What do you imagine when you hear the term “self-care”?
Typically, people associate self-care with practices such as getting a massage, spending time in meditation, taking a bubble bath, or doing something else that you enjoy. While these certainly help decompress, it’s important to consider the bigger picture when finding ways to exercise self-care.
Namely, finances can be an area where you may find yourself worrying about the future and making the best decisions for yourself and your family. Although less commonly discussed, financial self-care is just as important as regular self-care and decompression activities. Not only will financial self-care help you focus on the positive side of your money life, but you’ll also be better prepared for possible hardships by ensuring your finances are well-cared for.
Let’s talk about some of the top financial self-care tips to help you get back on track.
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9 Top Financial Self-Care Tips
The last year has been rough, and just like practicing self-care in other areas of your life, it’s good to check once in a while and make sure your finances are doing okay as well. Plus, thinking about fun things you can do with your money is always a bonus.
Here are the top ways to practice financial self-care this year.
1. Prioritize Debt
Debt can be overwhelming for anyone, no matter their financial situation or income level. Debt stress can creep up in unexpected ways, from job performance to how you handle money conversations.
While getting up close and personal with your debt might sound overwhelming and counterintuitive to self-care, this is an important step to create an action plan to alleviate your debt. In the end, once your debt is in order and paid down, you’ll be breathing that sigh of relief and will be lifting the debt weight off your shoulders.
Not only will your stress levels drop, but your financial situation will be much more solid.
Start by listing your current debt. This should include who you owe, how much you owe, the interest rate, and the minimum payment. Evaluate which debts are:
- High priority: rent, car payments, utilities, and child support
- Can quickly become a high priority: student loans, mortgage payments, property taxes
- Lower priority: medical debt, credit card debt, charge accounts with merchants
For the purposes of this article, high-priority debts are categorized as those that can severely negatively impact you and your family’s lives if not taken care of in the short term. If you can, try to pay more than the minimum amount due each month on your debt. This is a “quick win” way to lower the term of your debt, making the payoff happen faster.
If you’re able to make all your minimum payments every month, switch focus to your highest-interest debt and try to make extra payments. You’ll save time and interest off your debt by making extra payments, which you can then put toward other debts.
Working diligently to pay off debt is a great step toward improving your financial self-care and your physical self-care.
2. Budget for Fun
While it is important to have some sort of budget to guide your savings and maintain a healthy spending routine, it’s also important to budget for fun. In fact, American families, on average, will spend $2,482 on entertainment each year.
With the responsibilities of bills, mortgages, debts, and more, it can be easy to forget to put money aside for recreation. Self-care involves taking deliberate steps to better one’s overall health: physically, emotionally, and mentally. Make sure to allow for some additional funds to spend on activities that promote wellness. Whether this includes saving up for a vacation (save money by road-tripping or day trips) or budgeting to eat out once a week, you need to have the opportunity to enjoy life by proactively planning with your money.
3. Find Ways to Give
Just as important as it is for you to spend some of your hard-earned money on yourself and your family, finding ways to give back and help others can provide you with some great benefits. Finding a charity or organization that has meaning to you or your family is a special way to give back to others in need.
Not only does donating set a great example for your family, but there are actually health benefits associated with giving—including increased self-esteem and lower blood pressure. This can include donating with a one-time contribution or even further with planned giving throughout the year. No matter the route you choose to go, remember that there is no wrong way to give back or help someone else out. Understanding how you can help impact the community or a neighbor is a mutually beneficial way to practice financial self-care and improve self-esteem.
4. Revisit Insurance Policies
A lot of stress can stem from uncertainties about the future. And while you can’t guess what tomorrow brings, planning for it fully can help you feel more confident that you can handle whatever is thrown your way.
Making sure you and your family are covered in case of hardship is important, which is why it’s critical to ensure that you have the proper insurance policies in place. Which insurance coverage you need will depend on your specific situation, but the most common forms of insurance are home and auto, health, and life insurance. It’s best to revisit your insurance policies regularly to make sure they still adequately meet your needs, but also because you may be able to save a bit of money by doing so. Auto policies, for instance, are an expense that you may be able to renegotiate.
One type of insurance that isn’t discussed as much is life insurance. Because life insurance acts as an income replacement in the passing of a household income provider, it may be important to plan for your family or any other dependents you may have by enrolling in a plan.
No matter the type of plan you ultimately choose, if you have dependents you should consider incorporating life insurance into your financial self-care routine and regularly check to ensure that the plan provides the appropriate coverage.
