I've been sharing a lot about self-care with you babes, and you all know this is something that is so important to me. Recently, I was approached by financial advisor Lauren Woodcock who brought up an area of self-care I had never really considered but is so important when we look at our overall physical and mental health: financial self-care. Today, I am handing you all off to an expert on this topic who can provide way more insight and guidance than I ever could with regard to financial self-care. So today, I want you all to meet Lauren and check out her tips & tricks for financial self-care to set you up for long term success (and way less stress surrounding money and finances along the way).
Over the past few years, it seems like the world has finally tuned in to the importance of self-care and wellness (yay!); the philosophy that taking care of oneself first and foremost is not selfish, but integral for our own health and relationships with others. Wellness practices are growing to both inspire and educate on fitness, nutrition, meditation and sleep. It’s impossible to deny the benefits of holistic wellness in our lives. For me, a quick run can turn my mood from mopey (more likely downright rude) and unproductive to positive and energized in a matter of minutes.
However, not as prevalent, is financial self-care. I get it. I do this for a living, grew up in the world of financial planning and yes, I would still prefer to drag myself out of bed at 5am to workout than review my budget most days. I didn’t end up in this field because I love finance, numbers or talking about the financial market. Rather, I saw the way that financial habits can impact our lives – for better or for worse.
Unfortunately, positive changes in our money habits don’t have the instant gratification of a runner’s high or the excitement of a spinning class and post-sweat brunch date with friends; this topic is highly personal and sensitive for most people. However, if we’re talking self-care, we cannot ignore our financial health. If our goal is to decrease stress, improve relationships and gain time to focus on fitness/nutrition, we have to confront and take control of our money habits.
Let me be clear. Being financially conscious does not mean letting money run our lives, not living in the moment or enjoying ourselves. My goal is to help people become empowered by including financial self-care in their wellness routine. Financial awareness gives us the ability to do the things that we love, be confident and focus on our careers, friends and family rather than expenses and debt.
I know that it’s overwhelming and that everyone is in a different situation, but by tackling one or more of the steps below, you’re better off than you were yesterday.
1. Declutter and take inventory.
Gather everything: bills, debts, loans, accounts, insurance and anything else that impacts your financial situation. Organize it, summarize it and get rid of items that are no longer relevant. Get a folder, box or whatever works for you to hold these items in a way that makes sense for you. Call and get more information on items that you don’t understand.
2. Immediately find one item to cut from your monthly expenses.
Review a few months of credit card and/or debit card statements. Look for overspending in certain areas and one item (or more) that you can live without. Everyone will find something: a subscription to a magazine that you never read, a gym that you never get to, etc.
3. Make a budget.
It doesn’t matter if you’re making $50k or $500k a year, spending habits can be out of line no matter what your income is. Never assume that setting guidelines means giving everything up or not enjoying your life. Sit down and figure out what’s important to you. Simplify! When you prioritize the things that truly make you happy, getting rid of some other items feels like much less of a sacrifice.
4. Build a relationship with an expert.
No matter where you are. Find a “coach” that you trust, that gets you and your goals. Do your research. Don’t be afraid to walk away if it doesn’t feel right. If you’re overwhelmed, letting someone help you prioritize your goals will help take some stress off of the table.
5. If you haven’t yet, build an emergency fund.
If this feels impossible, start with $25 per month. Just get started. Set this money aside and don’t touch it. If you lose your job, need to break a lease to get out of a bad situation or just experience one of life’s many curveballs, you will be thankful that you set these funds aside and did not have to tap a retirement account or go into credit card debt. If/when you have to touch these funds, replenish them afterwards. Generally, your goal should be to have a minimum of three months of living expenses readily available.
6. Employer retirement plan that offers a match?
Contribute up to the match at a minimum. Otherwise, you’re leaving money on the table. If you’re wondering what the heck I am talking about, seek help from your HR department.
7. Utilizing your retirement plan(s)? Contribute an equal amount to a non-retirement investment.
There are so many things that happen before we retire that are still long-term. If you already have an emergency fund and are contributing substantially to your retirement account(s), make sure to have other non-qualified assets for those longer-term goals or non-retirement income needs.
8. Make sure that you understand how you’re allocated to the market in these accounts.
We need our money to work for us. Generally, younger investors with a longer time horizon should be focused on growth-orientated investments for any funds that are not in an emergency fund or being used for short-term goals (down payment on a new house). Compounding interest is impactful when there is time on your side!
9. Make a weekly money date with yourself.
This is my favorite tip and a weekly ritual that I rely on. The week flies by and sometimes we are barely making it through alive. I hear ya. Use a day out of the office to grab a coffee/tea/juice, your comfy clothes and review your finances in a peaceful space. I use Sunday mornings for this. It’s a nice way to survey what’s ahead ($150 for a bridal shower, $500 for the couch that the new puppy decided to eat) and look at your habits from the previous week. Last week was expensive? Have a quiet weekend of running/walks outside, try a new recipe at home and just make an effort to spend a little bit less.
10. Be confident. Know your stuff.
This is SO important! If you’re in a relationship where one person is handling the finances, do not just sit in the passenger seat. Yes, of course each person has different responsibilities and strengths, but you should make an effort to understand what’s going on in your financial lives. Ask to be included in meetings with your partner and review your goals together. Be aware of the whole picture. Trust is important, but we also don’t want to be completely in the dark.
Securities offered through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC. Annuity and insurance products offered through AXA Network, LLC. AXA Advisors, LLC does not provide tax or legal advice. AGE-124849(04/17)(Exp.04/19)