What Financial Health Means to Me: Peace of Mind
This post was written by Rowan McEvoy, an application product management intern at Envestnet | Yodlee in honor of the Center for Financial Services Innovation (CFSI) #FinHealthMatters movement.
As the saying goes, money can’t buy happiness. However, what I believe, is that managing your money correctly can buy some peace of mind. This is a realization which depends heavily on the idea of financial health. Just as an individual can be physically healthy or sick, one’s finances also exist along a spectrum of well-being. Yet the world of financial health lacks many of the preventative and remedial measures that the world of physical health contains. Most individuals do not receive a yearly financial check-up, nor are there widely-produced medications for credit card debt or a lack of retirement savings. In fact, the Center for Financial Services Innovation estimates that 57% of Americans are struggling financially.
Thankfully, I do not consider myself part of this 57%. Going into my junior year of college, this is my fifth straight summer with a job. Additionally, my parents cover tuition and rent. The net effect of these two circumstances is that I spend far less than I earn every year and have been able to start setting aside for retirement while simultaneously accumulating money in a savings account. Upon graduation, I hope to find a steady job with a decent salary, but, if not, I have a small safety net of my savings as well as the support of my parents. In this position, I consider myself reasonably financially healthy.
Yet I do not have complete peace of mind. Since I never applied for a credit card, I know very little about how they operate and how credit scores work. While I understand the general importance of a high credit score when taking out a loan, I wish I knew more about how I would maintain a good score. Furthermore, the thought of borrowing a significant amount of money scares me.
If I cannot achieve complete peace of mind with my finances despite my relative financial health, those among my peers who are less financial healthy probably cannot either. Most college students must deal with student loans and do not take advantage of contributing to a retirement account early in their life, missing out on valuable years of compounding interest.
So what does financial health mean to me? It means learning more about credit, applying for a credit card and managing it well. It means becoming more comfortable with the idea of borrowing money, maybe starting with smaller amounts so one day I don’t have to be scared about taking out a mortgage. It means helping my peers understand how they can best prepare for the future by making their money work for them through investments, and staying on top of paying off student loans. This can be accomplished by leveraging a variety of financial tools for personal finance, lending, payments,etc.
Financial health may not buy happiness, but it can lead to peace of mind and ease worries about how to manage your money. Ultimately, smart financial planning leads to improved personal financial wellness.