5. Improve Financial Literacy
Continually improving your financial literacy is one of the best things you can do for yourself. Money and finances are intertwined with almost every aspect of our lives, and the better we understand them, the better our decisions and lives will ultimately be.
Luckily, almost anything you want to learn can be found with a few clicks. There are blogs, podcasts, videos, and books available at little or no cost. The power of knowledge is literally at your fingertips, so whenever you come across a financial term or concept you don’t know, take some time to learn before making a decision involving it.
If you are a parent, another great way to ease some financial stress is to instill strong financial principles in children as they grow. By teaching financial literacy, parents can worry less about how their children will handle their money and feel secure they understand how to set themselves up for success. Building a strong financial foundation in these good practices provides children with a deeper understanding of the value of money.
Whether you’re just beginning to improve your own financial literacy or looking to teach financial literacy to your children or teens, the dividends paid on these investments will not only improve your financial self-care but your overall well-being.
6. Build an Emergency Fund
What would happen if you had an emergency tomorrow? What if your car broke down or your water heater quit? Would you have enough money to cover the expense without going into more debt?
Unplanned expenses such as those described above are exactly why an emergency fund is so important. They are just what they sound like, for emergencies.
Creating an emergency fund can help stash some extra money away in the event of an unforeseen circumstance. By setting aside a little extra money each paycheck, you can pay for the unexpected without putting yourself in a worse-off position with debt, which not only will help fix your emergency but will lessen your stress. It’s a win-win for financial self-care.
To make the process easier, consider an automatic scheduled transfer to a savings account each paycheck. With most banks or credit unions, you can elect to automatically transfer a percentage or a dollar amount at a frequency you choose. This way, the money is put toward savings before you have a chance to spend it. Drawing from this account should only be done in emergencies, such as with unexpected expenses or the loss of a job.
7. Make Fun Money Goals
A trip without a map typically leaves you wandering around aimlessly, and you may even eventually end up lost. It’s the same with your finances. It’s important to make money goals so that you have an idea of where you are and where you want to be heading.
While it’s important to have money goals for major life things such as buying a house or saving for retirement, it’s also necessary to have fun money goals. Building on the section about budgeting for fun, it’s also important to set money goals that are exciting to you and that you’re motivated to achieve. These could be purely fun goals like taking a big trip every year, or they could simply be goals that would make you excited like buying your first home.
Whatever excites you, improve your financial self-care this year by dedicating some time to working toward a fun money goal.
8. Examine Your Money Mindset
What do you think about money? Is it the root of all evil or a means to an end? Do you need money to live or do you live for money?
Your money mindset is your overall outlook and attitude in regard to your finances, and while you may not realize it, your mindset drives how you make financial decisions daily. For some, money has always come with negative associations and thus you may have a negative money mindset. For others, money has helped them get what they want out of life.
Wherever you fall in terms of your money mindset, one thing is for certain: a positive money mindset will make it more likely for you to take the steps needed to achieve your goals. On the other hand, a negative mindset tends to lead to defeatism, hopelessness, and ultimately, falling short with money.
Now, this isn’t to say that money mindset is the only thing potentially holding you back, but it definitely may be part of it. Examine your money mindset and see if you can’t shift more toward the positive to improve your financial self-care.
9. Invest in Your Future
While most of the above tips are focused on your present financial situation, it is just as important to consider how your finances will look as you age. While a natural goal of aging is retirement, there are a few factors to consider before you get to that point.
Will you have enough of a cushion to retire comfortably, or will you still need to work to some degree to support yourself? Will you have major purchases (like your car or house) paid off completely, or will this still be a recurring payment that you will be responsible for?
If you haven’t already, check and see if your employer offers 401k matching and contribute enough to be eligible for the match. If you are looking to switch employers, see what steps are necessary to roll over any current 401k contributions you already have to the new plan. In addition, you should also look to invest in other ways as well, such as by opening up an individual retirement account (IRA), 403(b) (for government employees), or other forms of investment like real-estate.
Also, don’t forget the investment that pays the most dividends: yourself.
Moral of the Story
It’s important to take care of our bodies and minds in order to remain healthy and happy. But, no matter how physically healthy you are, it will be impossible to be fully happy if your financial self-care is lacking.
Now that the year is well underway, take a moment and reflect on where you stand with your finances and re-examine areas that could use improvement. Using the financial self-care tips above, see what changes you can make to improve your finances, your health, and your life.
After all, financial self-care is ultimately self-care.