In a recent episode of the podcast TaskHuman Talks, host and TaskHuman provider Jamie Carroll sat down with Bruce Arendt to talk about all things financial wellness.
His top beliefs are:
The conversation covered many important topics. Here are the highlights:
When we think about financial health, it can be tempting to think there is a definition – a set of parameters that we need to meet to have it. But there isn’t. It is a spectrum. Everyone has their own idea of what being financially healthy looks like.
“It’s kind of a spectrum for the individual,” Bruce says. “And definitely we can look at individuals vs. couples vs. families.”
It’s also important to set financial goals. They give you something concrete to work toward, and they keep you focused on moving forward, much like other wellness goals.
“It doesn’t come overnight,” Bruce says. Set short term and long term goals, and get comfortable with the idea that financial wellness is never “finished.” It’s an ongoing process, like exercise.
We’ve been socialized to keep our finances private. So much so that it can be difficult for us to discuss money even with our partners. While he understands that it is uncomfortable, Bruce encourages open and honest conversations about money for couples.
People can come from different financial backgrounds and have different thoughts about spending and saving. Those differences can lead to conflict, and even separation, in the relationship.
“Our perspective on financial awareness is based on what we know, what we’ve learned from people,” Bruce says.
Those perspectives are not necessarily good or bad, but the differences can cause conflict.
Spending is one area where differences often pop up. Talking about spending habits and coming to an agreement about them will foster a healthier relationship.
“If one person is spending all of the money they are earning,” Bruce says, “and they are not contributing to the overall wellness of the household, that is a huge conflict.”
Both partners need to compromise. To feel invested, both need to feel that they’ve lost and gained parts of what they want.
Financial goals is another area where people should practice being more open with their partners. Start the conversation with safe questions, like “Where would you like to be financially in five years?”
“These are questions that can open up a more intimate conversation,” Bruce says.
Talking about your financial goals can help you and your partner get into similar mindsets about your money. And these are questions you can come back to any time you need to. Bruce reminds that life happens, so your financial goals should change.
When thinking about saving for your retirement, the earlier you can start the better. The more time you have, the easier it will be for you to grow your accounts to a level that can support a full and robust retirement.
You shouldn’t save for the future at the expense of covering your needs now, though, Bruce explains. If you’re struggling to make ends meet right now, you may need to put off retirement planning for a little while, which may also mean you’ll need to take a few more risks later.
Bruce advises taking a holistic approach to your saving.
“Invest in yourself,” he says, “and that is really one of the best investments you can make.”
You invest in yourself by taking care of your physical and mental wellness.
If your employer offers a retirement option, highly consider it, especially if it comes with matching funds.
Gig workers have options too. Our economy has more gig workers than ever. There are financial options that can work for them, like Roth or traditional IRA and 401k’s. When deciding which option is the best for you, it would help to talk to a financial professional. You need to know if you want to save more money now, or in the future, but Bruce prefers a Roth IRA.
“If you think you’re going to make more money when you’re retired,” Bruce says, “that’s a nice benefit. So I’m not paying taxes on that money.”
You also need to go back to your basic financial philosophy. When saving, time is a benefit. Even when considering a volatile stock market, time has shown it comes back, and often increases.
“I would much prefer to spread it out to kind of smooth out some of that risk,” Bruce says.
If the current market situation makes you nervous, Bruce encourages you to continue investing at a level that you’re comfortable with. If that means you need to pause your investments right now, that’s ok too. You don’t want to worry about your money.
To establish what your Rainy Day Fund should be, you need to analyze your expenses. Track the minutiae of your expenses for at least one month. Then, work to save 3 to 6 times that amount for your fund.
When it comes to your finances, the more information you have, the better. It even helps if you have a spending journal to know where you spend your money.
“The process of putting pen to paper is very informative,” Bruce says.
When you write down your expenses, you see it concretely, and you can learn more about your habits.
Then you need to create a budget, which simply means deciding where you’re going to spend money and not deviating from it. Bruce admits that most people avoid budgeting as individuals or as a couple, because it’s not that fun. That’s where a financial wellness coach can help.
“That’s one of the places that someone who is not close to that individual or couple can come in and get that going,” Bruce says.
Creating a budget allows you to better work toward a goal. Because you know where your money is being spent ahead of time, you know where you can save money for a particular purpose.
If you have a purchase goal, like a new car or expensive vacation, creating a separate savings account can be a good mental exercise. The separate account can create enough of a separation that will keep you from spending the money on something else. You can also set up an automatic transfer, so you don’t even have to think about working toward your goal.
Sometimes when we want to purchase something large, we need to cut our costs in other areas to find the money for it. We need to decide what we’re willing to sacrifice to have the goal, but that’s not the only way to get there.
“You don’t necessarily need to decrease your expenses,” Bruce says. “You could increase your income.”
Another often overlooked area of cost savings is food waste, says Bruce. When we buy food we don’t eat, we’re throwing away money.
“You don’t want to throw out an organic apple,” Bruce says, “that’s like throwing out $1.50.”
As a society, we should be more aware of how much money and other resources we misuse by having so much food waste.
Financial health is different for everyone. But it’s important you are clear about where you are and what you want. Working with a financial wellness coach can help.
“Financial health is a movement. It’s fluid,” Bruce says.
Listen to the full podcast here. If you’re ready to start getting clear on your financial situation and goals, or you want more in-depth support on how to create and maintain your Rainy Day Fund, reach out to Bruce on the TaskHuman app to set up a LIVE video chat today!