Planting Your Money Tree
Good afternoon, thank you so much for joining me today.My name is Dani Hill. I’m one of the health educators with Optima Health and in the summer of 2019, I was able to go through a certification program through the National Wellness Institute on financial wellness.
To be honest with you, I wasn't really sure what to expect in the training. I was a little bit concerned about my ability to finish the course work and then be able to discuss topics and use jargon that I didn't feel quite educated on.
What surprised me was that the training focused more on our attitudes around money, much more than using terminology, like, diversifying a portfolio or using a Roth IRA, things like that.
Unfortunately, most of us are so I'm familiar or somewhat intimidated with the financial world that we tend to put negative thoughts with finances and it creates some barriers to learning useful tools and making better decisions with our money. Making some changes to our relationships with that money is a process, and my dad used to say with processes it’s the same way as eating an elephant, you can only do it one bite at a time and it's true.
So, most the information that you're going to learn in this presentation was built around the topics and tools that I learned during that training.
What we're going to talk about today is a little bit about the link between our finances and our health then talk through some tools that we could use to better our financial well-being.
And then highlight some resources that you might want to look towards to help you get on track or help to keep you motivated towards your goals.
So let's start off by kind of defining what well-being is. Well-being is a state of being happy, healthy or prosperous as defined by Miriam Webster dictionary. If you've joined us for any of our previous presentations this year you've probably noticed that we've highlighted this concept many times. What we decided to do was to put this concept into a graphic.
If you look at this here it's a wheel, which is intended to kind of show that we all have different circumstances that impact our overall health. We have different bodies. We have different minds, different living situations, family and friends that might be influencing our lives and how we're spending our time. And that means that we all have a unique picture of health and well-being.
Although health and well-being is specific to each person, Optima Health has it defined by these four areas that you see on your screen starting with physical. My green top left wedge of the wheel there followed by emotional in blue, social in purple and then financial in yellow the well-being wheel kind of helps to explain this concept that we have these interlocking, interconnected areas of our life. That when you put them together act similarly to a wheel that you might see on a bike or a car.
We aren't able to necessarily move forward or change direction on the flat tire, just as we can't achieve our best health by focusing on only one area. You may be a marathon runner that's in debt or you might be a crazy, good investor and have some chronic health conditions. So if you have one or the other, but not all four, it's hard to make your wheel move forward, to make you move forward in reaching your best health.
So, how does financial well-being play into this? Think about it. If you are moving towards the healthiest state for yourself, as you define that, confidence in your finances plays a huge part in that feel good puzzle. Right?
People want to be emotionally, mentally and physically well and finances just naturally fits into those areas. You can equip yourself with some know-how and some of the emotional fortitude that you might need to deal with some financial situations, like student loan debt, or the rising cost of living, or even negotiating a raise. That knowledge will breed confidence and the numbers support that. What you're seeing on the screen here is some data from the 13th annual stress in America survey.
This is done by the American Psychological Association.
What they found is that overall our stress levels don't really change year to year, but proportionately Americans say that they experience stress about specific issues and these specific issues has risen.
So, the stress that we're seeing here is showing the survey that was conducted by Harris poll, and again, this was part of Stress in America report from the American Psychological Association.
They went out and they interviewed about 3,600 Americans that were over 18 from August to September of last year. They always do it from August to September of every year.
And the 2019 survey finds as in recent surveys that the personal sources of stress and American stress levels remain relatively constant year, over year. Those personal stressors that always seems to be at the top of the list are work and money and about six out of ten identify with both of those: 64% of those polled say they're stressed about work, 60% say they're stressed about money.
So these two are the ones that were the most significant sources of personal stress in our life. And that's why they're so common amongst all of us.
Pretty interesting to consider here, Americans citing the economy as a significant source of stress has actually declined slightly if we look at from 2018 to 2019. So 48% down to 46%. But if you look at the proportion from both of those years, as a decrease,look at how we're capping on the prior to that timeframe and after that timeframe so, back in 2008, which we were in the height of, you know, the economic recession, 69% of people said that they were stressed about the economy.
And then again, when folks were polled in 2020; May of this year, 70% now, say that they're feeling stressed because the pandemic.
