Financial well-being is an important part of your overall personal well-being and can be achieved regardless of income.
Being financially well means you can meet your current and ongoing financial obligations, feel secure in your financial future, and are able to make choices that allow you to enjoy life – in other words, financial freedom.
However, data shows that personal finances continue to be a leading cause of stress for many Americans. Financial stress occurs when there is uncertainty around finances, a sense of worry about the future, and a lack of security. Like most types of stress, this can impact your:
Ability to sleep
Physical health
Emotional health
Relationships
Performance at work
Family life
If you have or are currently experiencing financial stress, you’re not alone – there are many resources and professionals available to help. Getting to a place where you are financially well takes time but it’s never too late to start thinking about your finances.
Tackle Tax-Time Costs and Stress
Tax Day (April 18) is right around the corner. For many of us, organizing documents can be stressful and filing costly. If you are worried about either, read this article to find assistance and resources.
If you don’t need your tax refund for essentials right now, you might be wondering what you could do with it. This article from CNET outlines six ways to put your tax money to work.
Fidelity Investments and TIAA, U-M’s trusted partners in administering its Retirement Savings Plans, are offering several webinars and workshops this month focused on how to start investing, fine-tuning your retirement and more.
The MHealthy Portal includes Path to Wellness and Knowledge courses focused on financial well-being. The confidential health questionnaire (HQ) is also available to help you identify what well-being areas are thriving and which may need attention. Active, benefits-eligible faculty and staff who complete the HQ by May 31, 2023, will also earn a $75 reward.
It may be difficult to talk about financial struggles, but taking small steps can help change your financial future. It’s important to remember that you’re not alone. Resources and services are available to help you navigate a financial crisis:
One-on-one, confidential assistance is available to you through MHealthy’s Resource Coach program. Get help with locating the right resources at U-M and in your community for finding food, meeting basic needs and more. In some cases, financial support is available to cover an urgent financial need.
Need help with food, housing, or paying bills? Need support in a family crisis or community disaster? Michigan 2-1-1 is a free-to-use, confidential service that connects you with local community-based organizations across the state offering thousands of different programs and services for people seeking answers.
Financial literacy means having a basic understanding of how to handle money matters like saving money, paying bills, debt management, investing, etc.
Financial well-being begins with understanding how to manage your money. Boosting your financial knowledge increases your ability to make good financial decisions for you and your family.
Self-assessments – measuring your financial health
If you’re not sure where to start, these resources can provide you with a snapshot of your financial well-being:
It’s important to understand your financial situation and what expenses need to be met. This will help to keep you from falling short, make it easier to make informed decisions on how to use your money, and reduce stress.
Some people feel overwhelmed by the thought of money management. Though it may take time, it does not have to be complicated.
Tips and resources to help you manage your money:
Creating a Budget – Reviewing your finances periodically or creating a budget is always important, but especially if your financial situation is changing. It’s an opportunity to assess how much money is coming in each month, prioritize your bills (mortgage/rent, utilities, groceries, etc.), and if needed, consider eliminating non-essential expenses.
These five steps can help you create a budget to manage your finances.
This fillable PDF helps you make a simple, one page budget to see where your money is going at a glance.
Budgeting Technology – Mobile apps are a convenient way to manage your money. You can find free or low-cost budgeting applications are available to help to help with budgeting, working toward your financial goals, paying bills and more. Before using any app, do your research to make sure it is reputable and safe. Here are some great and affordable apps (note, some required a subscription):
You Need a Budget
PocketGuard
Every Dollar
Save for Emergencies – Having money set aside for unexpected events such as a lost job, illness or car repairs means you won’t have to break your budget to cover these. How much you save can depend on how much extra money you have available. Save what you’re able but as a general rule, it is recommended to put at least 10% of your income into emergency savings each month. To learn more about emergency funds, viewthis essential guide to building an emergency fund from the Consumer Financial Protection Bureau.
Protect your identity and money – Beware of scammers who use fear and uncertainty to prey on people.
The average U.S. household owes more than $138,000, according to the Federal Reserve Bank of New York.
Debt comes in many forms – mortgage payments, car loans, school tuition, student loans, credit cards, medical, tax – are just a few examples.
Nearly everyone has debt. However, it’s important to be able to manage your debt so you are in control and can build good credit.
Tips for managing debt wisely:
Know exactly what you owe, and who you owe. This will help you never miss a payment. The best way to do this is to obtain a copy of your credit report.
Know how much your debt costs you. Lenders loan money and almost always get more back than what was borrowed – through interest. The higher the interest rate, the more money it takes to repay your debt. Also, longer repayment terms mean you'll pay back more money in the end, even if your monthly payments are smaller.
