How to Create Healthy Money Habits and Make Them Last

Financial wellness is a serious concern for many people. Here’s how to change your attitude on money, and improve your financial health for the long run. New year, new you, right? Every year people around the world ready their New Year’s resolutions, hoping to trim their waistlines and their spending. But taking a healthy approach […]

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Financial wellness is a serious concern for many people. Here’s how to change your attitude on money, and improve your financial health for the long run.

New year, new you, right? Every year people around the world ready their New Year’s resolutions, hoping to trim their waistlines and their spending. But taking a healthy approach to your financial wellness needs more than saving a dollar day, or cutting out a coffee a week. Much like your fitness goals, your financial wellness is essential to your life. It needs a dedicated mindset, and a life-long, strategic approach.

Amazingly, two-thirds of adults expect to live past 80, but only one in three is confident that they will have enough money to do so, and only 35% feel financially secure, according to a study from consulting firm Mercer. Most people don’t think they will retire at all, or they expect to work well into their later years. It seems that living healthier, working longer and making our money stretch long past 65 is a reality that many people will face.

If taking care of our physical health is a priority, and our financial health should be just as important. Think of it this way: those extra gym sessions you’re planning are hopefully going to lengthen your life. Make your money last as long as your body will.

You know what to do, but the question is how to do it. Here are five ways to start flexing your financial muscles.

Be focused and determined

Start by being focused and determined. Make it an action item, put it in your agenda and stick to it, says Olga Miler, innovator and expert on women and money. Retirement companies and other financial services firms put out countless reports on financial planning, but they probably look intimidating and littered with indecipherable jargon. “You don’t need to be fluent in financial jargon to figure out what will work for you,” says Miler. Try one of the many existing retirement calculators online or simply do it on a sheet of paper. There is no right or wrong, but just doing nothing is not the way to go, she says. All you need is your salary information, your expenses and a couple other numbers to be able to get a rough retirement number to aim for.

Know what you have and what you want to accomplish

Having a transparent understanding of your financial situation is always helpful, but especially if you’re sharing finances as a couple. List it all out, suggests Miler. Take into account your cash, home, art, jewelry and any other assets. Take a look at your earnings, but also your debt from credit cards, student loans and mortgages. These numbers will help you determine your annual “burn rate” as well, or how much you’re spending versus what you are earning. You don’t have to be an expert to realize that you want to earn more than you spend!

After breaking down these numbers, Miler suggests aiming for financial accomplishments in the short, mid and long term. “It’s like in fitness. Define how much you want to lose on your waistline and define how you want to look in the future, how much you want to exercise in the next month and what workout you will do tomorrow,” says Miler. Do you have children that will need college funds? Perhaps you’d like to upgrade to a bigger house in the next five years. Be clear and realistic in your planning.

Define your rules and values

“No matter how much, or little, you have, money is a very powerful tool,” says Miler. How you spend or invest your money says a lot about you as a person. Think about your priorities, be it returns, having a social or environmental impact or maybe supporting young entrepreneurs, suggests Miler. Write those down as your financial rules. Then take a look at where your investments are going. Do they reflect your values? There are so many investment products available, chances are you can easily find options that will put your money to work in a way that you want. Just ask!

Take action

It’s time to determine what kind of financial support you need. Ask your family and friends about their financial experiences, Miler recommends. Determine if you want to seek out a bank, wealth manager or independent advisor to help you reach your financial goals. And be sure to do your research. Check credentials, qualifications, track records and prices. “We have found that this is one of the most difficult and time consuming steps,” admits Miler, “finding a person to trust, both on a qualification and personal level.” Best options are asking friends for referrals, online research and speaking to multiple advisors before making a choice.

Stick with it

You found your financial partner. Now what? Depending on who you chose, they will proceed in different manners, but they will certainly start by determining your risk profile. This is the amount that you are ready to lose if things don’t go well. And then, you invest. “What matters most is to track your progress regularly and adapt as your life and circumstances change,” says Miler. “But ultimately the most important thing is to just do it,” says Miler. “Only when you invest your money can it work for you.”

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