So, it'll be interesting to see how these percentages might change when they do their annual polling, which is being done right now throughout the United States, to see how it kind of reflects certainly COVID has undoubtedly caused all of us some degree of stress. For many of us stress comes back to money.
So if you think about some ways that the pandemic may have amplified your financial stress, it could be child care. It could be loss of a job. It could be just buying more groceries.
The cost of groceries has certainly increased. Some of us might be in a position where we were hoping to retire but this is now delaying that for us.
So, certainly COVID is playing a role in some of the financial stress that we may all be feeling right now.
I'm sure that we can all relate to many of these signs and symptoms of stress that we have listed here. Stress is how our body reacts to certain situations.
It can be something that's a sudden danger, or it could be something that we see is a long lasting challenge. Regardless during stressful events, our bodies release chemicals called hormones. And one of those is adrenaline. Adrenaline gives you that burst of energy that helps you to kind of, cope and respond to a stressful situation. One kind of stress that you might experience is that jolt that you feel when a car pulls out in front of you right? And you have the slam on your brakes.
Well, that jolt of adrenaline is what allows you to hit the brakes before an accident occurs. Stress can be mild and short term, but it can also be extreme and long-lasting and chronic, long-lasting stress can affect your mental and physical health. While we know deep down there are many more important things in life and money, when you're struggling financially you've got some fear over, you know, not being in control of a situation. Some stress that can certainly take over your world; that it can take over your thoughts. And it can certainly damage your self-esteem. It can make you feel like you're not accomplishing what you are hoping to accomplish. And in some cases can give you a sense of despair. So while when financial stress becomes overwhelming, your mind, your body and your social life all play a heavy price, right?
Those other three aspects of the well-being wheel that we talked about. Financial stress tends to lead to something that many studies have shown as a cyclical link. And what happens with this link is that we first start to have some financial problems that are adversely impacting our mental health. The stress of a debt or a financial situation leads us to kind of feeling a little bit stressed or anxious.
That's what you're seeing in that purple wedge at the top left. And then, as a result of that, we have a decline in our mental health and that makes it harder for us to manage our money. We might find it harder to concentrate.
And we might have a lack of energy or a lack of motivation about bills that are mounting. We're not as inclined to find our way out of that necessarily, or we might lose some income because you've got to take some time off from work to deal with that depression, right? You just need to kind of get away for a minute and that's what you're seeing in the green. And then we move into the teal section at the bottom, and these, you know, the difficulties that we're talking about with managing our money, might lead us to more financial problems. And then that's going to make our mental health a little bit worse. So, you become kind of trapped in this cycle over and over and over again. No matter how bleak your position may be in terms of in that moment, there are some strategies that you can use to kind of break the cycle, and it may not sound severe as dire as how I'm talking about it now but for some of us, you know, it might just feel a little bit overwhelming.
One thing that we might do is say, you know, what this is too much to take on. I'm just going to pay my bare minimum payment for my credit card or my student loan debt; that we can't handle trying to figure out another way to get out of it. So, let's talk about some stress or some tools that we can use to better our financial wellbeing.
Well, what you see, here is an acronym that we're going to use to talk through these tools. And when you are using this acronym, take in mind, that your first step is just setting an achievable goal in terms of your finances, it's just to clarify what you want.
So, we need to know what your goal is before you can apply any of these tools toward it. Like, most people, you may have multiple goals that you want to achieve over time. You may be able to reach all of them, hopefully.
But prioritizing which ones are the most important to you is going to make sure that you're able to take care of those first. If you share your finances with someone else certainly take time to talk to them about it. So, that you are on the same page and you know what each of your priorities are. But this word, MONEY, as I mentioned, is serving as an acronym.
We're going to discuss each of the tools associated with the letters. Important to know that this doesn't have to follow any particular order. So you don't have to do M and then O. You don't have to do E, and then Y, for example. Some of these may feel like building blocks for some of you. Some of them may not. So just use and apply the tools as you see fit to best equip you with whatever your financial goals are.
So the first is M - maintain control. And what we're talking about here is knowing what you need to set aside each month to reach your financial goals within whatever timeframe that you've determined for yourself.
And that's a great first step to making your money work for you.
