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The Voice of the Black Community

Life and Religion

Mo' money, fewer health problems
Research finds link between finances and health
 
Published Thursday, January 31, 2013 11:00 am
by Brandpoint

At the advent of a new year, many Americans make resolutions to improve health and finances without realizing how much the two goals are actually related. The state of your financial affairs can have a direct impact on your overall physical health.

“Money problems are a well-known cause of stress,” said Lule Demmissie, managing director of investment products and retirement at TD Ameritrade. “The negative impact that stress has on one’s physical health is well-documented [so] it makes sense that relieving stress through better financial planning, among other remedies, can help contribute to better physical health.”

According to a TD Ameritrade survey, women who started saving for retirement before their 30th birthday and contributed regularly to retirement savings reported feeling less anxious, frustrated or regretful than women who waited to begin saving or who didn’t regularly contribute to their savings accounts.

Looking to improve your finances in 2013? These five steps can help set you on the right path:

1. Set a goal

It’s important to define your objective. Write it down and be as detailed as possible in painting your perfect vision for the future.

2. Create a budget

A budget is the foundation for any solid financial goal. Track your monthly income and expenses, and plan accordingly. You need to understand how you are already spending your money and how much you need to save to help achieve your goal.

3. Establish a savings plan

Prioritize where you allocate your money. First, it’s a good idea to pay down high-interest debt such as credit cards. Next, consider establishing an emergency savings fund with enough cash reserve to cover at least six months of living expenses. Third, if possible, maximize your retirement savings by contributing the maximum amount allowed by the IRS. If you can’t contribute the maximum, remember that no amount is too small. If your employer offers a 401(k) match, try to take advantage of it. Remember to use easy “set it and forget it” strategies like auto-investing into your 401(k) and IRA and saving regularly will not be a burden.

4. Develop an investment plan

After you’ve established a budget and created a savings plan, it’s important to make smart investment decisions with your remaining finances. Work with a professional to help evaluate important factors like risk tolerance, tax status, time horizon, etc.

Also, make sure your investment plan aligns with both your short-term and long-term needs. If you have five years or less to reach your goal, consider more liquid investment opportunities. If you have 10 years or longer to reach your goal, you may have more investment flexibility.

5. Get educated about money

Money isn’t the only thing you need to invest in order to improve your financial health. You’ll also need to invest time to fully understand your personal financial situation and the options available to help you achieve your financial goals. Free savings and planning tools, such as retirement calculators and portfolio planners, can be found online.

“Just as it’s never too late to take steps to improve your physical wellbeing, it’s never too late to start saving,” Demmissie says. “Taking steps to improve your financial health can help relieve stress now and help you feel more confident about your plan for the future.”

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Posted on February 5, 2013
 

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