It’s been proven that serious financial worries exact a toll on both mental and physical health—and they can even affect life expectancy.
An American Psychological Association (APA) study found that men earning an income in the top 1% outlive those in the bottom 1% by almost 15 years. For women, the difference in longevity is 10 years.1 One reason for this, according to the APA, is that, under stress, people release inflammatory hormones that have been linked to serious illnesses, including cardiovascular disease and cancer.1
While stress can have many sources, financial insecurity almost always tops the list. According to a survey by the FINRA Investor Educational Foundation and the Global Financial Literacy Excellence Center, a large portion of adult Americans felt anxious when thinking about (60%) and stressed when discussing (50%) their finances even before the pandemic, which further intensified their existing stress and anxiety.2
Just as there are a basic set of principles to improve your physical and mental health – exercise regularly, get enough sleep, eat a balanced diet – there are also steps you can take to care for your financial well-being. Here are some ideas to get you started.
Having a financial plan can help you feel more confident about your financial future and better prepare you to handle evolving and uncertain circumstances as they arise.
Tracking your spending is a good first step in taking control of your finances. Write down every source of income and every expense per month, including entertainment. Once you add up your income and all your expenses, you’ll know how much money you have left over to put toward your short- and long-term financial goals.
Sometimes, the unknown can be a bigger stressor than known expenses. Put your mind at ease by setting up in an easily accessible emergency fund. The general rule of thumb is to save enough money to cover three- to six-months of household expenses.
Medical expenses can be one of those unknowns, whether they’re a result of an accident or an illness. Exactly how much you’ll need depends on your insurance coverage, so conduct a thorough review of your insurance policies to ensure you and your family are amply covered in case of a health problem or emergency. Types of insurance policies to check include life, disability, health, and long-term care, as well as health savings accounts (HSAs) and flexible spending account (FSAs).
A U.S. Bank 2020 Women and Wealth survey of 3,000 men and women found that 72% of women and 59% of men cite financial security as a main motivator for setting financial goals. In addition to the gap around financial security, respondents were also concerned about having enough money for retirement; 43% of women cited it as a key motivator, while a third of men did.
And no wonder: People are living longer and will need a much larger nest egg in retirement. That can be a stressful thought, especially if you didn’t start a 401(k) until later in your career or fell behind on your savings goals. However, incorporating an investment strategy into your financial plan can help you steadily build your long-term savings. The easiest way to start is through a workplace retirement savings plan if you have access to one. Many employers match contributions to a certain amount, so make sure to contribute at least that amount.
If an annual physical exam is important to maintaining good health, then an annual meeting with a financial advisor or banker is a great way to tune up your financial health. Financial planning can help ease your money-related stress by ensuring you can deal with small setbacks and still take care of yourself and your family.
The pandemic changed the way Americans spend and save money. Here’s a cheat sheet of pandemic money habits to keep.
This step-by-step financial planning guide can help you set a personalized strategy for achieving your short- and long-term goals.