October 2023
Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
As noted in last month's Small Steps to Health and Wealth (SSHW) message, financial wellness is the ability to manage day-to-day finances and stay on track to meet long term goals. To be financially well generally requires goal-setting and planning, motivation, and action to improve current financial practices.
In a recent Rutgers Cooperative Extension webinar, ten SSHW behavior change strategies were discussed as paths to achieve or maintain financial wellness. Below is a description of each SSHW strategy with a link for each one to worksheets in the SSHW workbook:
Track Your Current Behavior- This strategy (PDF) involves tracking income, expenses, and cash flow for a month or two to determine current spending patterns and emotional triggers for expenses.
Think Balance-Not Sacrifice- This strategy (PDF) involves taking action to balance income and expenses; i.e., to not "live beyond your means." For example, trimming expenses and/or earning more money via a "side hustle."
Make Progress Every Day- This strategy (PDF) involves doing one or more small things every to improve your finances. Examples include saving loose change in a can or jar, buying one less [soda, coffee, snack food, lottery ticket, etc.] and learning one new thing about personal finance.
Get Help and Be Accountable- This strategy (PDF) involves finding sources of support and encouragement to reach financial goals (e.g., family, friends, co-workers, employer HR office, investment clubs, and more). A good helper will tell you whether you are "walking your talk" or not and provide honest feedback.
Meet Yourself Halfway- This strategy (PDF) involves reducing discretionary spending by half of its current level. This can be done by looking for less expensive shopping options (e.g., a garage sale or consignment store) or changing practices (e.g., eating half of restaurant meals and taking half home for another meal).
Convert Consumption Into Labor- This strategy (PDF) involves calculating how many hours of work are needed to buy something and then deciding if the expense is worth it. People may change their mind after doing the math.
Compare Yourself With Recommended Benchmarks- This strategy (PDF) involves comparing your financial management practices with expert recommendations to gauge your progress. Examples of benchmarks include your consumer-debt-to-income ratio, credit score, liquidity ratio (emergency fund), and net worth.
Automate Good Habits- This strategy (PDF) involves putting financial practices on "automatic pilot." Examples include dollar-cost averaging investment deposits, direct deposit of a paycheck, and automatic bill-paying.
Step Down to Change- This strategy (PDF) involves finding less expensive ways to purchase things vs. cutting out expenses completely and feeling deprived. An example is shopping for clothing and housewares at a thrift shop.
Kick It Up a Notch- This strategy (PDF) involves ratcheting up current positive financial practices to make them even better. For example, saving an extra 1% of pay in an employer retirement savings plan or adding an additional $50 a month to credit card minimum payments to get out of debt faster.
Start small with one or two of these SSHW strategies and home in on those that work for you. For additional information about financial wellness, review the FCHS department Financial Wellness webinar.