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 percent outlive those in the bottom 1 percent 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
In 2020, the connection between health and wealth became clearer than ever with the emergence of the COVID-19 pandemic. It’s harder to stay gainfully employed and manage stress when you fear becoming ill or spreading the virus to vulnerable family members. Plus, constant news updates and changing government orders ratcheted up the stress for everyone.
Whether it’s the pandemic or something else that’s causing anxiety, stressors damage both our bodies and our bank accounts. In its report, the APA estimated that stress costs the U.S. $300 billion annually in terms of accidents, absenteeism, employee turnover, and direct medical, legal, and insurance costs.1 While stress can have many sources, financial insecurity almost always tops the list in an individual’s life.
You already know the basic set of principles health experts generally agree upon: exercise regularly, get seven to eight hours of sleep each night, eat plenty of vegetables, and avoid fatty foods, alcohol, and too much sugar. To these, you should add taking care of your financial well-being. Here are some ideas for how to do that.
A U.S. Bank 2020 Women and Wealth survey of 3,000 men and women found that 72 percent of women and 59 percent 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 percent 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. A financial professional can help you set and work toward goals that may improve your financial well-being and align with your retirement vision.
Sometimes, the unknown can be a bigger stressor than known expenses. Medical expenses can be one of those unknowns, whether they’re a result of an accident or an illness. So, put your mind at ease by earmarking savings for this kind of expense.
Exactly how much you’ll need depends on your insurance coverage, so the first step is 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) or flexible spending account (FSAs).
While it’s difficult to pinpoint a dollar figure for how much you’ll need in health reserves, the general rule of thumb is to build an emergency fund with enough money to cover expenses for a three- to six-month period.
Conversations with loved ones about money and health can be awkward or even difficult, but they’re a necessary task if you want to feel true peace of mind.
First, make sure that all your estate planning documents —your will, healthcare directive, and power of attorney—are in place and current. They’ll form the basis for those important conversations that will make sure your loved ones understand your wishes.
Second, you’ll want to consider who your beneficiaries should be. Most people’s beneficiaries will be their child or spouse, but for others, it may be a nonprofit or another loved one. It’s important to have conversations with family members to make sure everyone understands your wishes. This is especially true if you’re leaving behind a business or have assets with sentimental value to your loved ones.
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.
Want to learn more? Check out this 4-step guide to financial planning for today and the future.