By Bill Pienias, Special AFS Contributor
As 2020 draws to a close (and none too soon for most of us), more than 188 million adults in the U.S. will resolve to make a change in the new year. New Year’s resolutions may take on even greater significance at the end of one of the most challenging and painful times in history.
The top two resolutions historically involve physical and financial health. We vow to work out more, spend less and eat better. The more determined among us vow to tackle all three, and research shows pretty clearly that accomplishing one increases the odds of accomplishing the others.
Health and Wealth
Researchers at Washington University in St. Louis found that people who regularly save money are more likely to make healthy choices about their diet. And a study out of Duke University found that low credit scores could predict an increased risk of cardiovascular disease.
The reasons behind this mind-body-wallet connection have a lot to do with our education, expectations and employment.
Our education about financial matters has less to do with our college major or advanced degree and more to do with what the experts refer to as “financial literacy”. The National Institutes of Health defines financial literacy as our “ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions.”
While there may be a connection between your levels of education and financial literacy, one doesn’t always guarantee the other.
Lisa Kaybee and her partner, Susanna Parault, are living proof of that. Lisa has an MBA. Susanna has a double major in Economics and Political Science. Their combined gross annual income is well over $800,000. Yet, until three years ago, the two were deeply in debt, and Lisa’s credit score was below 500.
“It was mortifying,” said Lisa. “I was in a state of total denial about how much I made and how much I spent. I grew up in a middle-class family in a middle-class neighborhood. We had a decent house, and we had enough food. But I never got to go on all the expensive trips my friends did when we were growing up. I worked retail in high school and sold designer clothes to the kids I went to school with. I hated it.”
Once Lisa graduated, an advanced degree in hand and an income to match, she set out to live the life she couldn’t as a child.
“I have a business degree, for God’s sake,” Lisa said. “But I never applied my education to my own budget. I maxed out my credit cards, leased expensive cars and ignored the bills. I ate out almost every night, drank really expensive wine and told myself I was too busy to work out.”
The night Lisa celebrated her 31st birthday, she didn’t make it home from the party. A tingling feeling in her arm at dinner became a hot, searing pain in her shoulder by dessert. When she stood up from the table, everything went dark.
Doctors determined Lisa had suffered a heart attack, brought on by years of overeating, under exercising, and way too much wine. Lisa also suspected her stress level exacerbated her physical problems, as she would lie awake some nights and wonder how she could make so much money and owe so much more.
Our education about financial matters has less to do with our college major or advanced degree and more to do with what the experts refer to as “financial literacy.”
Science says she’s probably right about that. Long-term stress, including anxiety about money, can trigger an increase in both adrenaline and cortisol, hormones associated with stress. Elevated levels over time can cause health problems like high blood pressure, increased heart rate, and decreased immune functioning.
Lisa decided to tackle her physical and financial problems at the same time. The first place she went was the gym.
“That’s where I met Susanna. We hit it off from the beginning, but it took me a long time to tell her what got me back to the gym.” Susanna was equally reluctant to talk about her own journey of physical and financial damage.
“I was more of a binge eater and binge spender,” Susanna explained. “I followed a healthy diet and a strict budget, until I got tired of it. Then, I would whip out my credit cards, buy a ticket to Paris and pig out for a week or two. I spend thousands of dollars on food and wine and clothes until I was sick and ashamed and ready to go home.”
Susanna’s health problems didn’t escalate as quickly as Lisa’s, but her financial situation was grim. So, she enlisted the help of a financial planner in her office and began to tackle her debt, one credit card at a time.
“I felt great about getting my financial house in order, so to speak, but I still felt like crap physically,” she said. She took a different road, but one that eventually led her to the gym and to Lisa. Now, the two women, workout partners and partners for life, have embraced financial fitness for life as well.
Financial planners advise anyone who wants to get their budget under control to start with a comprehensive look at reality. See your situation for exactly what it is and make a plan to tackle debt first and investments later.
- Make a list of all your debt, not including your rent or mortgage. Include credit cards, car loans, and personal loans.
- Organize the list in descending order with the highest interest rate debt at the top.
- Determine your net monthly income (what you make after taxes and insurance).
- Now figure out how much more you can pay toward the debt with the highest interest rate. Make larger payments toward this debt until it’s gone.
- Make your way down the list until you have it all paid off.
- Don’t be discouraged when you discover it will take five years or even ten to get everything paid off. You’re creating a plan to secure your financial fitness for life.
If you’re anything like Lisa and Susanna, you may be pleasantly surprised to discover that once you’re working toward financial fitness, physical fitness will also become a priority. Both food and money can carry hefty emotional baggage. If you spend impulsively, you may eat impulsively too.
Let’s face it. No one ever secured their financial future by skipping an expensive coffee every day. But bypassing the coffee shop will help you adjust your mindset. You begin to see yourself as a saver, not a spender. Small psychic adjustments like that can help you clearly see the road to physical and financial fitness, for life.
President of FinFit Life, Bill Pienias, has been a leader in the insurance and fitness industries for over 24 years. He has built and led companies in the US and Europe, most notably being the President of AEGON’s largest Broker-Dealer, Vice President of WFG, CEO of The Salve Group and leading the recruiting and sales efforts as SVP of Foresters Financial. Bill is a native of Chicago, played quarterback at Brown University and enjoys being with his wife and three children