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The general notion of what health looks like has changed dramatically in the last few years. Increasingly, when people think about health, they’re thinking holistically: Health is physical, sure, but also emotional, social, spiritual, intellectual — and financial.
“I think financial health is such an important component of overall health,” says Kate Yearwood Young, founder of Yearwood Young Advisors, a fee-only financial advisory firm.
But what exactly does financial health look like? According to Kate, it’s about having an understanding of what money you have coming in, how much is going out and where, how much you’re saving, and why you’re building your savings. “While there will always be ups and downs, feeling confident about and in control of your finances can contribute so much to your mental health.”
Read on (and listen in) to find out Kate’s best advice for improving your financial health.
For Kate, financial health isn’t just about how big your bank account is or how much you’re saving. “I really believe that you can work toward financial health by making sure that your personal finances are aligned with your values and what’s most important to you,” she says. “Money is just a tool in our lives; if it’s not bringing you security or flexibility or happiness or something else that’s just fundamentally important to your life, then all the savings in the world aren’t really helping you accomplish your goals or live your best life.”
“I think balance is a key to financial health, and really any other type of health,” Kate says. And she isn’t talking about balancing your check book. “Life would be sad if we never spent money on things or experiences that make us happy! But it’s also difficult if we’re spending more than we have and are stressing out over growing debt. Sometimes, the difficult decision that may make us a bit unhappy in the near-term (forgoing that amazing leather jacket because you’re already over budget this month or skipping a girls’ weekend because you’re paying down your credit card) is what will allow us to build more enduring happiness down the road.”
Make Time for Money Check-Ins
One of the best things you can do, according to Kate, is check in on your finances on a periodic basis. She recommends doing this twice a year, using free tools like Mint.com, or, if you can, getting support from a fee-only financial advisor who can help you through the process.
“Think of your household like a little business; just like a business, you have assets and liabilities (which you list on a balance sheet), as well as revenues and expenses (which you’ll add up and track in an income statement). Businesses report these figures to their shareholders so they can determine whether the business is healthy and headed in the right direction. The same applies to our households; we need to take inventory of where we stand and where we’re headed to know if we’re on track toward our goals.”
One final piece of advice? Try to practice acceptance with yourself, says Kate. “Everyone has made financial mistakes and some of them can’t be undone. Instead of dwelling on the past, try to focus on what you can do to put yourself in a better position going forward.”
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