7 Pillars of Financial Wellness and Fitness in the New Year
Financial wellness can be yours if you truly want it. But first, you must decide 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. Any strong wind, rain, or storm will likely knock it down.
So commit now to make a change. Did you do it? Really? Okay. Cool.
Let’s start building a solid 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 deeply, you can truly understand why you do what 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 to clarify 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 will help you see the necessary steps to get to where you want to be.
So, how would you describe your relationship with money?
Now that you understand your current relationship with money, it’s time to dive a little deeper into the 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 about money from your parents or your environment?
Your current financial situation results from 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 must start by changing your beliefs. Some core beliefs seem to become truths today, like, “It takes money to make money.” But they are BIG fat lies, so don’t believe them!
Just because something is said often and believed by most people you know doesn’t make it accurate. And that lie you’ve been convincing yourself is the truth for decades may 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.
To truly change your relationship with money, you must first uncover your beliefs about money. Then, monitor your thoughts like a hawk. After all, you don’t want those thoughts constantly reinforcing negative beliefs.
Once you get in the habit of thinking one way, it will take constant awareness and work to change it. You must always be aware of your thoughts about money. Change them immediately if a negative thought pops 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. It 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 easily.
You want to remember to cut these negative beliefs off as soon as they start. That way, you are not continually reinforcing them. Then you’ll want to replace negative thoughts with a positive statement.
Making statements that aren’t true, like “I have plenty of money,” may initially seem weird and untrue. But one day, it will be true. And guess what? That day is the one you are preparing for today.
So be sure to lay the right groundwork for the future you desire.
You can track your thoughts with insights from Nav.it’s money moods.
2. Build Your Tree of Knowledge
If you ever want to control your finances, you will 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 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, there are free finance courses you can take online through sites like Coursera. You can also sift through thousands of YouTube videos, podcasts, and blogs to build your financial know-how.
Pro tip: check out the Quizzes in the Nav.it community feed.
You can use these resources to build up your knowledge of the stock market, figure out how to invest (believe it or not, there is a correct order), or learn about the financial benefits of living abroad.
If you’re feeling extra ambitious, you can 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 books got me started on my financial wellness journey and are why 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. So get out there and start growing your financial tree of knowledge.
3. Improve Your Income Streams
Cash is king. It’s the lifeblood of modern society, a necessity that shouldn’t be overlooked or undervalued. If you don’t have any money coming in, there’s no way you can survive. For anyone seeking financial wellness, you must ensure your money is right. That means you have more than enough money to live on.
You can do this two ways: increase your income or diversify 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 it is.
You could ask your boss for a raise, look for a better-paying job, learn new skills to make yourself more desirable in the marketplace, and, my all-time fave, start a side hustle.
Everyone needs a side hustle. And not just for the extra income it brings but also for the sense of freedom it grants 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. More specifically, I’d consider 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 seven ways you can monetize your blog? Now I will admit that blogging isn’t easy and is not for anyone trying to make a quick buck. But the income you make from blogging is unlimited and can potentially last forever.
Plus, it doesn’t take much effort to maintain once you get the ball rolling. The point is that 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? For many of us, this pandemic taught us that what we think is secure, like our job, may not be as safe as we’d thought.
So when you are thinking about the money you have coming in, think about the source. Are you dependent on one sole source of income? Is it a reliable source, or might that income disappear?
To solidify your income stream and ensure that you always have money coming in, you need to diversify your income. You should have multiple income streams, 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 passive income. Passive income is necessary for financial stability. Once set up, it 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 earn solid passive income for many more years.
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. 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 with the Nav.it money app?
Your Emergency Fund
Ah, 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 to having an emergency fund, and it’s never too late to start one.
Emergency funds are an essential part 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, it 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. It doesn’t matter how little you have to contribute; just decide to create 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 of expenses in your emergency fund. Although, after these last few years, you may want to extend that recommendation to 12 months.
Either way, by deciding to build up your emergency fund, you’ll know you’re making a wise financial decision for your future.
Your Retirement Accounts
While building up your emergency funds, don’t forget about saving for retirement. In all actuality, the most significant 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 provide a company match if you contribute a certain amount. Cha-ching!
My advice is to 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. In contrast, others save you from paying taxes later, like the Roth IRA.
Some even save you on taxes now and later. Here’s looking at you, HSAs!
Need a run down of the differences? Read more!
The beauty of these accounts is that they are not only savings accounts but investment accounts as well. And what’s more, the money you invest in your retirement accounts is 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 unique 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 of many wellness journeys. 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
- Promise not to take money out unless it’s an emergency
5. Invest for Your Future
Sticking money under the mattress, while all the rage in the early 20th century, is not going to cut it if you want 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 of investment options you want or need to live your desired life.
Here are the four main types of assets you can invest in:
- Commodities (gold, silver, etc.)
- Real estate
You may want to look into investing in the stock market on your own. Of course, before jumping 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.
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 aren’t looking out for you. Ensure you choose 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. The amount of risk you should take in the stock market should correspond with your age. Typically, the younger you are, the more risk you can take. Alternatively, the older you are, the less risk you should take. This boils down to the fact that the older you get, the more money you should be investing 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 many stocks versus 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 you would keep the other 10% in bonds. If you want to be more conservative, you can use 100 instead of 120 as the starting number.
While I love stocks, my favorite type of investment is real estate. I highly recommend you consider getting at least one property as an investment.
Why? These things not only give you primarily passive income from now to eternity but also provide great tax breaks on any income you earn from your investment. How can you beat that?
Check out this piece on Investing for Long-Term Goals.
6. Be Mindful of Your Spending
Not all things are created equal. Some matter more than others. 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 to brag to your friends, or save money and stress by getting the Honda?
The choice is yours. Just ensure you are clear on what brings you joy and what doesn’t. What is necessary? What can you live without? This goes back to the first pillar we discussed earlier: knowing yourself.
It all comes down to knowing exactly what you want from life and not being afraid to go for it. Don’t be 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, think, where can I get the most bang (in terms of happiness) for my 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, you might not have practiced mindful spending in the past. So you’ve probably racked up a good amount of credit card debt and loans.
On your journey to financial wellness, you will 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, you will pay it off in full!
Choosing your payoff method is a big step in kicking your debt to the curb. There are many kinds, but the most popular ones are the avalanche and snowball method.
There’s the traditional way to pay off debt, and then there’s the smart way. There’s no need to do a severe budget re-haul to pay off your debt faster. And sometimes, no need for budgeting at all. Simply commit, get creative, and take action.
Imagine. One day, soon, 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 one of the most integral factors in financial resilience.
You need a supportive environment to have a strong enough foundation for your financial future, where you can freely share your thoughts, feelings, and dreams. We’re talking about a judgment-free zone that is always willing to lend an eye (or, occasionally, a shoulder) and constantly pushes 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, and your co-workers all make up your environment.
Getting your finances under control is never easy; you will inevitably 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 want to start looking elsewhere for the support you need. And maybe don’t let those that didn’t make the cut in on your plans. The last thing you need are some Debbie downers pulling you down and holding you back from attaining the life you desire and deserve.
P.S.- The Nav.it money app is built 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.
Nav.it’s New Year’s Resolution Guide to Budgeting
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.