How to Invest in Your Financial Wellness

by Spero Financial

Taking care of your physical and emotional health has become a popular topic. People love talking about the latest exercise trend or the best things to do to promote their emotional well-being. While your physical and emotional health are important, don’t forget to take care of your financial health, too. 

Financial wellness requires taking time to understand your emotions surrounding money. It’s important to develop healthy emotions around money, which will ultimately help you successfully manage your money. Without a sound financial plan, it’s all too easy to walk through life feeling like your money is controlling you. Financial wellness is getting to a place where you control your money. 

Believe it or not, your early life experiences can have a major impact on your financial wellness. Good or bad, those experiences can trigger emotions that you will carry through life. These emotions will, in turn, affect your relationship with money. And your relationship with money impacts the interactions you have with money. So, if you want to improve your financial wellness, a good first step is establishing a healthy relationship with money. To develop that healthy relationship, you need to take a look at the way you currently relate to money.

What’s Your Money Personality?

Everyone approaches money differently. We all know someone who’s extremely frugal, and we probably have a friend who’s always ready to swipe their card while shopping. There’s a good chance we’ve also encountered someone who always seems to have their budget in order. 

People may approach money the way they do because of their upbringing, career choices, current financial situation, and many other things – all of which form their subconscious beliefs about money. These subconscious beliefs are known as money scripts. For better or worse, everyone has their own relationship with money. Yes, even you! Curious about your relationship with money? Try a test called the Klontz Money Script Inventory.  

The Klontz Money Script Inventory

The Klontz Money Script Inventory measures your relationship with money in four categories. Every person has a score within each of these categories. By determining which ones best describe you, you can gain insightful information about your relationship with finances. Why is this important? Knowing why you interact with money the way you do can help you pinpoint actions to improve your financial health.

Money Status

Those who score high in Money Status equate their self-worth with their net worth. They may have grown up in a lower socioeconomic class or a household where outwardly wealthy people were highly regarded. Money Status people feel they are always competing with those around them, and they like to make it obvious how much money they have. They are more likely to overspend and hide their spending habits from their spouses. 

Action Item: If you think that Money Status might fit your money personality, consider each purchase you make carefully before making it. If it’s not a necessity like gas or groceries, ask yourself why you are making the purchase. Do you need it, or is it just for status?

Money Worship

People with high Money Worship scores think money equals happiness and that one can never have enough money. To them, money is the solution to any problem. Money Worshipers are more likely to have debt, and their pursuit of money never seems to satisfy them. 

Action Item: Money Worshipers will benefit from finding activities that bring them joy and do not cost a significant amount of money. Whether it’s baking, reading, or hiking, look for ways to have fun and enjoy life without spending too much money. Money is nice to have, but it doesn’t buy happiness!

Money Vigilance

A high score in Money Vigilance typically points to someone who keeps a watchful eye on their finances — someone who budgets well, doesn’t overspend, tends to be frugal, and already has a solid foundation of financial wellness. Those who score high in this category also save well and think money should be something people earn rather than something they’re given. They make good spending choices and typically find it improper to talk about finances with anyone other than their spouse or partner. One downside to a high Money Vigilance score is that it indicates someone may be anxious about their finances and unable to enjoy the money they earn.

Action Item: Try not to get caught in a cycle of constantly worrying about money. If you identify with Money Vigilance, set aside a small sum of your budget to treat yourself now and then. It could be as simple as a nice meal out or as extravagant as a weekend getaway. Allow yourself to responsibly enjoy those funds that you worked so hard for.

Money Avoidance

Money Avoidance tends to be higher in those who are already wealthy. These people believe money is inherently bad, that they don’t deserve money, and that rich people are greedy. They frequently give money away and try not to think about money if they can help it. Sometimes, people’s professions also reflect Money Avoidance. Psychologists and social workers tend to score higher in Money Avoidance, while those in business tend to be lower in this category. 

Action Item: Although it seems counterintuitive, avoiding money can cause more problems with money. If you’re dealing with Money Avoidance, you should check your bank accounts regularly to ensure you still have enough to cover your expenses. Then, if you have disposable income left over, pick some of your favorite charities and make a donation. By using your money to help others, you can remind yourself that it’s okay to have money.

Which category sounds most like you? Take some time to understand these four categories and see if they help you better understand your relationship with money! Want to dig more into your money personality? Check out Mind over Money, written by Ted and Brad Klontz (father-son duo), who’ve pioneered the field of financial psychology.

Final Steps to Improving Your Financial Wellness

Once you decide where your relationship with money currently stands, set a goal for where you want it to go. How you get there is up to you. Ultimately, financial wellness looks different for everyone. Set achievable goals that take into account your personal circumstances. Here are some practical steps to improve your financial wellness.

Take a close look at your finances.

There are two categories of expenses: fixed and variable. Fixed expenses remain fairly unchanged month-to-month. These are things like rent, bills, food, and transportation. Variable expenses fluctuate and include clothing, outings with friends, and vacations. When looking at your finances, it’s important to determine how many of your monthly expenses are fixed and how many are variable. Once you do that, compare how much you spend each month with how much you make. If you’re spending more than you’re making, you’ll probably have to cut a few variable expenses.

Set and stick to a budget.

To make wise financial decisions, you should create a budget that you can stick to each month. One recommended budget is the 50/30/20 budget. With this budget, you can use 50% of your income for essential expenses, 30% for things you want, and 20% for savings and paying off debt. Different budgets work for different people, so take time to figure out what works best for you.

Create a financial calendar.

As we’ve mentioned, you will have several fixed expenses every month. One way to keep track of these costs is to create a financial calendar. Simply make paying monthly bills an event on your calendar. This step will help you keep track of your financial commitments and pay them on time. You can even set times to plan for bigger purchases like vacations.

Save and invest.

We get it. Saving and investing doesn’t sound like the most exciting thing. But it’s a vital part of gaining financial security. If you can become financially secure, you won’t need to worry about money. You’ll be equipped to cover the costs of emergencies and can work to become debt free. If you set aside a small portion of your income each month, unexpected expenses won’t hit as hard.

Educate yourself.

It can never hurt to improve your financial literacy. Whether you’re a financial expert or new to managing your finances, there’s always something new to learn!

These steps are just a few of the many ways you can improve your financial wellness. Your financial health is vital and can help you feel more secure and in control of your money. It’s important to use your money wisely, but it’s not bad to spend some money on things you enjoy. It’s all about finding a healthy balance that suits your needs. No matter what goals you set for yourself, give yourself a little grace. Work towards your financial goals with diligence but be understanding with yourself if you have a few minor slip-ups from time to time. Focus on progress, not perfection. 

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