The next step is to look at what money you have coming in and going out so that you can ensure that you have the funds available to meet whatever your needs and fund your goals may be. To do this start tracking your expenses. This includes a couple of dollars that you might spend on coffee or at the snack machine, and it could also be your bigger things, your grocery shopping, your utility bills, putting gas in your car. You can do this in a low tech way just by jotting it down on a piece of paper or a notebook, or you can use one of the many apps and software tools that are developed for this very purpose. But tracking your expenses is enlightening. And certainly, is enlightening if you do it for a week.
But if you do it for a couple of months, you're going to get a really good picture of where your money is going. You may even find that tracking your expenses and being accountable to yourself and to someone else, if you're sharing finances with someone, that will help to curve your impulse purchases. Many people are less likely to buy things that they don't think that they really need if they know they have to write it down and experience the consequences of purchasing that on paper, right?
Think about if any of you have ever done a food log before. It's the same thing. You might think twice about eating some desert or eating a second helping of something if, you know, you have to write it down, because you're more accountable to yourself. So our first tool here is “maintain control”. Just be aware of how you're spending your money.
Next would be O - to organize your priorities. So, these are four buckets that we are showing here on your screen. The first bucket is your must have. These are expenses for things that you absolutely need to have.
For most of us, that might be housing. So your rent or your mortgage Transportation - that might be a car note, or for using public transit. You kind of put money aside every month to get where you need to go. Certainly paying our food and our bills. So, everything that, you know, you need to keep the engine of your life going is going to go into that must have bucket.
Our next bucket is the nice to have and these are expenses on things that you would like to do. Things maybe like going out to eat, or some sort of entertainment; going on vacations. Things that you really look forward to help you kind of relieve stress in your life.
The third option would be your near term expenses. And these are going to be things that you are anticipating happening in the in the near future. Things like, every year, if you know, you have to pay taxes this tax season, or, you know, that there are some looming auto repairs that are coming your way, or some medical expenses that you can expect to things that. You know they're coming there in the near future.
And then our last bucket is future expenses and these are things that are going to happen farther into the future. Maybe a down payment on a house or a car? Maybe retirement, maybe for, you know, paying for college for your kids, your grandkids.
So second tool here is to put your money in buckets and that way you can kind of get an idea of how is your monthly income is being split up across lots of different areas of your financial world.
Our next tool is to N - nest for emergencies. For most people, having easily accessible funds in an emergency savings account is critical. So the goal here is to work towards putting away three months of your essential expenses into an account. And that way, if you have an unexpected crisis that can really make a difference on keeping your head above water, right, to keep you on track for your goals.
Once you've established an emergency savings, you can certainly focus on saving long-term for your bigger goals. But these are going to be things from your must have and your near term buckets that we talked about on the previous slide. You’re going to add up those expenses and then multiply by 3 and that'll give you an idea of what you would need to save in the event of, god forbid, a long term illness or job loss.
Next we have E - emphasize savings. I always love this - Always pay yourself first, right, as you see on your screen here. There are probably quite a few things that you'd like your money to do for you just beyond covering your day to day living expenses. Like we talked about in those nice to have category from the previous slides, maybe a vacation or buying house or college, or being able to retire early, they can range the gamut, but defining your financial goals and keeping those a priority in your money choices will help to develop a financial focus around what's the most important to you. This doesn't mean necessarily that you have to start cutting out things that you don't feel like you can spend money on anymore. But it just means that you’re paying yourself first to put that money away for things that you really do need to save up for and enjoy.
As this slide shows you here, you have a couple of ways that you can start to save. It might be finding additional income. It might mean spending less money, or it might be doing both.
So, depending on your particular situation, you can determine which of those ways might help you to really start putting some money away by paying yourself first each month.
And last is Y - your budget, you’ve got to build one. And the first sentence on this slide is probably one of my all-time favorites when it comes to financial well-being. Start telling your money where to go instead of wondering where it went.
And hopefully what you have seen in some of the tools that we've already discussed that if you're doing any of those things then you're already on your way to building a budget, right? All of those previous tools might serve as a way to get you to building that budget.
A lot of us have a pretty negative association with the word budget. We think about it as being limiting or sacrificing a lot, but in reality, it’s just planning for where we want our money to go, right? How we want to spend it and how we want to save it. As you can see on your slide here, if you are using all of these tools in combination, you could look at the four buckets that we talked about previously. Assign dollar amounts to those expenses and stick to your limit and then you can always reevaluate how you want to allocate that money differently in the future if you need to adjust.
