught us is that what we think is secure, like our job, may not be as secure as we’d thought.
So when you are thinking about the money you have coming in, think about the source. Are you dependent on only one source of income? Is it a reliable source or is there a possibility that that income will disappear?
In order to solidify your income stream and ensure that you always have money coming in no matter what, you need to diversify your income. You should have multiple streams of income and I don’t just mean from working the 9 to 5s and part-time gigs.
The key to having a diverse income is to have some income that is passive. Passive income is key to having financial stability, because passive income once set up, doesn’t require anything else to continue making you money day in and day out. For instance, if you started a blog (*wink wink), and stuck with it for a few years, you could be getting solid passive income for many more years to come.
4. Build Your Savings
You can’t talk about financial wellness without mentioning your savings. In order to be financially fit, you must have some money stashed away. Now, I’m not talking about the stash you keep under the mattress although that could work as a possible emergency fund.
But I am talking about saving with your future in mind.
Having trouble saving? Have you tried automating it through the nav.it money app?
Your Emergency Fund
Yup. The good ole emergency fund. I know you know that you need one. But have you started it yet? If not, you’re not alone.
According to Bankrate, 28% of Americans have absolutely nothing in their emergency fund. And after this year, I’m sure that number has gone up. Drastically.
Better late than never definitely applies when it comes to having an emergency fund. And it’s never too late to start one.
Emergency funds are one of the most important parts of your financial wellness plan. That’s because they are your safety net should things go to Hades in a handbasket. It protects you from the ups and downs in life. And most importantly, saves you from having to go into debt every time you sneeze.
So if you don’t have one set up, make a plan to get started today. Doesn’t matter how little you have to contribute. Just make a decision to start one. Now.
It could be $100 a month or $5 a month. Every little bit you put into your emergency fund counts.
Depending on your job you’ll want to have 3 – 6 months worth of expenses saved up in your emergency fund. Although, after this year, you may want to extend that recommendation to 12 months.
Either way, by making the decision to build up your emergency fund, you’ll know you’re making a wise financial decision for your future.
Your Retirement Accounts
While you’re building up your emergency funds, don’t forget about saving for your retirement. In all actuality, the biggest chunk of your savings should be going into your retirement account.
Most companies will offer you the option to invest in a retirement plan such as the 401k. Some will even offer you a company match if you put in a certain amount of money. Cha-ching!
My advice: Get the company match. That’s free money, honey!
There are many perks to investing in a retirement account. For starters, these accounts are tax-advantaged. Some of them save you from having to pay taxes now, like the 401k. While others, save you from paying taxes later, like the Roth IRA.
And some, save you on taxes now and later. Here’s looking at you, HSAs!
The beauty of these accounts is that they are not only a savings account but an investment account as well. And what’s more, the money you invest in your retirement accounts are allowed to compound and grow tax-free year in and year out.
For those of us who are self-employed, freelancers, or self-proclaimed gig workers, don’t worry. You too can partake in the retirement account festivities. There are even some special account options just for you.
Do You Need a Budget?
When someone mentions saving money, budgeting is usually not far behind. It has become the cornerstone in some people’s wellness journey. But the question remains, do you need a budget?
Well, the answer is, it depends. There are both pros and cons to budgeting. For some people, budgeting gives their money structure and helps them control their spending. But for others, it is a complete waste of time, as they never even use it once it’s written.
So do your research and then decide.
If you are still undecided, you can always test it out for a year or so and see if it works for you.
Top Tips For Saving:
Pay Yourself First
Always use a High-Yield Savings Account
Automate Your Savings
Make a Promise Not to Take Out Unless it’s an Emergency
5. Invest for Your Future
Sticking money under the mattress while all the rage in the early 20 th century is not going to cut it if you are looking to have something to live off of when you turn 60. That’s why investing is crucial to building your financial future on solid ground. What you invest in matters. And sometimes your retirement plan might not give you the full range in investment options you want or need to truly live the life you desire.
Here are the 4 main types of assets you can invest in:
Commodities (Gold, Silver, etc.)
You may want to look into investing in the stock market on your own. Of course, before you just jump right in, take time to learn about the stock market and the basics of investing first.
If that is just too much work for you or you’d rather have a professional do it for you, you could always hire a financial advisor to help you out.
Be careful though. Some are not looking out for you. Make sure you chose one that is fiduciary, as they are required to look out for your best interest.
