Financial Wellness, What Does That Mean?

Wellness is the conscious, deliberate process that requires that a person become aware of and make choices for a more satisfying lifestyle.

So what does financial wellness mean?  Financial wellness is a feeling of satisfaction with your current and future financial situations. Finances are a common stressor for people, so if you can minimize worry about this aspect of your life, you can enhance your overall wellness.

When I first stepped into my recovery, I didn’t know what wellness meant or what taking care of myself would mean to me 25 years later.  I had no idea what a real journey it would be discovering who I was and what I wanted to be. As I look back, I realize that I lacked knowledge in many areas. I also learned to accept that we are a product of our environment, but that doesn’t limit us from learning and growing until the day we take our last breath.

In the past, I always spent every cent I made. I never learned the importance of saving. I had always been a hard worker and enjoyed having money because I felt money gave me the independence to do what I wanted, when I wanted. I didn’t think of the future. I worked hard and played harder: traveling and dining without having any thoughts of saving money.

When I had six years of sobriety, I got married and started a new job.  I was in my late 30’s and I started thinking about the future. My partner and I wanted to buy a house and have children. I sure wished I had saved something all those years!

Fast forward, a few years, a few kids, and a few life lessons later, we were in serious debt.  We had a home equity loan, a small business administration (SBA) loan, and my husband’s business had failed. It was 2008 and the entire county was in a financial mess. I hit my rock bottom with money and I decided I was never going to be in this place again.

I saw a sign at one of the church’s near my home: ‘Dave Ramsey Financial Freedom’. I went online and started reading about his eight-baby step plan. The program is plain, simple and grounded in spirituality. It was perfect for me.

I have learned invaluable lessons and I view money very differently than I did in the past. Savings gives me freedom and independence. I have changed our family destiny and I hope my three sons have learned good financial habits.

Here are a few financial wellness tips I followed to improve my financial wellness:

  1. Look at what you are earning, after taxes, and write down every expense you have.
  2. Understand the difference between wants and needs; needs are water for drinking, food to eat, clothing to keep you warm, and shelter.
  3. Make a budget and use the 50-30-20 rule:
    • Take after-tax income for the month and allocate it accordingly:
      • 50% for needs: water, food, shelter, transportation, phone bill, etc.
      • 30% for wants: anything in your life that isn’t necessary for your basic needs.
      • 20% for savings.
    • Depending on your debt, the budget can look different. For example, I took my wants allocation and put that money toward my debt.
    • Keep in mind: The faster you pay off your obligations, the quicker you can move on with the next steps.
  4. Educate yourself and make smart choices. Look at this Dave Ramsey example of how compound interest works:
    • If John (age 21) saves $2,400 a year for 9 years and Sam (age 30) saves $2,400 a year for 37 years, who will have more money? The answer changed my world.
      • John invested $21,600 and will have $2,547,150 by the age of 30 whereas Sam, who invested $88,800, will have $1,483,033 by the age of 67.
  5. If you can’t pay cash for it, you don’t need it.
    • The only exception is a home purchase where you can take out a loan, although if you can’t put 20% down, you can’t afford the house!
  6. Never buy a brand new car. Buy pre-owned for cash and save.
    • A new car is the worst investment you can make! A new car decreases in value 20% – 30% at the end of the first year, and, in five years, it can lose 60% or more of its initial value.

It is never too late to start. I am grateful that I have had my lessons in life, and I have learned and grown from them.  I have told my three sons, money doesn’t make you happy, but having enough for what you need does bring peace, and the ability to have and enjoy a satisfying life.

“You must gain control over your money, or the lack of it will forever control you.”

–Dave Ramsey