Some of you have probably heard of Dave Ramsey. He is the one that developed the envelope method, where you would have essentially these four buckets that we've talked about. You would put cash into each one of those envelopes and you would use that to pay out of for your different expenses month to month. And when the money ran out, that was it. You had no other option. It's a really effective method. A lot of people have had a lot of success with it.
Unfortunately, a lot of us don't live in a world where we can use cash all the time, but think about applying that same kind of concept to your expenses and put it into categories. And that's how you can start to build a budget that focuses on saving.
Here's one last look at the acronym altogether that you can use to get started. So it’s maintaining control, jotting down your expenses, how you're spending your money, organizing your priorities into the four buckets that we talked about, nesting for emergencies by saving up three months’ worth of our expenses, emphasize saving to pay yourself first every month and that way you can save beyond just an emergency fund and then building a budget. So, figuring out how your money is going out and how you can determine the amount that you want to a lot to each of those categories.
We're going to talk about some tools that might be available to you. Anybody that's looking atvthis is going to be from a different employer so these are going to be at least good starting points for you.
The first would be to go to your employer. If you have a 401K K or 403B vendor, that might be a good place to start. You could always reach out to them and ask what kind of tools or resources might be available to you to really look at your total financial situation. I know as a Sentara employee, we have Fidelity, and we can meet with consultants from Fidelity to help us look at some aspects of our financial picture. So that might be a good place to start.
Also, surprisingly, your EAP resources might also be a good place to start. If you have Optima, you may have some financial well-being resources available on the Optima website that you could definitely take a look at. If you have another provider, you can also see if they've got something similar. And beyond that, if you do feel a considerable amount of stress, when it comes to finances, EAP might be a good place to give you some stress coping mechanisms to help you really get past any of the barriers that you're experiencing.
And then, lastly, the wellness programs, if you have one. If you have a wellness coordinator embedded into your human resources department, for example, there may be some programs that they're aware of, that you to talk to them about.
Next would be trusted resources, trusted sources that you could go to. This might be your bank. Lots of banks have, you know, financial advisers or analysts right there and available to you. You can always, certainly go there. It could be, if you have a credit card through your bank, talking to them about ways that you can pay it down or strategies that you could use.
Next, lots of these smart apps or services that you can use. We talked about that a little bit in the previous slides, but a lot of these websites have ways that they can analyze how you're spending your money. So it'll give you pie charts and lots of different graphics that you can use to kind of get an idea of how you're spending your money every month.
If you need help with that, certainly some banks have these types of tools embedded into their own apps or their websites. So you could always take a look at that too.
And then also a financial advisor. There's lots of different types of financial advisors that you could reach out to. There might be some that do look at investments, but certainly others that don't take any type of commission. That will just really help you look at your whole financial picture and get an idea of where some good starting points for you, and you can see how these two columns might be a little bit overlapping as well.
You're 401K vendor, for example, might be able to recommend good apps for you to use. Your bank might give you some suggestions on financial advisors. So you can see how you can use these two columns together.
The last resource I'm going to give you is the Consumer Finance Protection Bureau, and the website is listed below: consumerfinance.gov is the website.
There are some really great tools in terms of different, different kinds of things. You can look at all different types of topics on ways to save money, but also to educate you on lots of different aspects of your finances everything from getting a car loan, to retiring, to long term disability, to paying for college, any kind of topic you can think of -it's going to be available there.
There's also a well-being score card. You can take a little quiz and see how you're doing in terms of your financial well-being and it'll give you specific information based on your score that you can use to start as a starting off point.
And lastly, the blog posts that you'll see post shown, there are lots of different topics. Interesting things to read about to become more educated on.
That concludes our presentation today on financial well-being. I hope that you've really enjoyed it. It's a fun topic for us and we like to present on this one. Certainly, as I've mentioned in previous presentations, I think at the beginning of this one as well, all of these presentations are recorded and will be available on Optima Health website. You're welcome to look at any of those. Join us monthly for our live presentations on rotating topics.
Thank you so much have a wonderful day.
Last Updated: 9/1/2020