See how financial health has changed my life and get your own financial health checklist
Today is the first annual Financial Health Matters Day! You probably didn’t even know it but try asking your boss for the day off. No? We pay a lot of lip service to the idea of financial health but spend little time really understanding what it can mean to our lives.
I know what financial health means to me. It took me years to realize it but I finally got there and it feels great.
Financial health, financial independence or financial happiness…call it what you will but it means not having to worry about money. It means being prepared to meet unexpected expenses, being able to save enough for your financial goals and having the freedom to enjoy life no matter how much money you’re making.
What does financial health mean to you? Retweet or share this article with your answer and the hashtag #FinHealthMatters
I wasn’t always financially healthy. In fact, it was only the financial equivalent of yo-yo dieting that helped me get where I am today.
Money Blunders of the Financially Poor…and Miserable
I talked about my first money blunder in one of the first articles on the blog. Just a couple of years out of the Marine Corps and with diploma in hand, I landed my first job in corporate finance. It wasn’t long before I became exhausted by the daily routine and hated my job.
I set out to save every penny and work as hard as I could until early retirement. I took on part-time jobs and skimped until burnout would lead me on a spending bender every six months or so.
I had no idea how to manage my money so it didn’t matter how much I tried to save, it always seemed to disappear and set me back to zero.
It seems I wasn’t alone in my poor financial habits. The Center for Financial Services Innovation finds that 57% of Americans are struggling financially with many reporting no savings or not enough to get through any large, unexpected expenses.
Worse still is the fact that I didn’t have a clue why I couldn’t manage to save or where my money was going. It wasn’t until talking with a friend that I was able to pinpoint where I was going wrong and get the resources I needed to learn good financial habits.
I ended up destroying my credit by missing a couple of payments. It wasn't until learning how to use debt consolidation loan that I was able to rebuild my credit score and keep track of my bills.
More than half a decade after putting myself back on track and I can honestly say I’ve never been happier. I’m in a job that I do because I love it, not because I need the money, and I know there’s no financial hurdle my family couldn’t overcome.
Financial health is about financial independence. Less than a week ahead of Independence Day, there’s no better time to put your own finances on the path to financial health and the freedom you deserve.
Building a Financial Health Checklist
Want to find your own financial health? It’s closer than you think but it will take some effort if you’ve been falling into the same poor financial habits all your life. Follow the financial health checklist below to get you started.
- Set realistic goals and a budget you can keep
- Turn your budget upside down
- Start an emergency fund
- Turn your hobby into a paying gig
- Start investing but stick to the basics
One of the biggest things I learned from my money blunder was that it’s not enough to set goals. You have to set realistic goals. Don’t jump right into a budget you know you won’t keep. Set a simple budget goal and aim to keep it for at least 66 days, that’s the average amount of time it takes to form a new habit. Even if you backslide a little after the two months, you’ll have created some great money habits that will last.
Try this budgeting trick I like to call, turning your budget upside-down. Instead of starting by taking monthly expenses out of your income, only to find nothing left for saving, save 10% of your income first. Then list your expenses from most to least important instead of by cost. If you come up short, start cutting the expenses at the bottom of the list.
According to John Lennon, “Life is what happens while you are busy making other plans,” and he may have been talking about financial health. You need at least three to six months of expenses as an emergency fund, stashed away in a savings account. It sucks to see that money just sitting there earning nothing but you can’t be financially healthy without something to fall back on when…life happens.
Steve had it right and not just about how to rock a turtleneck. I bounced around a lot of jobs after getting out of the Marine Corps and was miserable in every single one of them. I was grateful to get each one and was paid well but it didn’t matter in the long-run. I could have been making millions and I still wouldn’t have been happy. I’ll rephrase Jobs’ quote and say, “The only way to be financially healthy is to love what you do. Find a way to turn what you love into how you make a living.”
Finally, start investing! Even if you can only afford to invest $50 a month, put it in an account and let it grow. Don’t listen to stock market pundits on TV or anyone trying to pitch you the next hot stock. Invest regularly in a broad index fund or a few sector funds and let time do the rest.
Being financially healthy and experiencing the feeling that comes with it is a little like the Matrix, the 1999 sci-fi movie not those impossible math puzzles you had to solve in school. Nobody can tell you what financial health feels like, you just have to experience it for yourself. Check out a few of the other #FinHealthMatters articles on this first annual Financial Health Matters Day and plan your path to financial happiness!
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.