It’s often said that money can’t buy happiness. While that may be true, being “mindful” about money can do wonders for your financial health and well-being. Financial well-being is generally defined as the ability to meet your financial needs, a feeling of security about your financial future, and the freedom to make choices that allow you to enjoy your life.
Money problems are a common source of stress so if you’re worried about your finances, being more mindful could help. Mindfulness is the practice of focusing your attention on experiences in the present moment. This awareness helps you see things clearly and react without fear or emotion. So what does that look like when it comes to money?
Being mindful can help you achieve balance in your financial life. This starts with knowing where your money goes each month. How much do you have left after you’ve paid all your regular expenses? Are you paying fees on gyms, streaming services or subscriptions that you don’t use? Test yourself over a few weeks and try not to spend any money on non-essentials. This attention to spending can help you think more critically and make better choices. Once you know where you money is going, decide how much you can allocate toward savings.
To get a sense of your current financial wellness, get your Financial Resilience Score.
Saving money gives you security and peace of mind, so it’s important to think about what goals matter to you specifically. Future planning is important, but you still need to think about finances in the present. Do you save for retirement or put money away for an emergency? To stay focused, and avoid feeling overwhelmed, choose a few short-term and long-term goals, and put them in order of importance.
An emergency fund, for example, is a great short-term goal. Having enough money set aside to deal with an unexpected expense means you’ll have less to worry about in a crisis, and you won’t go into debt putting sudden expenses on your credit cards. The ideal emergency fund covers three to six months of expenses. At the very least, it’s a good idea to set aside at least $1,000.
Map out bigger goals, like saving for a down payment, over a longer period. Start saving for goals like these early on and keep at it - that way, your money has more time to grow. Even if you have some debt (especially low-interest debt) it’s a good idea to save for the future - you can start small. If you wait until you feel like your finances are perfectly in order, you might miss some great opportunities.
Once your goals (along with the plans to reach them) are in place, you’ll start to feel differently about your financial health and wellbeing.
Putting it in practice
One of the best ways to save is to “pay yourself” through regular, automatic deposits to a savings plan. You can set up automatic deposits (also known as pre-authorized contributions) to add money to your savings or investments. Just choose an amount to move into your account every week, two weeks, month, etc. There are also other tools out there to help you save automatically — like Meridian’s Auto-Save feature.
While money itself may not be the ticket to happiness, it can afford you experiences that will enhance your life and make you feel good; the comfort and security of a home you love to be in, a much-anticipated vacation with friends and family, or retiring sooner to focus on things you love.
If you have questions about how to achieve financial wellness, talk to a Meridian financial advisor
A previous version of this post was published May 19, 2020