6 Tips: Financial Wellness as the Ultimate Form of Self-Care this Valentine’s Day

 

You’ve probably already heard of the importance of self-care. But how do you take care of yourself? Do you swim? Breathe deeply? Practice yoga? Whatever the method, self-care can help your physical, mental and emotional health. 

However, self-care means more than simply taking a stretch break at work or ensnaring 10 minutes over your lunch hour for guided meditation. Have you thought about how financial wellness can help you with self-care as well? 

Financial wellness can increase settled feelings, a positive mindset and allow you to improve your financial outlook. Who doesn’t want to dump unhealthy amounts of stress?

Let’s walk through how you can add self-care to your financial life as well, which can include putting together a spending plan and budget, paying off debt, getting great insurance, saving and investing, planning for retirement and checking your credit. Doing all these things can put you in a better position to give yourself (and by extension, your family members) a little bit of love starting on February 14.

How You Can Put Self-Care into Your Finances

Financial self-care might not intuitively make it onto your list of “to-dos.” In fact, you might need some pointers to get started. Let’s walk through a few ways you can use self-care in your finances.

Tip 1: Put together a spending plan and budget. 

How do you spend your money? You’re not alone if you constantly ask, “How does money fly out of my bank account so fast?” However, it’s not a good thing if you don’t know how your money comes out and where it goes. 

It’s time to put together a spending plan and budget. Grab a free app like Mint or a paid app like PocketGuard so you know exactly where your money goes and in which categories you end up spending a lot of money. 

You can start to piece together a budget after you know how much you have coming in and how much you should spend (and how much you should not spend in certain categories).

Tip 2: Pay off debt.

Sure, sure. Easier said than done, huh? Wiping out debt isn’t quite as easy as it may seem. It’s a good idea to consider methods for erasing your debt, including the debt snowball method or debt avalanche method. Each method considers your debt in total and helps you determine how you can work toward eradicating it. For example, if you have high-interest debt, you may want to pay that off first. On the other hand, you may want to tackle smaller debt amounts first so you rid yourself of the psychological barrier of getting rid of debt. Here’s how you do it: 

  • Debt snowball method: The debt snowball method means you pay off the lowest amount of debt first. Let’s say you owe $7,000 on your car and $12,000 on a personal loan. You’d make the minimum payments on the personal loan but pay extra on the $7,000 car loan because it’s the lowest amount. Focusing on the lowest amount you owe first can give you a quick win and gives you a psychological boost. 
  • Debt avalanche method: The debt avalanche method means you pay off the loan with the highest interest rate first. Let’s say that your $7,000 car loan has an interest rate of 4% but your personal loan has an interest rate of 9%. You pay off the loan with the highest interest rate first — the personal loan. 

Tip 3: Make sure you have great insurance.

So, this doesn’t automatically seem like a budgeting/spending/debt area, but it has everything to do with your financial situation in the event of an emergency situation. If a fire erupted on your home, would you have enough insurance to cover a complete rebuild? If your spouse died, would you have the right amount of life insurance to handle everyday needs and college for your children? 

The best way to make sure you’ve got enough insurance is to call your insurance company and ask for guidance. An agent can help you determine the appropriate amount of insurance for your situation. It can give you enormous peace of mind to know you have the right amount of insurance to cover you in all situations. How’s that for self-care?

Tip 4: Start saving and investing.

Are you already saving and investing? If so, good for you! If not, it’s never too late to start. Anyone of any income level can invest, and the most important thing you can do is to write down your goals. Figure out your short-, mid- and long-term goals and go from there. For example, a few short-term goals could look like this: 

  • Saving to purchase a bedroom set
  • Putting together an emergency fund
  • Saving for a wedding or vacation

A few mid-term goals:

  • Saving for a down payment on a house
  • Paying off student loans
  • Starting a business

A few long-term goals: 

  • Saving for retirement
  • Get rid of your mortgage debt
  • Put together end-of-life plans

You don’t have to have all of these items (or any of these items) on your checklist and you may have some other things on your list that aren’t on this short list. Needless to say, your investments should reflect what you have going on in your life. Any investment should have the right mix of stocks, bonds and other types of funds to fit your goals.    

