Health & Wealth: Why Taking Care of Your Finances is Self Care

If you look up the meaning of self-care, you’ll find many different definitions.

For instance, Wikipedia says self-care maintenance behaviors include “illness prevention, illness behaviors, and proper hygiene.” Dictionary.com, on the other hand, offers what is perhaps a more accurate definition of self-care: “Noun. Care of the self without medical or other professional consultation.”

Although some forms of self-care – like getting more sleep and taking a walk during your lunch hour – won’t cost you any money, other forms of wellness require a small financial investment. So, if you really want to commit to self-care and pay for things that will improve your life, it’s time to take care of your finances as well.

Since health and wealth are interconnected, it makes sense to think of financial health as a form of self-care. Not only will this set you on a path toward a more prosperous future, but you’ll free up funds for other forms of wellness at the same time. Read on to learn more about financial self-care.

Live Within Your Means

There is more to living within your means than simply creating a budget. You must also stick to that budget, cut out superfluous expenses you can’t afford, and make sure you’re set up for success by leveraging resources like apps that can save you money.

What you should be looking at is eliminating excessive extras, like dining out at expensive restaurants on the regular or shopping sprees you can’t afford. By trimming your expenses, you’ll be able to afford the things you truly desire. Plus, you’ll likely reduce your stress since you won’t have to worry as much about affording your lifestyle.

Pay Off Debt

Paying off your debt is a key element of financial self-care. No matter if you’re single, married, or somewhere in between, debt complicates things.

There are several ways you can pay off your debt faster. Take a look:

1. Don’t Create More Debt

For starters, try to use your debit card or cash instead of your credit cards. Since a debit card is tied to your checking account, you can really only spend money that you have – unless you consistently go into overdraft. When you use a credit card, on the other hand, you can easily rack up debt if you don’t pay your balance in full every month. Since credit cards can charge hefty interest rates, the amount you owe will continue to grow and you’ll be saddled with – you guessed it – more debt.

The bottom line: if you use your debit card vs. using a credit card, this will help you from adding to your existing debt.

2. Make a Plan

Create a plan to pay off your debt. One option to consider is called the debt snowball method.

With this method, you’ll list your debts in order  – from those with the smallest to largest balances. Then, you’ll pay only the minimum on all your debts except the one with the smallest balance. On this one, you’ll pay as much as you can until it’s completely paid off. Once this debt is gone, turn your focus to the next debt on the list. Continue to work your way down your list until all of your debts are paid off.

To illustrate this, here’s an example. Say you owe $300 for a car repair, $500 on your credit card, and $5,000 for a student loan. Your debt snowball plan would look like this:

To come up with the max possible to pay for your car repair bill, you can take on a side hustle when you’re not working at your main job. This way perhaps you can afford to pay $100 per month for your car repair. After it’s paid off in about three months, your new plan may look like this (doesn’t include any interest):

The payment you make on your credit card in this example is the minimum payment of $25, plus the $100 payment you were making on your car repair, making your monthly payment $125.

After your credit card is paid off, you’ll add the $125 payment to the $100 minimum payment for your student loan and pay it off faster with a monthly payment of $225. Get it?

Save for Emergencies

Sometimes your daily routine is interrupted when the unexpected happens. For example, your car breaks down and you have to pay a large repair bill. Or, you have to go to the hospital, leaving you with a large medical bill – sometimes even after your insurance company has paid up.

The point is: you can’t predict every expense you’ll have. Therefore, you can’t budget for all of them either. What you can do is start an emergency fund and this way you’ll be prepared to pay for unexpected expenses.

Invest for the Future

Taking care of yourself isn’t only about spending money on things that will help you today. Self-care is also a way to ensure that you’re financially secure in the future.

One way to do this is to start investing in a retirement fund. If you have a 401(k) at work, it’s a good idea to put the maximum allowable amount into this employer-sponsored retirement plan. In 2017, the max contribution is $18,000 and in 2018, it goes up to $18,500. Many employers will also match your contributions dollar-for-dollar, up to 6%. This equals free money for you. To learn more about whether your workplace offers a 401(k) and a match, check with your human resources department.

If your employer does not offer a 401(k), you can still set up an IRA on your own. The contribution limit for an IRA is $5,500 in 2017 and 2018. This doesn’t allow you to save as much as you can with a 401(k), but it’s still a good way to save for your future.

How You Practice Self-Care is Up to You!

Remember that self-care means taking care of your whole self. This includes your finances, as well as your physical and mental health.

Here’s a final tip for you (and it’s free!) The next time someone criticizes you for foregoing buying a fancy new outfit and getting a massage instead, just smile and let it go. Deep down inside you know that you’re taking care of yourself and this is what’s most important.