Sometimes, taking a moment to evaluate your current health, both mentally and physically can help you to personally take inventory of some things that may be creating obstacles within your life. According to various studies,
[1]
[2] there is a direct correlation with a person’s financial wellbeing and their mental health.
Today we would like to share a few things to help alleviate some of your financial stress, and ideally relieve some mental anxieties they may be causing.
Budgeting and Saving
Knowing your monthly income and debt obligations is a great place to start when working to create a plan for your money. There are a number of tools to assist you in creating the ideal set-up for your needs, but reducing your overall debt can often be helpful when trying to increase your household’s available cash-flow.
Dave Ramsey has a famous strategy for those looking to reduce debt, called the
Debt Snowball. In this methodology, he suggests first listing all of the debts you currently hold in order from smallest to largest, not factoring in the interest rates. Then, once you’ve been current on all payments and have saved up $1000 for an emergency fund, begin putting any additional income toward the smallest of these debts until it is paid in full. Having one less bill to pay, you can now put all the money you were paying on that debt toward the next biggest debt along with any additional funds you’re able to add as well. This process continues until each of the debts are paid in full.
Saving for Retirement
With many Baby Boomers postponing their retirement due to
less than ideal savings, it’s clear the U.S. is facing not only a student debt crisis, but a retirement crisis too.
Instead of becoming one of the millions of Americans who have zero dollars saved, there are a few key things you can do now to ensure you are properly preparing for the future. By taking advantage of special savings accounts, such as a company-matched 401k, a Roth IRA, or an Insurance tied HSA, you can begin saving to make the greatest impact on your financial future.
- 401k – This savings option is typically offered by most full-time employers, wherein the employee saves a percentage of their pre or post-tax dollars (depending on the plan) toward their retirement. These funds are then invested according to the company’s chosen investment options, which employees are able to choose from. Many companies will offer to match up to a certain percentage of contributions by the employee which can further grow the account over time.
- Roth IRA – An IRA, or Individual Retirement Account, is a savings account where individuals can put pre or post-tax dollars into an investment account which they manage. In this case, a Roth IRA uses post-tax dollars where a Traditional IRA would use pre-tax dollars. In either circumstance, individuals are allowed to contribute up to a specified amount each year which allows them to take advantage of specific tax incentives to assist them in saving for retirement.
- HSA – A Health Savings Account is often a piece of a High-Deductible Insurance plan. These plans require the users to pay various fees upfront, before utilizing the insurance’s coverage throughout the year. Occasionally, employers will contribute a fraction of the funds needed for the annual deductible which are used through this specified account. Because these funds are used specifically for medical purposes, they are able to be invested and grown and can carry over from year to year. Often those who utilize this plan are able to structure long-term health savings to assist in covering medical expenses often associated with aging and retirement living.
While not every worry or financial stress has an immediate solution, we want to ensure that if there is a route to helping you find a brighter financial future, that we at Lincoln Savings Bank are a part of it.
Additionally, not every mental health concern centers around personal finances. We understand that life can be difficult, and obstacles can at times stand in your way. Thankfully, there are many local and state resources available to help you overcome those obstacles should you like a hand. The individuals who run these organizations are there to support you and your mental health journey. Whether it’s having someone to vent to, getting more information to support a friend, or finding a voice to lean on when you need some guidance, the people at the organizations listed below are here for you.
National Alliance on Mental Illness Free Text Support Local Iowa Chapters
1-800-273-8255
Iowa 211 Referral Service for Mental Health Needs
Dial 2-1-1
Foundation 2 Crisis Support Hotline Support Chat/Text Support
1-800-332-4224
House of Hope Housing and Support for Single Mothers
319-232-3823
Iowa Legal Aid Free Legal Aid for Those Living in the State of Iowa
1-800-532-1275
Your Life Iowa Iowa Department of Public Health Addiction Support
855-581-8111
National Suicide Prevention Lifeline 24/7 Free and Confidential Support
1-800-273-8255
References
[1] - Thomas Richardson, P. E. (2107). A Longitudinal Study of Financial Difficulties and Mental Health in a National Sample of British Ungergraduate Students.
Community Mental Health Journal, 344-352.
[2] - Choi, L. (2009).
Financial Stress and Its Physical Effects on Individuals and Communities. San Franciso, CA: Federal Reserve Bank of San Francisco.
Lincoln Savings Bank. Member FDIC.
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