Not sure how to get started investing? Check out robo-advisors like Robinhood or get a human financial advisor to help you determine the right route to meet your goals.

Tip 5: Plan for retirement.

As mentioned in the last tip, planning for retirement should go into your long-term savings plans. You’re asking for trouble if you’re depending on Social Security to provide for your retirement. Unfortunately, Social Security won’t completely take care of your full needs in retirement. Unfortunately, politicians have been talking about how Social Security is heading for bad news — in other words, someday, there may not be enough in the Social Security “pot” to go around. If you want to have money when you retire (especially if you want a lot of money when you retire), skip waiting for the government to bail you out. You need to make your retirement a top priority. 

Contribute as much as you possibly can into a pretax retirement account, Roth 401(k), SEP IRA, traditional IRA or another type of retirement account. You owe it to yourself to make sure you take care of your future.

Not sure how to plan such a large (and intimidating) goal? (It’s understandable. After all, it’s a matter of putting together your life plan.) Meet with your company’s 401(k) representative or if you’re self-employed, talk with a financial advisor in your local area. Make sure this individual is a fiduciary, which means that he or she does everything with your best interests at heart.

Tip 6: Check your credit. 

Credit scores range from 300 and 850 and report your creditworthiness, or how well you handle debt. Many factors make up your credit score, including how well you make your debt payments. The higher your score, the more likely lenders would likely lend to you. Here are some examples of credit score ranges: 

  • Fair: Scores from 580 to 669
  • Good: Scores from 670 to 739
  • Very good: Scores from 740 to 799
  • Excellent: 800 and up 

You can check your credit through a credit report, which contains information from companies called credit reporting bureaus: Equifax, TransUnion and Experian. Every month, these companies collect information from your creditors, which can include your mortgage lenders, landlords, credit card companies, etc.

It’s important to remember that lenders don’t just consider your credit score when determining whether you need a loan. Lenders will also consider your monthly income, cash and investments after you apply for a loan.

The biggest reason to check your credit for free on a site like annualcreditreport.com: Credit reporting errors happen more often that you probably realize. Errors on credit reports, according to a study conducted by the Federal Trade Commission. Common errors can include:

  • Personal information mixups (errors with names, phone numbers and addresses) 
  • Account statuses reporting incorrectly 
  • Debts listed more than once
  • Balance errors (including incorrect balances)

Practice Financial Wellness and Self-Care this Valentine’s Day

By all means, opt for the chocolates and roses this Valentine’s Day, but remember to put financial self-care on your priority list. Take a minute to think of how much of a weight will lift off your shoulders by practicing financial wellness. How much stress will doing so take off your plate? 

If you have a significant other or spouse with whom you combine finances, why not consider a financial date night once per month? You and your loved one can spend time considering how to care for yourselves and your finances on a regular basis. (You don’t have to do this on Valentine’s Day, but talk about a great gift idea for the rest of the year!)

Ready to learn more about family investing and other finance topics? Tap into the UNest blog for more information.

 

 

Disclosure

College Savings Calculator is a hypothetical tool that demonstrates how monthly contributions, age-based asset rebalancing, and tax savings may impact the long-term value of your account, and do not take into account a portfolio’s underlying investment management fees. Calculations assume the private institution cost inflation is 2.8%, public out of state cost inflation is 3.9%, public in state cost inflation is 2.7%. Portfolio is assumed to have only stocks and bonds. Monthly equity returns are based on the historical data from the 10-year track record of the stock market (SPY). Monthly fixed income returns are based on the historical data from the 10-year track record of the bond market index (AGG). The current college expenses are provided by the collegeboard.org. Actual account performance may differ due to market fluctuations, changes in recurring investments, and asset allocation. The information provided here is for illustrative purposes only and does not represent actual or future performance of any investment option and is not intended to predict or project the investment performance of any security or index.