I remember the first time I heard of this concept. It was last year during Financial Literacy Month, which occurs every year during April. My SO, Brian, and I combined our finances a few months prior to that, and I was put in charge of budgeting and allocating funds for savings.
Honestly, I thought we were doing fine. A little was getting saved every month and all of our bills were getting paid. But I knew we were in debt, too. Both of us had school loans and car loans, I had a signature loan and was considering going back to school at the time (which I did!), and we were working on getting our credit up. Why not do a wellness check? How bad can it be?
What is a financial wellness check?
A financial wellness check takes into account all the various elements of your finances and allows you to see the big picture. You have to calculate how much money is coming in every month. You have to know what every monthly bill is (or estimate for varying amounts like gas or electric). You have to pull up receipts and credit card and debit card transactions to find out where the extra money is going. How much interest are you paying on your debts? How much of that income was saved? How much of that income was invested?
Finally, it also requires you to determine your net value. I did this for Brian and me combined since all of our finances are combined anyway. In simplest words, net worth is the difference between your debt and the value of your assets. Assets aren’t just stocks and bonds. They can also be artwork, jewelry, technology, or anything else valuable that you could sell.
Why is all that so scary?
I don’t have a reference, but I remember reading an article around the same time I was doing this that said people don’t want to face their debt. It’s no secret that the United States is in a debt crisis due to the build up of credit card debt and student loans. When that debt gets to the point that it’s crippling your way of life, sometimes it feels better to bury your head in the sand and tell yourself you’ll face it tomorrow.
Unfortunately, that’s not how problems get solved. Problems don’t just go away when ignored. Financial problems in particular have a nasty habit of building up and getting worse if left unaddressed.
It started getting scary for me, too, the further I got along. While I had an idea of what each debt was, I had never seen the number of them all together before. Worse, I had never seen the total of how much we were spending on interest. I knew that we didn’t have enough saved away to deal with an emergency, but the big picture made me realize we wouldn’t have been able to cope with it at all.
Why would anyone put themselves through this?
Because you can’t not put yourself through this.
My financial wellness check had several benefits for me. I had a lot to fix and I had to prioritize how I was going to fix it. Obviously, most of the debts would be taken care of with time. Many of the other problems didn’t have an obvious solution.
I decided to make it a priority to get an emergency savings fund together. We decided on a number that we were comfortable with and set up a plan to get there. We had two financial emergencies between November and December. We were prepared. They were taken care of and we were able to move on with our lives without taking on more debt.
We’re working on getting it back to where it was. Until then, I’m still sticking with the values I learned about myself by doing that financial wellness check.
If I truly value my time and my skills, and I’m willing to go to work and have someone pay me for that time and skill-set, then I damn well be sure I’m valuing the money I earn from it. Because that money provides my lifestyle. Because that money provides my security. Because my cocker spaniels are really happy when I’m responsible enough with my money so I can spare a few extra dollars for treats and bully sticks.