Your financial health can be just as important as your physical and mental health – even if it’s only because the former can impact the latter.
For some, looking after the finances is like pulling teeth, whether it’s out of your own head or that of a lion. As painful and slow as the process might be, it may be worthwhile checking in on your financial health.
How can I judge my financial health?
Depending on how important you think your finances are, what goals you’re trying to achieve, and your familial/relationship status (are you looking after a family? Married? Getting by with a little help from your friends?), there are a variety of ways to judge the wellness of your dollars.
Are you regularly saving more than you’re spending?
Yes, a simple proposal, but one that has to be asked nevertheless. If you’re finding that you’ve got periods where you’re ‘good’ (saving what you can) and ‘bad’ (buying anything and everything within a 2km vicinity of a sign saying ‘sale’), then you might have a little bit of a problem.
Solution: The 50/30/20 rule is a simple and effective method – 50% of income should go towards necessities, 30% towards discretionary purchases, and 20% towards savings. It’s important you keep in mind your regularity of pay, because there’s a huge difference between a month and a week – most noticeably how much is left in the bank at the end of either.
Are your priorities in order?
If you find yourself searching Ebay for a life-size replica of Michael Buble but your rent is overdue, there’s a chance your priorities might not be aligned with your immediate needs. Financial priorities change hugely from person to person. Even in our 50/30/20 rule, there’s priority to consider – yes, you need food, but you also don’t need to get Kobe beef for dinner every other night, or have an accompanying Tuscany Sangiovese with lunch.
Solution: Have a think about what’s important to you, and if there’s anything you might have considered a necessity that can be downgraded to a discretionary. That way, it’s easier to track where and why you’re spending you hard-earned bucks.
Do you have an idea of where your money is going?
If you’ve ever looked at a bank statement and thought, ‘…who the hell is that?’, you might want to start thinking about keeping better track of where your money is going on a weekly/fortnightly basis. Not only will this allow you to organise your 50/30/20 more efficiently, it will increase your chances of spotting and responding to unusual activity within your account.
Solution: As painful as it is, actually look at your account on a regular basis. Most accounts are viewable online, so make use of it!
Financial stress is stress, plain and simple. It’s likely that added financial stresses or pressures are going to exacerbate any mental health issues you might be going through concurrently, like depression or anxiety, and can lead to unhealthy living habits.
Health problems linked to financial stress include:
- Weight loss/gain
- Eating disorders
- High blood pressure
- Addiction/substance abuse
- Heart disease
- Insomnia/other sleep-related problems
What can you do about it?
Seek a financial advisor – just like seeing any other professional for any other problem you might have, a financial advisor can give you access to a wealth (pun intended) of experience. Whether your problem is with organisation or keeping to goals, having an expert sort through your options can give you a strategy and some peace of mind.
Cut back – a short-term solution is to simply cut-back on all unnecessary spending. This can give you the breathing room to look at what you have, what income you expect, and what you need to do in order to reduce the stress of your financial situation.
See a doctor or psychologist – in some cases, financial stress may be a symptom rather than its own cause. If you’re prone to overthinking certain areas of your life, or have an irrational fear related to your finances, seeing a professional can give you tools and methods to manage this anxiety.
ASIC’s MoneySmart – MoneySmart has a range of tools and resources, including:
- Calculators and tools
- Unclaimed money finder
- Financial infographics
- Teaching resources
They also have a great app called TrackMySpend, which allows you to budget for life’s events, great and small.
This year, make sure you’re looking after yourself, mind, body, spirit, and wallet.