Financial Fitness: Strengthening Your Wallet and Well-being
In today’s fast-paced world, many individuals strive to lose weight, exercise more, or reduce stress. But have you considered the impact of financial fitness on your overall health?
Financial stress is a significant contributor to mental and physical health issues. The American Psychological Association (APA) reports that 72% of Americans feel stressed about money at least some of the time. This chronic stress can lead to unhealthy behaviors such as smoking, overeating, and physical inactivity, which are risk factors for heart disease and stroke, according to the American Heart Association (AHA). [1]
Given these statistics, it’s clear that financial health is intrinsically linked to overall well-being. Just as you might incorporate physical exercise into your routine, it’s essential to include financial strength training to build resilience and reduce stress.
How to Get Started
Step 1 – Establish Your Financial Routine
Begin by envisioning your future:
- Are you planning to purchase a home in the next five years?
- Do you dream of owning a vacation property?
- When and how do you envision retirement? [2]
Write down your goals to create a clear financial roadmap.
Step 2 – Calculate the Cost of Your Vision
Utilize online calculators to determine how much you need to save to achieve your goals, accounting for factors like inflation. This will help you set realistic savings targets and timelines.
Step 3 – Identify Opportunities to Save
Finding extra funds to save can be challenging, but consider the following strategies:
- Tax-Deferred Savings: Explore tax-deferred accounts to allow your savings to grow without immediate tax implications.
- Employer Retirement Plans: If your employer offers a retirement plan with matching contributions, ensure you’re contributing enough to receive the full match—it’s essentially free money.
- Adjust Tax Withholdings: If you receive a large tax refund annually, consider adjusting your withholdings to increase your take-home pay and direct the extra funds into savings.
- Insurance Deductibles: Evaluate whether you can raise your insurance deductibles. Higher deductibles often lead to lower premiums, and the savings can be redirected to your emergency fund.
- Mortgage Payments: Assess whether making extra mortgage payments is the best use of your funds. In some cases, investing that money elsewhere might yield better financial returns.
Step 4 – Consult Financial Professionals
Once you’ve drafted your financial plan, seek advice from professionals:
- Tax Advisors: They can provide insights into tax-efficient saving strategies. [3]
- Financial Planners: They have tools to help you model different financial scenarios and can offer personalized advice to optimize your savings plan.
Step 5 – Implement and Regularly Review Your Plan
Starting your financial routine is a significant step. However, life circumstances change, so it’s crucial to review and adjust your plan regularly to stay on track and address new challenges.
The companies of National Life Group and their representatives do not offer tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor.
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[1] American Psychological Association. (2024). Speaking of Psychology: The stress of money, with Linda Gallo, PhD.
[2] American Heart Association. (2024). Stress and Heart Health.
[3] The American College of Financial Services. (2024). Study Finds That Improving Financial Literacy Supports Retirement Wellness and Confidence.