“Money doesn’t buy happiness, but it buys the kind if misery you may prefer”, is a quote often attributed to comedian Groucho Marx. I would like to say that Groucho is wrong, BUT in my 25 years writing the consumer financial column, $uper $aver and another 23 as a mortgage banker the sad truth is that if you are experiencing money problems and are not “financially healthy” it negatively affects your “health” in other areas. No money for healthy groceries? There goes your physical health. No money for rent, electric bill, school fees? There goes your emotional health. No money for an emergency cushion? There goes your psychological health. The bottom line is that your financial health is directly or indirectly tied to your physical, psychological and emotional health. So where to start?
My own financial health, while probably at any given time is not much different from your own, did not improve until I started to look at it more like a game than an unattainable project. Necessity (low pay and small raises of a young teacher) and the birth of my first child (Dr. Jordan), created a situation where I had to work towards financial health or make enormous lifestyle changes (like selling my home and cars). Instead, I looked for small places I could start saving money, one of them was using coupons. From the first time I got $72 worth of groceries at a local Libertyville, IL supermarket and the store paid me $28 to take the groceries home, I was hooked and saving money became my passion and avocation. My (tax free) savings turned into a way to pay my utilities, family vacations to Acapulco, Disney and Ocho Rios and eventually a nationally syndicated newspaper column to allow me to teach these skills to other moms. My point in sharing this is to remind you to: Start small, keep good records (I wrote down all of my coupon savings to stay motivated), be consistent and keep it fun and treat yourself once in awhile. Did I guy a Gucci Bag here and there with the savings? Guilty! But keep in mind, I worked for them with my coupon savings and in the end they were free.
Coupons, digital ways to save like credit card points, collecting airline miles, Honey (auto browser savings), loyalty programs and just old fashioned comparison shopping are good places to start. But here are ten ways to get started to improve your financial health. When you doctor gives you ten things that you need to do to improve your physical health (increase cardio, drink more water, eat more veggies, cut down on fats, etc., you have a motivation to stay alive and improve your physical quality of life to comply. Improving financial health is more of an ambiguous motivator unless you literally lose your job, can’t pay your rent and are in a dire situation.
In light of that here are ten ways to start to improve your financial health!
- Have a Savings Plan; I honestly started with a mason jar in the kitchen cabinet. I put my coupon savings in the jar each week and in 15 weeks I had $1,000. Then the money went into the bank. If you have trouble saving, try increasing your 401k distribution. That is painless because you don’t see it.
- Pay off Credit Card Balances; Try not to depend on credit cards as a means of support. I won’t tell you to close your credit cards because as a credit analyst, I can tell you that no revolving credit will result in lower credit scores. Using your cards and paying them to zero will increase your scores and eliminate interest. The goal here is not to carry a balance that you have to pay interest on or that eats up the money you saved elsewhere.
- Use Coupons; This might sound outdated but yes, use coupons. Eating out? Buy One Get One Free. Ordering In? Free Delivery. The Sunday newspaper is still a great resource for savings, and use the online coupons from your phone. I prefer to use coupons and bank the savings and then I never feel guilty about a mani-pedi.
- Have a Budget; This is easier said than done. However, if you use a really good budget app, you can look at this as a game too. My favorites are “Mint” and “Acorns”. Mint is a really good user friendly FREE budgeting ap. Acorns is more of a savings app. Also, on the larger scheme of things, don’t overlook “Nerd Wallet”.
- Have a Goal; Saving money and budgeting can be work and a pain in the a$$ actually. The best way to overcome the savings doldrums (it is more fun to spend than it is to save) is to have a goal for your savings. My coupon savings goal originally started out as a college fund for Dr. Jordan when she was 6 months old. However, when I got to $2,500 it was also my tenth wedding anniversary. We took the money and went to Mexico. (Thank God she turned out ok – but you get the idea)
- Spend Less than you Earn; It actually causes me physical pain to type these words, but it is true. Start by knowing what your actual AFTER TAX take home pay is for your household. It sounds like a lot if you earn $100,000 BUT remember that a huge portion of that goes to pay taxes, insurance, benefits, Social Security, so what are you really left with. I think a lot of people go wrong by working off of their w-2 and not the Net earnings shown on your paycheck. Are you a Friends rerun fan? Watch the clip where Rachel Green gets her first waitressing check and looks at it with disappointment and says, “Who’s Fica”. (If you are in the dark google).
- Keep Good Records; Along with your budget, make sure you keep good records. Check out your online bank accounts. To find out what you are spending in different categories, use your banking software to pull up things like: Credit cards, utilities, merchandise, etc. You can grab them by category.
- Review Your Cable & Internet Bills; One of the biggest pains in my A$$ is cable. It’s like men, can’t live with it can’t live without it. Make sure you review your bill. Are you getting overcharged? Do you really need all of the services you are paying for? You might be able to slice $100 a month off of your expenditures just by changing your cable provider.
- Review Your Insurance; Do you have insurance? Health? Life? Auto? Make sure you have ample coverage in case of emergency. One big illness, complicated pregnancy or even a trip to the emergency room can wipe out the average family. Also, if you are under protected find out if you have a family emergency, what the hospital is willing to write off. Don’t just NOT pay the bills and wait for collections to go on your credit report.
- Automate Your Savings; This might seem obvious, but today we automate our utility payments, mortgage, rent, auto etc. So why not automate your savings? If you are reading this article and you already automate your savings please comment. To stay financially healthy it is recommended that we save 10% of our gross income. This is difficult for people but if you start smaller, say with 3% or 5% automatically deposited into a savings account, you will learn to work with less!
These are ten of my 25 top tips that recommend to my clients and readers on how they can improve their financial health. One I did not mention is refinancing to lower the interest rate or term of your mortgage. If you live in Illinois, Wisconsin, Florida or Washington State and would like to discuss your home mortgage purchase or refinance please feel free to reach out. If you reside elsewhere I am available to answer questions and to put you in touch with a professional in your area.
Division President Diamond Residential Mortgage
Certified Divorce Mortgage Consultant