How Does “Financial Wellness” Work?

When I started working on my money life, I wasn’t sure how to go about being healthy with money. The terms were mysterious to me, and I thought the feelings of fear and shame would eat me alive. It was so overwhelming since it seemed like every day brought new costs and financial decisions to make.

Sports are really important in my life. For my tennis game, I can’t just show up and expect to win without having spent any time on my game outside of matches. There are certain things I do to prepare for the glow of being able to play my best. I practice, hydrate, eat well, get coaching, hit on a backboard, and discuss strategy with people who have good tennis games. I use this template of what works well and apply it to how I handle my money life, as well. My money doesn’t get in good order and in alignment with my goals without my spending time and energy on it.

Formula Aspect 1

Without attention on your numbers, this never-ending stream of financial data is moving through the cloud with your name on it, and you don't actually know the upshot of it. You can be very honest and connect with others, but without attending to your actual numbers, you're taking best guesses and operating on a set of general hunches that everything's probably okay in your accounts.

So how does one pay attention to their numbers? Tracking regularly. Having a numeric plan (aka budget) and then matching your spending, saving and earning reality to it, in the numbers. It doesn't have to be obsessive, you just have to know enough details to be clear whether it is working to match your priorities.

Formula Aspect 2

Without deep self-honesty, you can crunch the numbers all day long, and you can connect with others around it in various ways, but how do you know whether your numbers are matching up with living your best life? How do you know where you are on the spectrum of sucky life to best life, according to your own values?

You can be doing all the "right" things that Money magazine says to do, but if you're not taking the time to dig in and find out what's true for you TODAY, then in some ways this life opportunity is passing you by.

This is also true for updating my deep self-honesty. Part of the "deep" aspect is that the self-honesty be current. If you've been chasing something out of inertia, it can feel good to have a path or an outcome to head towards. But when did you last take stock to re-examine if it's really the best fit for you, given what you know now?

I see this coming between couples all too often. They may have a sense of each others' values, and then continue to act accordingly until more information arrives. If one or both people are not checking in with themselves regularly, all of a sudden it can seem like the other person is something to fight, out of alignment with what feels right to you today. (When in reality, they may just be acting from an outdated paradigm.)

OK, so how do you experience deep self-honesty? Some practices that help me are journaling, finding someone I can trust to talk with regularly about this stuff (who isn't personally affected by my financial choices), if I've set financial goals and am consistently not meeting them, I review whether I actually do want those things.

Formula Aspect 3

Without connection, we tend to get too isolated and stuck in one or more of the difficult emotions (fear, anger, scarcity, low self-worth). Without connection, we can also be more susceptible to denial and rationalization. I've also noticed that sometimes, peoples' expectations can be way high or way low compared to average realistic human behavior. Someone may beat themselves up for not saving "enough" money, and feel too ashamed to talk about it. It's incredibly healing to have that conversation with a trusted person. Reality checks are priceless, whether I like them or not!

Those healing conversations are actually where the 3 elements of the formula can all get their beautiful airtime together. When I know my numbers, the conversation has the chance to become less vague and get more traction. When I've taken the time for deep self-honesty, I can ask relevant questions and have plenty to offer the conversation. I can even drive the conversation, if the other person wants to practice the formula but doesn't have as much experience with it yet. Then the connection happens when I decide to be vulnerable enough to venture into this territory with another human.

I help clients learn and practice the following behaviors. Practice is the key word. We’re not going for all-or-nothing…we’re going for, do the best you can, and when you step off the path just do your best to step back on.

Elements of a Financial Wellness game plan:

  1. Know your net worth. Assets minus debts. It really helps to have that as a starting point. It’s the “YOU ARE HERE” on the map of your financial health.
  2. Create a monthly, predictive spending plan. (It’s like a budget, but sounds less restrictive!)
  3. There will be a baseline of income and expenses, probably, that stay relatively similar from month to month. However, we look at the calendar of the month ahead to see what special items need to be accounted for in the spending plan.
  4. Have an accountability partner. Someone with whom you can be honest, and who possesses at least some of what you want in your money health. This is likely not someone who has the stock answer of, “Oh, go ahead and buy it. You deserve it.” This is someone who is able to know how important it is for you to reach your goals, and knows that instant gratification is rarely going to be the best answer. I still send my monthly plan to my accountability partner, every month. When I know that someone I trust has seen my plan, I am about 300 times more likely to stick with it.
  5. Write your goals somewhere you will see them at least each month. Maybe set a reminder in your phone. I currently have a goal of getting my net worth to increase past a certain number this calendar year. This helps me weigh out how much I actually want to buy something, and colors how loose or tight I choose to plan my monthly spending plan numbers.
  6. If you’re a 1099 contractor, keep up with your profit and loss statement monthly, and put aside estimated taxes into their own savings account so the money is there when it’s time to pay your quarterlies. (A very rough rule of thumb is you can expect to have to pay at least 20% of your net profit, which is gross profit minus deductible expenses.)
  7. Set up a system that works for you (such as, if you invoice clients, or to track your expenses and be able to tie them back to your spending plan. Some people even use cash in category-designated envelopes. (So retro! So effective!)
  8. I have a weekly, what I call, Numbers Lounge. It’s a designated time (at least half an hour, usually) to look at my accounts, balance my virtual checkbooks, update my categories and make sure I’m on track for the month. I generally do this on Sundays. Pick what works best for you practically, and make a recurring appointment in your calendar if you need reminding. Some of my clients have Money Mondays or Fiscal Fridays.
  9. I do suggest hiring someone to do your taxes, if it’s anything beyond 100% straightforward. I used to do mine through Turbo Tax, and have been relieved to have a professional handle it instead. I still need to have my information organized and provide it in a timely manner. But for the nitty gritty of changing tax laws, it seems wisest to get a good specialist for the annual task of filing income taxes.

These are items that I think apply to everyone.

Then, the fun of personalizing your system is part of what I love working on with people. Some people need support to loosen up and discard some of the fear that has them be perhaps too conservative with their financial choices. Still others are very good at spending money, and might benefit from tips and strategies to practice not spending when they usually would. So often couples benefit from having a neutral third party to navigate ongoing disagreements about money. Finding agreement on a spending plan that everyone can live with is truly wonderful.

What I remind people (myself included), is that there is no WRONG choice. Also, I can change my system if and when I need to, when I get more information or my preferences change over time. We have a variety of right options that will lead us to different pots of gold at the end of whichever rainbow.