That stress you feel when you have poor financial health? It affects you more than you might think. Whether you’re behind on your student loan payments, can’t pay your rent or realize that you couldn’t afford a trip to the hospital if you were seriously hurt, it turns out that financial stress is pretty hard to shake off, and living with that kind of burden can actually damage your physical health. Research has shown that financial stress can lead to physical pain, mental health issues and cardiovascular disease — or worse.
The last thing you want is to get sick because you’ve been so worried about how you can’t afford medical costs. And with 61 percent of Americans now reporting money as a significant source of stress, dedicating time to improving your financial wellness can be just as important as the time you spend maintaining your physical and mental health.
But what does financial wellness actually look like?
The Consumer Financial Protection Bureau looked at the factors that contribute to financial well-being and decided that a financially healthy person is one who can:
Control and prepare for daily and monthly expenses
Remain financially stable after a financial shock
Meet financial goals without entirely sacrificing nonessential purchases
With those principles in mind, here are a few steps you can take to become financially fit — and improve your physical well-being as a result.
Develop a Spending Plan
Having control over your day-to-day cash flow starts with a spending plan that holds you accountable to living within your means. If you spend more than you make each month, you’ll never have enough breathing room in your budget to handle an unexpected expense, let alone save for the things you really want in the future.
Draw up a budget — the 50/20/30 budget is a great choice for simplifying your finances, especially if you’re new to budgeting — and start tracking everything you spend, whether it’s with pen and paper, a spreadsheet or a mobile app.
Build an Emergency Fund
Your ability to absorb a financial shock — think job loss, medical emergency or unexpected car repair — will depend on how well you’ve prepared your finances in advance, so start building yourself a financial safety net with an emergency fund.
An emergency fund is a liquid savings account dedicated to paying for emergencies and the unexpected expenses that come with them. Experts recommend saving at least six months’ worth of living expenses in this account.
Check Your Insurance Coverage
How often you do or don’t need to dip into your emergency fund will depend, in large part, on the other parts of your financial safety net, including your insurance coverage.
In addition to your primary health insurance policy, consider whether you might benefit from a supplemental health insurance policy that can cover expenses like your deductible, copays and other out-of-pocket costs that can quickly add up when emergency strikes. A supplemental plan can cover any gaps in your coverage and keep you from coming up against a huge unexpected medical bill. You may also want to consider looking into disability coverage and life insurance if you or your family would not be able to make ends meet in the face of any disruption to your income.
Finances are stressful. But that’s no reason to avoid looking at your bank account balance and hope for the best. Taking an active role in your financial health with these straightforward tips won’t make you a millionaire overnight, but they will lay the groundwork for success and offer you the peace of mind you need to counteract your stress and improve your physical health.