Plus, steps to take this week, this month, and this year.
June 27 is FinHealth Matters Day, an observance created by the Center for Financial Services and dedicated to bringing attention to Americans’ financial health via social media and other platforms. In honor of this new financial holiday, (who knew there was such a thing?) we compiled a list of ways you can improve your financial health today, this week, this month, and this year. And who doesn’t want that?
We spoke with Meghan Murphy, director at Fidelity Investments in Boston, Mass., about what it really means to be “financially healthy.”
Murphy is a big proponent of paying attention to more than just your bank balances: “Being financially healthy has a lot to do with your feelings: Are you meeting your savings goals? Are you dealing with your debt? Are you sticking to your budget? Are [you] protected financially should something unexpected happen?” she says.
How you feel about your money is a key component of your financial outlook, she explains.
“[At Fidelity], we have talked to people from both ends of the spectrum and everywhere in between: those who are feeling really confident and maybe not doing so well and could use a bit of a wake-up call, and people who are doing really well from a financial standpoint and don’t feel like they are,” she notes. “So, [we help] build their confidence and let them know specific steps they can take to help improve their confidence.”
Murphy also sounded off on what steps you can take today, this week, this month, and this year to give your financial health a boost.
What Can I Do Today?
This one is simple, but can be difficult for many people: Have the “money talk” with your spouse.
“It’s something people often avoid: have a conversation with your spouse about money,” Murphy advises. “Money is one of those topics that people avoid talking about because it can be uncomfortable, and it can take a long time to get a grasp on where your money is going.”
Plan a financial date night once a quarter with your spouse, she suggests. Stay in, look at bills, and talk about where your money is going, how it’s being spent, how it’s being saved, and where you’d like to see it go in the future.
“This doesn’t sound exciting, but once you sit down and have a discussion about it and make sure everyone is on the same page of where your money is spent and saved, you’ll feel much better,” she says.
What Can I Do in a Week?
Time to get out your pen and paper (or the notes app on your iPhone). This one is all about the details — and can be harder than most people think.
“Track everything you spend for a week. Write everything down!” Murphy says. “The fun part of this is at the beginning of the week, you can estimate how much you’ll spend that week, and [at the end of the week], you’ll see how close you are.”
Understanding how you spend your money is an important step in taking control of your financial future.
“We all have those days when we go to the store and come out with more than what we intended to,” she continues. “But if you can really understand how you spend your money in a week, you may be able to look at it and say, ‘OK, next week, I can spend $20 or $25 less.’”
What Can I Do in a Month?
Say it with me: emergency fund. We all know we’re supposed to have one. But let’s be honest: How many of us really have the 3 to 6 months of living expenses tucked away? Doing exactly that is your monthly assignment.
“Set up an emergency savings account and start funding it. Make it an account that isn’t easily accessible [in the day to day],” Murphy says. “I’m a fan of savings accounts with a passbook, which you manually update with your balance.” Plus, you have to physically go to your local bank for all deposits and withdrawals.
Regardless of where you put the money, make sure your emergency fund isn’t easily accessible so you can’t spend it, she suggests.
What Can I Do In a Year?
Tackling debt is a great year-long goal, Murphy says.
“[At Fidelity], our research has shown that debt is a way of life these days,” she says. “[So, this year], commit to paying down debt. Set a goal at the beginning of the year. Say, ‘OK, at the end of the year, I really don’t want to have these credit card balances,’ or ‘[I] want to make a dent in my student loans.’ Set a goal and check in periodically to make sure you are staying on track.”
But when it comes to setting financial goals, it’s important to keep one thing in mind: Make sure your goals are realistic.
“What I always encourage people to do is set realistic goals. If you make $40,000 a year, it’s not realistic to think that you could save half,” she explains. “Set reasonable goals for your income. Keep your eyes on the prize. Check in once a month, like when bills are being paid, to make sure you are staying on track. Having a partner for accountability is helpful, too. It’s similar to what I’ve done at work with one of my coworkers — we keep each other accountable for eating healthy during the week. Do the same thing with your spouse or friend [for your financial goals.]”
Setting financial goals is so important, but can be daunting, especially if you feel like you aren’t “financially healthy.” But don’t let this get in the way of taking the first step, Murphy stresses.
“[Y]ou are not alone. Being financially healthy is almost as hard as being physically healthy. It takes determination and commitment, and we all go off-track from time to time,” she says. “But take small steps. Take one day at a time.”
Also, learn about resources that might be available to help you.
“Take advantage of any financial guidance your employer might offer: webinars, workshops, podcasts, etc., to help improve your financial health. Remember, financial struggles equal stress, [which equals] higher medical bills. So, it’s really in your employer’s best interest to help you in this area,” Murphy notes.
And, most importantly, develop a strategy.
“Get a plan in place,” she says “This is a great first step to becoming financially healthy. And then track your progress. There are a lot of different apps out there that can help with that. And don’t be afraid of the discussion. Have the conversation of, ‘Have we spent too much this week? Is there a goal we can’t hit that we need to reassess?’ Understand where you really need to focus. Maybe it’s your budget. Maybe it’s your debt. Then set achievable goals from there.”