For years, I’ve compared financial health to physical health. The two share a lot in common – both are simple to figure out, but much harder to attain.
Financial health is about moderation. I feel financially healthy when I can pay my bills, save for retirement and still splurge on a pair of earrings or dinner with friends. It’s like being physically healthy – no one expects you to become a vegetarian who grows your own produce and only drinks water. You can have red meat, alcohol and brownies while still being healthy. You just need to also squeeze in exercise, veggies and water.
Living too cheaply is like being on a diet – at some point, you’ll crash and burn. It’s ok to treat yourself, even if you’re in the middle of paying off debt. It’s ok to buy a cheesecake once in a while or a $13 cocktail to celebrate a friend’s engagement. Being financially healthy just means not doing those things too often.
Part of being financially healthy is saving for the long-term. That can include setting up an emergency fund and planning for lean times or starting a retirement account to provide for you in your golden years. Saving for the future is like exercise. You might not notice a difference right away, but after decades of everyday effort, you’ll be leaps ahead of your peers.
Unfortunately, not everyone checks their financial health. According to the Center for Financial Services Innovation, more than half of Americans are struggling financially.
While most of us have annual physical where we find out how we’re doing, there’s no easy system in place to get a financial check-up. Thankfully, you can create your own.
You can meet with a financial planner every year to get a snapshot of how you’re saving for retirement and if you’re on track to meet your goals. A financial planner should be able to get a holistic snapshot of your money and tell you where you’re doing well – and where you need to step up.
But you can also find out your financial health by yourself. Every month I go through what we’ve spent and what we budgeted. That helps me see if we’re on track to retire, buy a rental house and take a trip abroad. I can also see how surprise expenses affect our budget and if we have to allocate a little less to other categories.
Being financially healthy means being aware of what your finances are. It means tackling those hard questions and facing whatever issues you have. You don’t have to be debt free or rich to be financially healthy – you just need to be working toward a better financial future.
I don’t advocate for a life of deprivation. I don’t recommend staying at home, biking in the snow and dumpster diving for groceries. You don’t need to spend hours every month reconciling your bank account or analyzing the stock market. Remember, it’s like being physically healthy. No one expects you to only eat vegetables and eschew anything with sugar.
Take some time to figure out what being financially healthy means to you. If you’re not healthy yet, set a goal on how to get there.