Investing Risk and Allocation
Investing in the stock market does come with risk. And the amount of risk you should take investing in the stock market should correspond with your age. Typically, the younger you are, the more risk you can take. And the older you are, the less risk you should take. What this boils down to is, the older you get, the more money you should be putting in bonds instead of stocks.
Because people are living longer and longer these days, financial advisors are starting to recommend using the 120 Rule to determine how much stocks vs. bonds you should have in your portfolio.
The rule is simple. You take your age, say 30, and subtract it from 120. This equals 90 and represents the percentage of your portfolio that should be in stocks. So the other 10%, you would keep in bonds. If you want to be more on the conservative side, you can use 100 instead of 120 as the starting number.
While I love stocks, my favorite type of investment is real estate. So I highly recommend you look into getting at least one property as an investment.
Why? Because these things not only give you mostly passive income from now to eternity but they also provide great tax breaks on any income you earn from your investment. How can you beat that?
Not all things are created equal. Some matter more than others. And your job on your financial wellness journey is to determine what matters most to you. That goes not only for your money but for your time as well.
Work overtime during the holidays or spend some quality time with your daughter? Buy that brand new Jag just to brag to your friends or save your money and your stress levels and just get the Honda?
The choice is yours. You just need to be sure that you are clear on what brings you joy and what doesn’t. What is necessary and what you can live without. This goes back to the first pillar we talked about earlier: Knowing yourself.
It all comes down to knowing exactly what you want out of life and not being afraid to go for it. Not being persuaded by commercials or your friends to chase after things you never wanted to begin with.
When it comes to spending your hard-earned money you must think, where can you get the most bang (in terms of happiness) for your buck? Don’t spend it on things that don’t matter to you. Remember you are giving your life to earn that money you are spending. The very least you can do is make sure you spend it on something worthwhile.
Speaking of financial wellness and mindful spending, chances are in the past you did not practice mindful spending. So you’ve probably racked up a pretty good amount of credit card debt and loans.
Well on your journey to financial wellness you are going to have to ditch the debt at some point. I know, I know. It’s going to take ages before you can fully pay it off.
But no worries! It may seem like Mission Impossible at the moment but trust me. You got this! And no matter how long it takes, eventually, it will be paid off in full!
There’s the regular way to pay off debt. Then there’s the smart way. There’s no need to do a serious budget re-haul to pay off your debt faster. And actually no need for budgeting at all. Simply, make the commitment, get creative, and take action.
Imagine. One day, in the near future, you too will be debt-free. How good would that feel?! Take a minute to imagine it and bask in all its glory!
7. Supportive Community
Quite an underrated and often forgotten pillar for financial wellness is your environment. It is definitely one of the most important factors in financial resilience.
And in order to have a strong enough foundation for your financial future, you’re gonna need a supportive environment. One where you can share your thoughts, feelings, and dreams freely – a judgment-free zone, always willing to lend an eye (a shoulder occasionally) and always pushing you to reach closer and closer to your dreams. The people you come home to, the friends you tell all your deepest darkest secrets to, your siblings, your co-workers, all make up your environment.
Getting your finances under control is never easy and you are gonna need some backup.
So it’s time to take inventory. Go through all of your friends, relatives, and co-workers. Will they provide you with the support and encouragement you need on your journey to financial wellness?
If not, you will definitely want to start looking elsewhere for the support you need. And you may want to consider not letting them in on your plans. Because the last thing you need is some Debbie downers pulling you down and holding you back from attaining the life you desire and oh so, deserve.
Pst… The Nav.It money app is built in with Community in mind.
Good Luck on Your Financial Wellness Journey
The journey to financial wellness can be hard. And at times you may struggle to stay motivated or become unsure about whether you are doing the right thing.
I know. I’ve been there. But when the going gets tough I remember my BIG why and it keeps me on track. I also keep these money quotes on hand to encourage me and remind me that I am doing the right thing.
I live by them. They provide the best guidance for me. And I think they will for you as well.
Chinyere is a personal finance coach, blogger, and speaker. She is a self-proclaimed save-a-holic who paid off her student loans in 6 months of getting her first full-time job. However, growing up in a single-parent household in Baltimore, she learned all the wrong things about money. Namely, that money was meant to be spent. But when a very close family friend unexpectedly passed away, she realized there must be more to life than this. So she started on a journey to create her ideal life and to, ultimately, be financially free. She founded The Sista Fund to help women like her take control of their finances and become financially independent. She believes that everyone deserves to live life on their own terms and that now is the time to take action. You can reach here at Facebook, Instagram, Pinterest, and LinkedIn.