According to CFSI’s Consumer Financial Health Study, 57% of Americans—approximately 138 million adults—are struggling financially. While we can probably picture what strugging looks like, what about being financially healthy? To me, financial health means that I’m prepared to handle what life throws at me. In my case that means that when my wife and I began suffering with chronic illness, we were able to cover our medical bills and avoid bankruptcy.
First my wife, who was already suffering with fibromyalgia, learned she also had rheumatoid arthritis. She worked as long as she could with the pain, but in the end had to file for disability. Then I had a heart attack, learning I had type 2 diabetes and congestive heart failure in the process. That required multiple hospital stays and surgery, but thankfully I am stable now. Still, I had to retire a few years earlier than planned. At the same time our income was taking a significant hit, our healthcare expenses were increasing.
I think most of us are aware of how expensive healthcare is in the United States. Yet still it might surprise you to learn that almost 30% of my household budget is spent on healthcare insurance premiums, doctor visits, prescription medications, tests, and other medical necessities. The average household spends only 6% of their budget on these healthcare costs. Being financially healthy and sticking to our budget means that even with this increased burden, we’re still able to pay our expenses, maintain an emergency fund, reduce our debt, save money, and keep our credit rating strong.
Financial health really matters. So how did we make it to a reasonable level of financial health? It took a lot of good decisions on a day-to-day basis. Things like deciding not to buy that item we wanted at the store, or cooking at home instead of going out to eat. It also meant doing some planning to set a budget, establish an emergency fund, and obtain needed insurance coverage. Long term disability coverage was an important one for us, and yet it’s one that many people overlook. Getting to financial health meant eliminating our credit card debts and reducing our other debts.
That’s not to say that the journey has ended. Our medical expenses are still adding up year after year, and we must remain vigilant to be able to stay afloat financially. Plus you never know when another unplanned expense may come knocking at your door. In the meantime, we set financial goals and revise our budget regularly. We try to find new ways to increase our income (not so easy in our situation) and decrease our expenses.
We all tend to think that bad things won’t happen to us…until they do. Improving your financial health means that when that day comes, you’ll be prepared and your finances will be secure.
Are you prepared in case of an unplanned hit to your finances? What if that situation lasts longer than a few weeks? #FinHealthMatters