To take control of your financial future, you have to make sure you are managing, growing and protecting your money properly.
It’s easy to get scared off by the thought of numbers and spreadsheets — but don’t. Instead, think of your financial health as a part of your overall wellness.
“Research shows that financial worries can cause a lot of stress and we know stress can affect your body,” said certified financial planner Lazetta Rainey Braxton, founder of Financial Fountains and a member of the CNBC Digital Financial Advisor Council.
“Feeling confident about your finances and [having] control of how you’re spending based on what’s coming in can just help your overall mindset,” she said.
Challenge yourself
To that end, CNBC Invest in You has devised an eight-week challenge to guide you step by step to a better financial life.
The lessons have been broken down to tackle the following subjects: handling your budget, creating an emergency savings fund, building wealth through 401(k)s and IRAs, home buying, saving for college, investing in your personal health, life and property insurance, and estate planning.
In the meantime, here is a preview of some of the best financial wellness practices.
Set up a budget
To begin, set up a budget.
That means tracking the money that comes in, like your paycheck, and listing your expenses, and savings. From there, you can determine if and where you need to cut back.
Create an emergency savings
More than a third of people, ages 36 to 60, have nothing saved for an emergency, according to a survey by PNC Financial Services.
Yet an unexpected emergency can bust your budget or put you into debt. That’s why it’s vital to have money set aside before a crisis happens.
The size of your emergency savings fund is dependent on your monthly expenses and whether you are married or have kids. Three months of living expenses may be enough if you don’t have children or if you have short- or long-term disability through your job. Otherwise, you should try to save at least six months worth of expenses.
But don’t be scared by that number. Start small. Begin by figuring out how much you’d need to cover one month of expenses. Start saving enough to reach that goal.
That can be as simple as transferring $25 a month into a savings account, said Braxton. She also suggests taking any money you may save through discounts and coupons in retail shops and putting it into your savings.
“The goal with emergency savings is just getting started. A little bit adds up a lot.”
Save for retirement
On average, Americans believe they need $1.7 million to retire, according to a Charles Schwab survey. To reach that goal, or your own “retirement number,” the age that you are when you start saving will determine just how much you should set aside.
If you start in your early 20s, then socking away 10% to 15% of your salary each year could be enough, Schwab found. However, if you wait until you are 45-years old, or even older, you have to set aside as much as 35% of your salary.
“It depends on a person’s circumstances, including where they live and the kind of lifestyle they hope to have,” said certified financial planner Joy Stephens, branch manager of the Charles Schwab location in Arlington, Virginia.
“To figure out a good savings target and make a plan accordingly, people should look to some of the tools at their disposal,” she added. “This can be as simple as one of the many retirement calculators online, or it can be getting personalized advice from a professional.”
If your employer offers a 401(k), take advantage of it — especially if they provide a matching contribution.
Invest in your health
About 8.5% of Americans, or 27.5 million people, didn’t have any health insurance in 2018, according to the U.S. Census Bureau.
Yet, taking care of yourself — and your health — is important. One hospital bill could devastate your financial plan.
What you pay depends on your plan. You may have an employer-sponsored plan. If not, check out the options made available through the Affordable Care Act.
Make sure to select a plan that will cover what you need and be mindful of the out-of-pocket expenses that could “drain your budget,” Braxton said.
“Shopping for the right health insurance is important,” she said.
