Help for Your Financial Wellness

“Beware of little expenses; a small leak will sink a great ship.” –Benjamin Franklin

Financial Wellness involves the process of learning how to successfully manage financial expenses. Money plays a critical role in our lives and not having enough of it impacts all the dimensions of wellness.

Financial stress is repeatedly found to be a common source of stress, anxiety and fear for people. Keeping track of expenses, making a budget, and sticking to it are important skills to have in order to be financially responsible and independent. Learning how to maximize your financial wellness now will help you feel prepared to handle potentially stressful financial situations in the future.

National norms for the general population of adults in the United States have been established for the interpretation of Personal Financial Wellness Scale™ (PFW™) scores. Individuals can use these average scores as a starting point to gauge their own levels of financial wellness as compared with other Americans. Take your own Financial Wellness Assessment to see how you compare with other Americans.

Below are three questions that Oklahomans have asked about money management with good answers from Oklahoma Money Matters Q&A Forum.

Question 1: How can I manage my money better without following the typical budget?

Answer: A well-developed budget helps many people manage their money, but some find it difficult to maintain their monthly spending plan. If that’s you, there’s good news! It’s possible to save and manage your money without following the typical spreadsheet budget. Here’s how.

• Go on a spending diet. This can help jumpstart your ability to save money without following a budget. Review your finances to find your money pits and vacuums. Then brainstorm ways to reduce or possibly even eliminate these problems. Of course this doesn’t work on your fixed expenses, just the ones that fluctuate from month to month.
• Go with free first. Before purchasing an item or service, see if it’s available for free. Books, music and movies can be borrowed from the library or from friends. Many health insurance companies offer free gym memberships. Even cable television shows can be viewed online. Look for no-cost options before shelling out money.
• Focus on one category at a time. Instead of reducing your across-the-board spending by a certain percentage, focus on cutting back in one particular category. Whether it’s eating out, groceries or entertainment, look for ways to scale back. Once you’ve mastered one category, move on to the next.
• Pay with cash. It’s a proven fact; most of us spend more when using debit or credit cards versus paying with cash. Consider implementing the classic envelope system. Grab some envelopes and write the name of each category in your spending plan on a separate envelope. Then, place the monthly amount of cash you plan to spend on that category inside. Forget your checks and plastic cards, use these envelopes instead. Once the cash in each envelope is gone, there’s no more spending until next month! This tactic forces you spend only the amount you’ve allotted for groceries, gas, entertainment, clothes, etc. One word of caution-be sure you have a safe place to store your envelopes if you implement this plan. If your cash gets lost or stolen, there’s no replacing your money.
• Let your bank help. We all know that we can’t spend what we don’t see. For this budget-free method, you’ll need three bank accounts: two checking and one savings. First, decide how much of every paycheck you want to put toward savings and have that automatically sent to your savings account.

Via direct deposit, send the rest of your paycheck to checking account No. 1. From this account, you’ll pay all monthly fixed expenses, like rent, car payments and utilities.

With the money left over after paying your fixed expenses, divide by four and set up a weekly automatic transfer of that amount to checking account No. 2. Use this account for all variable expenses like groceries, entertainment, clothes and eating out. Refrain from transferring more money over or using credit cards. With this method, you save each month and have an accurate account of your spending money from week to week.

See Question 2 for more information.

Question 2: For many people, getting paid once a month is extremely hard, no matter how much money you make. Where can I find resources to help me save and still have enough money to last through the month?

Answer: That’s a great question. Finding yourself with more month than money is a struggle many of us can identify with. It takes discipline to budget your money to last four to five weeks, but it is possible!

Consider this alternative to more traditional budgeting methods. You’ll need three bank accounts – one for savings, two for checking.

First, decide how much of each paycheck you want to put toward savings and have that automatically sent to your savings account.

Next, put the rest of your paycheck into checking account 1. This is the account you’ll use to pay all your monthly fixed expenses, like rent, car payment and utilities.

