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:
- Look at what you are earning, after taxes, and write down every expense you have.
- Understand the difference between wants and needs; needs are water for drinking, food to eat, clothing to keep you warm, and shelter.
- 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.
- Take after-tax income for the month and allocate it accordingly:
- 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.
- 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!
- 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