Make payments on time every month. If you don't pay at least the minimum payment each month, your creditor could charge a late fee and may report your late payment to the credit bureaus. This damages your credit score. If you are unable to make payments on time, talk to your creditors about what options are available to you.
Borrow only what you can afford. A general rule of thumb is to spend no more than one-third of your income on debt—including mortgages, credit cards, and loans (e.g., car loans, student loans, and lines of credit).
Your credit score and credit history play an important role in your financial well-being. Your credit history is summed up in a three-digit credit score, which:
Lenders use as a risk factor in determining your ability to pay back a loan.
Helps lenders determine whether they will loan you money towards buying a home, purchasing or leasing a car, approving a credit card, and more.
Landlords use in reviewing rental applications
Helps to determine your interest rate on a loan. Lenders typically charge a higher interest rate if you have a low credit score, costing you more money over the life of the loan. Improving your credit takes time, but the sooner you start, the faster your credit scores will improve.
Tips for improving your credit score:
Pay your bills on time, every month. Late payments have the biggest impact on your credit score. Missing one payment can damage your score immediately.
Set a reminder to pay a few days before the payment is due, or consider setting up automatic payments on your bills.
If you are not able to make payments on time, contact your creditors before they contact you. Don’t wait until you’ve missed payments. It’s a better idea to be proactive and reach out to your creditors to explore options such as hardship programs, loan deferments, reduced interest rates, and balance transfers.
Reduce your credit card debt. How much credit card debt you’re carrying is the second-biggest factor influencing your credit score.
Try to use 30 percent – or less – of your total available credit.In general, the lower your spending on each credit card, the better your score.
Review your credit report. It’s important to check your credit report regularly for errors and dispute any errors you find.
Setting financial goals is an important step toward becoming financially secure. Your goals can be long or short. Maybe you want to save money for a down payment to purchase a house, pay down credit card debt, pay for a wedding, go on a vacation, or buy a car. Regardless of your goal, you will need a plan to achieve it.
Short-term financial goals:
Short-term financial goals help you stay focused and keeps you on track to achieving longer-term goals. Having money set aside acts as a safety net for unexpected events such as an illness or car repair.
Tips for achieving short-term goals:
Create a budget. This will help you assess how much money is coming in each month, prioritize your bills (mortgage/rent, utilities, groceries, etc.), and discover where you could possible save. Get started with this fillable budget PDF.
Write down your goals. This can keep your objectives clear and get you motivated to achieve them. A good tool to creating goals is using the SMART method. Your goal should be Specific, Measurable, Action-oriented, Realistic and it should have a Timeline.
Create an emergency fund. Don’t let your goals get derailed by an unexpected expense. Have money set aside acts as a safety net for unexpected events such as an illness or car repair. How much you save can depend on how much extra money you have available. Save what you’re able but as a general rule, it is recommended to put at least 10% of your income into emergency savings each month.
Long-term financial goals:
Long-term goals typically take several years to accomplish and require longer commitments and often more money. Examples might include buying a home, saving for a child’s college tuition or saving for retirement.
Resources for long-term planning:
Retirement planning at U-M:
TIAA and Fidelity: Access investment services, free one-on-one meetings and retirement planning from one of the university’s authorized retirement savings investment companies.
Attend a live webinar: TIAA's interactive sessions are designed to give you practical, useful information on personal finance and long-term investing. Visit the Live Webinar Lounge to register. Adobe Flash may be required.
Planning for Retirement: Learn about how to determine when you are eligible for retirement, what happens to your benefits in retirement, and your income options in retirement
Social Security Retirement - You can never be too early or too late when it comes time to planning for a secure retirement. There are many factors to consider when making that monumental decision and one of them is Social Security. We know that navigating a government program can be overwhelming, intimidating and daunting. However, you will be amazed at how easy it is to work with Social Security, to navigate their planning resources, get your questions answered and utilize the online tools to ensure you make the right decision.
filing strategy options when it comes to spouses and divorced spouses benefits
key factors to consider when determining the right time to file
how you can work and collect benefits at the same time and how and when to file the application
how your decision on when to file for retirement benefits can affect widow(er)s benefits
learn about Medicare - when you must have it and when you don't need it
PNC Bank and the U-M Credit Union: Customers can access resources available through U-M’s partner financial institution, including financial planning resources.
The racial wealth gap: The racial wealth gap in the United States is the disparity in median wealth between individuals of different races. Addressing systemic disparities in educational opportunities and barriers to economic mobility are named as strategies to closing the wealth gap.
MHealthy acknowledges the disproportionate ways people of color, and African-Americans in particular, have and continue to be disenfranchised and denied access to wealth-building opportunities in the United States. Given that financial well-being is one of the dimensions that MHealthy cares about, the racial wealth gap is a health equity issue that we are committed to raising awareness of. Below, you will find organizations, leaders and resources that are leaders in closing the racial wealth gap.