Divide the money that’s left over after paying your monthly fixed expenses by four and set up a weekly automatic transfer of that amount into checking account 2. Use account 2 for all variable living expenses, like groceries, entertainment, clothes and eating out. The key to making this budget work is to refrain from transferring more money over or using credit cards.

To take this approach to the next level, consider moving to a cash-based system. It’s a proven fact; most of us spend more when using debit or credit cards than we do when paying with cash. After you’ve determined what your weekly allowance for variable expenses will be, grab some envelopes and write the name of each variable expense category in your budget on a separate envelope. Then, place the weekly amount of cash you plan to spend on that category inside. The beauty of this method is that once the cash in each envelope is gone, there’s no more spending until the next week! This tactic forces you to spend only the amount you’ve allotted for each category.
Remember, there are a multitude of budgeting methods and tools available. If this one doesn’t meet your needs, don’t give up! Instead, try a different one until you find the right fit for you and your lifestyle.

Additional resources to help you maximize your finances:

• The Freecycle Network – To get clothing, appliances and other household items for a steal, take advantage of this grassroots, nonprofit movement of people getting and giving items for free. Search by your location to see if anyone is giving away something you need. Help your wallet and the planet by keeping good, usable products out of landfills. To sign up and explore the benefits, visit Freecycle.org.
• Mint – This free program allows you to pull all your accounts -checking, savings, investments, retirement – into one place so you can see your entire financial picture at a glance. Whether on your phone or on the Web you can set up a budget, track your goals and do more with your money! Visit Mint.com to get started.
• SmartyPig – Reach your financial goals quicker with SmartyPig, a free FDIC-insured online savings account. Whether you’re saving for a wedding, vacation or just a rainy day, SmartyPig can help you reach your goal faster and gives you cash-back savings that makes your money go further. Check out SmartyPig.com to learn more.

Question 3: How can I keep my budget on track in a tight economy?

Answer: Thankfully there are a lot of little money-saving steps you can take that can add up in a big way. Of course you can start cooking at home or brewing your own gourmet coffee instead of hitting the drive-thru. Examine your auto or home insurance to make sure you’re getting the best deal. Update your W-4 so only the necessary deductions are taken from your monthly paycheck. Or, you can be more careful about turning off lights when you leave a room. Beyond these simple tips, let’s examine some additional ways to save a dime or two.

• When using coupons, only buy the things you regularly purchase or something new you were going to try anyway. Also, use your coupon when items are on sale and frequent stores that double coupons or let you partner a store coupon with a manufacturer’s coupon (hint: Target). All of these strategies will give your coupons more saving power. Visit local coupon blogs like MoneySavingQueen.com or CouponCloset.net to learn how to maximize your coupon use.
• Think used instead of new. Freecycle and Craigslist are great online resources for gently-used, free or cheap items like furniture, clothing and children’s items. Not only is it a great way to get the things you need, but it keeps useful items out of landfills, so it’s good for your budget and the environment. Just play it safe when making pick-up arrangements. If possible, meet at a well-lit public place, like your local police station. It’s safer than inviting strangers to your home.
• Explore consignment stores, thrift stores, flea markets and garage sales to find gently-used, sometimes new items. Plus, if you enjoy the thrill of the hunt, thrifting can be cheap entertainment.
• If you prefer other forms of entertainment, visit Travelok.com to find free family-oriented festivals and events or check out Groupon, Wimgo Deals or Living Social for wonderful discounts on great local services and entertainment like dining, spa treatments and event tickets.
• Consider borrowing books and movies from your local library to bring a steady flow of new-to-you items into your home. If your local library offers movie nights, take advantage for some family-friendly fun.

You don’t have to make huge sacrifices to stay on budget. Just take a creative look at your spending and find simple ways to cut back just a little and get a better deal.

Remember the Financial Wellness impact to your life is being in control of your finances which in itself is a great stress reliever.

• If you are not financially well, you could have lower productivity, higher stress leading to increased absenteeism as well as garnishments or too many loans.
• The more you are financially well, you will most likely have increased job satisfaction, improved attendance, less stress and reduced medical costs.

“It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy.” –George Lorimer