According to a new survey from the Center for Financial Services Innovation, only 28 percent of Americans are ‘financially healthy’, but what does this really mean? Financially healthy people are those who have financial plans in place to build long-term resilience and opportunity for creating wealth.
Unfortunately, more than half surveyed were described as just coping with their finances. They are struggling with some financial aspect such as medical bills or automobile repairs. It’s the …
unexpected expenses that keep this statistic so high.
Another 17 percent struggle with all or nearly all areas of finance including paying bills, saving for retirement, and budgeting. In many American households, spending equals or exceeds monthly income, and many are unable to pay their bills on time.
The CFSI study found Americans who struggled financially growing up were less likely to be financially healthy in the future. Their mental and physical health was compromised due to financial stress.
Are You Financially Healthy?
- Would you be able to cover three months of expenses if something happened and you were not able to work?
- If your injuries or illness required in-home or assisted living care, do you know how you would pay for this?
- Is your income keeping pace with the increasing costs of basic living expenses?
- Do you have a budget?
The key to becoming financially healthy is to learn how to manage money. This requires planning and may even require some sacrifices. It’s important to create a budget to track your financial progress. After saving enough to cover three months of expenses, paying off debt should be the next objective. Creating a plan may require the help of a financial expert. Find an advisor you trust and feel comfortable with when discussing your finances.
A couple of weeks ago, I had the pleasure of having coffee with a woman who started a business in the early 1950s. I asked this charming 95-year-old for advice on her success, and she said to never quit asking the ‘what-ifs?’. In other words, always ask yourself, ‘What if this doesn’t go according to our plan?’; ‘What is our back-up plan?’. This same advice also applies to personal finances. What is your plan for becoming Financially Healthy?