Financial Literacy Lifestyle + Wellness

10 Ways to Practice Financial Self-Care

BY Spectrum Wealth Management | Aug 4, 2021

When you hear the words self-care, you probably think about things like meditation, going to the spa, reading your favorite book, or finding other ways to de-stress. Although these things are essential parts of a good self-care routine, so is financial wellness.  Financial self-care is all about developing habits that set you up for financial success.

Self-care routines are different for everyone, based on individual wants and needs.  Your idea of self-care may look like a hot yoga session on Saturday mornings, and someone else’s could be taking a walk, picking up a coffee at their favorite local shop, or disconnecting from electronic devices once a week.  Regarding your financial health, you can incorporate things like saving money every month, regular financial checkups, following a debt management plan, and looking at your current spending habits.

Why is financial self-care important?  Just like when you neglect your physical and mental health, ignoring things can cause minor problems to escalate into more significant issues.  When you prioritize your finances, your mindset will shift towards supporting a healthy relationship with money.

Here are ten ways you can incorporate financial wellness into your self-care routine.

1. Empower yourself with financial literacy

Learn about money best practices, budgeting tips, starting investing, and utilizing your savings account to maximize the money in your account.  There are hundreds of free resources available online, such as podcasts, budgeting tools, checklists, and more.  Knowledge is power.  The more you know, the better equipped you’ll be to reach your financial goals.

2. Don’t be afraid to talk about money      

Recent studies show that 70 percent of people don’t discuss everyday financial issues.  People hide debt from their partners and feel taboo surrounding talking to friends or family about money.  The truth is, we all experience similar types of issues and successes when it comes to finances.  Money is a part of everyone’s life.  Don’t be ashamed to discuss financial topics, money troubles, or to ask questions.  Find a trusted friend or financial advisor to support you.  Be realistic about the areas you are struggling with, and talk about your money worries and goals.  You never know who may be experiencing the same things as you or who may be able to offer solid advice to help you deal with your finances.

3. Evaluate your relationship with money

Financial wellness is about more than just paying your bills on time or having money in your savings account. It’s about your relationship with money, too.  Do you have anxiety when it comes to spending money?  Do you get overwhelmed when you try to make a budget and stick to it?  Does the thought of doing a financial checkup seem daunting and stressful?  If so, it’s time to ditch the negative thinking patterns you have about money.  Regardless of if you have a lot of debt or none at all, take time to think about why you behave the way you do with money.  Write it down in a journal, talk it out with a friend or your partner, or seek advice from a financial planner or other financial professionals.

4. Track your income and expenses

Take charge of your financial life by creating a budget.  There are many types of free budgeting tools available online, apps you can download to your phone, or you can make a spreadsheet if you prefer do-it-yourself methods.  Writing down your income and monthly expenses is a proven way to understand where your money is going and how much you have left at the end of the month.  Take a look at the 50/30/20 rule when it comes to budgeting your money.  Having a visual guide gives you a good idea of planning for your financial goals and making smarter financial decisions.

5. Be realistic about how you budget your money and save

When it comes to sticking to a budget, it’s usually easier said than done.  If your income fluctuates, using the method of spending less than you earn while saving for one or more of your goals isn’t realistic.  Using a budget that matches the flow of your income can help you catch spending and savings issues before they get out of hand and strategize different ways to save money that fits your situation.  For example, if you have money coming in lump sums, using a method such as saving up money over short periods may work better for you than to budget and save the same amount of money week-by-week.

6. Prioritize your debt

Thinking about your debt could cause some stress, which seems like the opposite of self-care, but the best way to relieve stress related to debt is to pay it down.  Using tools such as your monthly budget, financial goals, and financial literacy resources will make prioritizing your debt much more manageable.  The best way to get out of debt is to pay off the amount you borrowed in full each month (e.g., credit card debt), or, if that’s not an option, pay more than the minimum payment each month.  When it comes to choosing which debt you should pay off first, there are a few different tactics you can use.  You can consolidate your loans to keep things simple and pay one payment vs. several payments each month, start with the balance that has the highest interest rate or pay down the smallest outstanding balance in full first. 

The most important thing to remember when trying to get your financial life in order and paying down debt is being honest with yourself.  Know what’s realistic for you to pay each month, how much you can save each month, and areas you can afford to reduce your spending.

7. Invest in your retirement

A lot of people experience stress today because they are worried about the future.  For this reason, we advised contributing as much as you can, as early as you can, to a retirement account such as a Roth IRA.  Even if you’re already contributing to a 401(k) through your employer, it doesn’t hurt to invest more when you’re able to.

After you’ve paid for your essential living expenses, consider taking a portion of what’s left into a retirement account.  Even if you’re only able to afford a small amount, even as little as 1% of your income, you could turn small savings habits into a big payoff over ten or more years with the magic of compound interest.

8. Increase your assets

If your spending habits are healthy, you have an emergency savings fund and money left after saving for retirement, way to go!  It takes hard work to get to this point, and now it’s time to think about investing outside of your retirement account.  By doing this, you’ll put your money to work in addition to your current retirement savings.  Growing your assets through investing is a great way to practice and maintain financial self-care. 

A key to investing is knowing why you are choosing to invest and knowing your risk tolerance.  If you think you’ll want to spend the money you’ve invested in the next couple of years, consider a short-term, easy-to-sell investment (liquid).  If you’re looking to grow your funds over several years, focus on diversifying your portfolio for long-term growth.

9. Re-assess your insurance annually

Having health insurance is vital, but insurance premiums can be a significant expense.  Once a year, check up on all of your insurance plan details and the premium(s) amount to be sure you’ve got enough coverage based on your age and current life stage.  You may want to consider adding a life insurance policy that makes sense for you and your family.  If you’re self-employed or have insurance through the marketplace, the best time to review your policy and make changes is during the open enrollment period.  This could end up helping you save money on insurance in the long run.

10. Ask for help

If you’re facing financial difficulties or need help getting your finances on track, you’re not alone.  Money can complicate things, but thankfully, there are helpful tools and resources available everywhere.  There is a plethora of information available online. Just make sure it comes from a credible source before you use it.  It’s also worth consulting a financial professional such as a CPA, financial advisor, banker, or lawyer if you need personalized services that fit your financial life.  Many financial professionals offer free consultations, and although it’s an additional expense, it may help you simplify your finances and save money in the long run.

The best self-care rituals you can have are those that help you de-clutter and de-stress your everyday life.  Choose habits that fit your lifestyle and that you can stick with, so self-care doesn’t become a chore.  There is no better time than now to start simplifying your finances and reducing financial stress.  The sooner you get started, the better you’ll feel – you’ll thank yourself in the future.

This content is developed from sources believed to be providing accurate information, and provided by Spectrum Management Group. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.