Your Financial Health

Illustration by Rebecca Bradley

By Holly Fisher

As we move into 2019, many women will be thinking about how to make this year different – changes they need to make, new habits they want to develop. Finances will likely be part of those New Year’s resolutions – maybe spending less, saving more or opening a retirement account.

Stephanie Mackara, principal wealth adviser with Charleston Investment Advisors, cautions women against simply creating a budget without thinking about how it fits into their larger life plan and goals.

“Money is something that is a tool to help you achieve your goals, but you have to have the foundational goals,” she says. “As people start a new year, it’s a clean slate and it’s helpful to think about what’s important to them and what they want to achieve in that given year.”

After setting goals, the next step is getting clarity on exactly what you’re spending. Stephanie recommends a budgeting tool like where you upload your financial information and accounts to get a visual on how you’re spending your money. Most people know about how much they spend for their house, utilities, the monthly cell phone bill, but it’s those other expenses that can be surprising.

“You see a visual (of your expenses) and think, ‘How am I spending $500 a month on going out to eat?’” Stephanie says.

Getting clarity on your expenses is key because you can make decisions based on those numbers and your values, Stephanie says. Instead of thinking about a budget as restrictive, flip your mindset and see it a tool to help you achieve your goals.

“I’m all for enjoying life, spending and creating experiences, but not to the extent that it’s putting you in debt,” she says. “At the end of the day, a budget’s only as good as what it’s telling you and what you’re learning from it. What you should be learning is where your money is going and where it’s not.”

Invest In Your Future
Georgia French, senior vice president of wealth management for UBS on Daniel Island, is a firm believer in “pay yourself first.”

She urges her clients to think about how they fund their retirement account to the fullest – whether it’s individual investments or a 401(k) offered by their employer. You can’t rely on pension plans or Social Security to fully fund your retirement, she says. Be responsible for your own financial well-being.

The most common question people ask is how much they should save. Georgia says it comes down to how you want to live out your retirement years. She suggests listing all the mandatory expenses – mortgage, gas for the car, insurance, groceries. If your paycheck after taxes is $10,000 a month and you’re spending $7,000 on the essentials, you have $3,000 to spare.

Once you know the essentials, you can think about your retirement goals. Do you want to travel or buy a boat? If you’re comfortable today living on $6,000 a month, then you need to save enough (considering inflation) so you can live on $6,000 a month in your retirement.

“Make an effort to work the plan backward,” Georgia says. “Where do I see myself? What’s my dream?”

Answer those questions and then create a financial plan that will help you achieve those retirement goals.

Create SMART Goals
Virginia Lee, senior vice president in First Citizens’ commercial banking group, suggests making two lists: wants versus needs. If you want to join a gym in 2019 or plan a girls’ weekend getaway, put those on the “wants” list and then look at how you can adjust your spending to attain them.

By carefully tracking your spending, you can begin to trim expenses, allowing you to save for those bigger “wants.”

You may be surprised to find you spent $1,200 last year going to the movies, Virginia says. This year, cut back by watching movies only on Netflix or going to only one movie per month. Remind yourself why you’re cutting back, she adds. You’re trading the cost of movies for that gym membership or that girls’ weekend.

Setting clear financial goals for the year can keep you motivated when you’re tempted to overspend.

Lee encourages people to set SMART goals:

  • Specific – How much money do you need for that girls’ weekend?
  • Measurable – You can see your progress toward the amount you need for the trip.
  • Attainable – You feel as if you have a good chance of succeeding.
  • Relevant – This trip is something you’re excited about.
  • Time-related – Set a concrete date for the trip rather than simply saying “someday.”

“When you’re motivated with something in mind, it’s so much easier to look at each expense and weigh it,” Virginia says. “Do I really need that new pair of shoes?”  

Feel Liberated About Your Finances
Helen “Cokie” Berenyi is big believer in aligning your life’s goals with your finances. In fact, she’s written a book and created an online course that helps people do just that. The CEO and founder of Alphavest, Cokie published “Perfect Day: An Entrepreneur’s Guide to Curing Lifestyle Deficit Disorder and Reclaiming Your Business, Your Relationships, and Your Life.” The book is a companion to Cokie’s Perfect Day Connect, an online course with videos and worksheets that walk entrepreneurs through the process of figuring out the deficits in their lives and how to bring all aspects into balance.

Many of her clients are financially secure but they may have neglected other areas of their lives: health, relationships or philanthropy. Cokie works with them to identify areas that need attention and then create a system for funding those areas.

For example, a client might decide their health needs to be a bigger priority, but they aren’t sure about spending money on a monthly Pilates class. Cokie helps them see they could allocate 1 percent of their annual budget to health and wellness. This would give them $2,000 or $3,000 for a gym membership or fitness classes. When you break it down like that, Cokie says, most people believe they’re worth at least 1 percent of that financial bucket.

She also recommends creating a separate bank account to fund a travel goal or as an overflow account for unexpected expenses or even charitable contributions.

Developing budgets, financial goals and conscious-spending habits removes the guilt and shame people – particularly women – have when it comes to money. They beat themselves up for overspending or not saving enough, but these things happen. Don’t feel bad about it, simply be aware of your financial health, Cokie says.

“Budgets are broken every day,” she says. “Just have the clarity and be connected to what you want to spend your money on. If you spent too much, instead of feeling guilty, say, ‘Now I’ll spend more purposefully.’”