By Toni Husbands, Debt Free Divas
As a mother of two very young children, staying healthy is a priority because I want to remain active with them as we all grow older. Helping my children develop healthy lifestyle habits is important so hopefully one day they can pass that on to my grandchildren. I didn’t have my oldest until I was 38, so staying healthy isn’t necessarily a given. At this age, focusing on health must be intentional.
Financial health doesn’t just happen either. It requires an intentional focus, but it’s important to have a healthy definition of what financial health really means.
Financial health has meant different things to me as I progressed through my financial journey.
I graduated during the DotCom boom of the 90s. Jobs were plentiful. Signing bonuses — at least in the IT and engineering world — were common. Bonuses and pay raises were expected and appreciated.
Life for a recent grad in Dallas, TX was good.
During that time, I would have probably equated financial health with being able to pay my credit cards, student loans, and car payment on time. Even though I’d joined an investment club, limited thought was given to planning for the future. The investment club was largely a social outing — for me.
My most pressing concern centered on planning for the next excursion. I lived by the motto, “Have card. Will travel.” I’m not proud.
If left Dallas to pursue a master’s degree and run smack into the DotCom bust.
I left undergrad with $13,000 in student loan debt. During the 90s, I paid the regular payment without much heartburn. However, when my career interest changed from corporate America to nonprofit (along with my income), that student loan payment became a larger issue.
By then, I was married. We dove into a mortgage. Actually, we never met a financing opportunity that we couldn’t refuse.
We bought a timeshare. Leased automobiles. Financed cars. Purchased a laundromat with a very expensive price tag. My penchant for travel only increased now that I had a built-in travel buddy. Most of that ended up on credit cards.
My idea of financial health during this time was largely tied to maintaining a high credit score.
According to FICO, we were rocks stars.
In reality, we were just deeply in debt.
Transitioning from a two income household to one in order to open a business forced us to face our finances with new eyes. No longer DINKS, we now had to learn how to create a budget together, operate with less income, and work through a massive amount of consumer debt.
After seven years, we’d paid off $107,000 in credit cards, student loans, car payments, and one timeshare. I grew to loathe that timeshare.
Now in my 40s, I don’t equate financial health with stuff. It has nothing to do with accumulating things or borrowing to fund my excursions.
I still love to travel. We just pay for it all with cash.
Financial health means freedom.
- Freedom from the bondage that debt represents.
- Freedom from anxiety related to juggling payments.
- Freedom from financial stress that can have a negative impact your physical well-being.
I see financial health, like physical fitness, as an ongoing process. A process that includes improving my financial literacy, establishing and adjusting goals as needs change, and taking action.
Financial health allows us to:
- Support worthy causes
- Explore entrepreneurial interests that can leave a legacy for future generations
- Maintain a one income household so I can stay home with my children
- Invest and prepare financially for the future
- Plan for college education funding to avoid student loans
- Expose our children, through travel, to a variety of cultures, people, and languages
Financial health contributes to the harmony in my home. Because my husband and I are not fighting and stressing over money, we can focus on building a stronger relationship.
Financial health gives you options.
What is Financial Health
Financial health, like our physical state, is something that can be achieved with the right mindset, proper education, and the right amount of encouragement.
A financially healthy person doesn’t have to be rich. They don’t need an MBA in finance. They don’t have to keep the TV tuned to CNBC either.
What they need above all else is a mindset change. When you know better, you can do better.
To describe financial health, let’s talk about what it is not. Financial health is not:
- Living from paycheck to paycheck is distinct sign that your finances are not in order.
- Only paying the minimums on credit cards or other debt means you are outspending your income.
- Relying on credit cards to cover emergencies means that you don’t have adequate savings.
- Avoiding calls from debt collectors can imply that you are avoiding financial challenges.
- Making purchases without regard to a budget is not a good plan for success.
Just like getting in shape, fixing your finances can be done with a plan and a commitment to change.
- Improve your financial IQ by reading personal finance books and blogs, listening to podcasts, or attending workshops and seminars.
- Use the debt snowball method to eliminate consumer debt.
- Build your emergency savings. Start with a goal of 3 months to get started.
- Improve your credit history by paying bills on time, eliminating debt, and not opening any more store credit cards.
- Associate with people who have a similar goal to improve their financial health. Remember, bad company corrupts good character. Limit your time with those who believe in living financially irresponsible lives.
The idea of what it means to be financially healthy has changed for me over the years. Thankfully, we have arrived at a healthy definition; one that will support our future financial goals.
I’d love to hear your thoughts.
This blog post originally appeared June 29, 2016 on Debt Free Divas. It was one of 10 winners of a national #FinHealthMatters Day essay contest created by Financial Health Network. MetLife Foundation is a major sponsor of Financial Health Network’s ongoing consumer financial health work. To learn more about FinHealthMatters from Financial Health Network, sign up here.