Self Care Series Part 7: Financial Wellness

Welcome to this 8 part weekly Self Care Series, where we look at 8 key aspects of Self Care. 

My Challenge To You: Each week (M-F) take 1 Action Step daily to start paving your 2021 with intentional positive Self Care Habits.

I’m going to be honest, it has taken me to get to the better half of my 30’s to really feel like I have a hold on my finances and that I am financially fit. I like to call it “adulting”.

My parents did a fantastic job of teaching me to work hard and always have savings and such but I found myself straying many, many, MANY times racking up credit cards and getting deeper into a hole of over draft fees.

So for this section I reached out to my good friend and my Financial Advisor, Stephen Dudek over at Access Financial (www.accessinvestmentadvisors.com) for his Pro Tips for Financial Wellness:

1)  GET AN HSA.

  If you don’t have a health savings account, you should definitely look into getting one! Depending on certain criteria related to your insurance plan, specifically the levels of its deductible and out-of-pocket maximums, you may be eligible for an HSA. These accounts have great tax benefits- deposits are made with pre-tax dollars, lowering your tax liability, and the account grows tax-free as well. Further, so long as withdrawals are made for qualifying medical expenses, you don’t have to pay tax on the withdrawals! An added bonus: after the age of 65, if you want to take money out of your HSA for a non-medical reason, you only have to

pay income taxes. 

2) BUDGET SMARTER. 

We all know that budgeting can be a helpful way to rein in bad habits when we get out over our skis on spending. However, this idea can be a bit conceptual- a real example is often more powerful. Let’s take alcohol for example. According to the Bureau of Labor Statistics, the average household spends approximately $565 a year on alcohol. Might not sound like too much really- but consider this. Imagine for a moment you took that monthly $47 you were spending on booze, and instead deposited it in a retirement account. Let’s further pretend that you did this for 30 years and invested in all stocks, and got yourself a healthy 8% return on that money. In thirty years, you would be left with an extra seventy thousand dollars! Now THAT is the power of compounding at work! 

3) SAVE FOR THE LONG TERM, NOT TOMORROW. 

This pandemic, in addition to upending every other aspect of our lives, has also witnessed the rise of Robinhood, an online trading app allowing people access to a huge array of investment products, from the vanilla to the esoteric. This is not a knock on Robinhood! This is actually a knock on investing in things we don't understand, for the sake of trying to hit a home run. Sometimes people get caught up in complex options strategies they don’t understand, and lose far more money than they were anticipating. When sizing up a stock, make sure that you understand it, inside out. Better yet, avoid the inherent risk that comes with buying single stocks, and invest in a diversified fund, ideally with a low expense ratio. Don’t buy something expecting it to triple in a week- understand instead the long-term nature of investment. 

4) MANAGE YOUR DEBTS WISELY!

Debt is, sometimes, unavoidable- student loans, a new car, that first house. However, when approaching the management of debt, there are a couple ways you can go about it. There are two common methods, the snowball and the avalanche. The snowball method is psychological- pay down your debt each month with the smallest balance first, enjoying the sense of achievement, building up to tackling those big balances later on. The other method is the avalanche, which is more quantitative (and, honestly, makes more mathematical sense)- get rid of the debt with the highest interest rate first, working your way down. Which way is right for you? Well, only you can know that. Nonetheless, they both have their advantages!

Now go do yourself a favor and start working on one of these or looking into guidance from a Financial Advisor. My anxiety and stress with money got better when I got myself set up for success with my Financial Advisor and learned that money doesn’t have to be feared, it is simply an exchange of energy.

Please reach out to Stephen for any financial inquires and I would love to help you break through any mental financial barriers you might be having.

There is always a way through.

Be well,

~T~