Editorial Policy

Is debt killing you? 3 ways to boost financial health

Matt Alderton

March 11, 2016

Everyone knows that debt can ruin your credit score. What you might not realize, however, is that it also can ruin your health.

“There are two things people often forget about money,” says Annalee Leonard, founder and president of Mainstay Financial Group, a retirement planning firm in Pensacola, Florida. “First of all, it’s a necessity of life. Secondly, it creates a great deal of stress — and we all know what stress does to our health.”

Indeed, an American Psychological Association 2015 survey found that 72 percent of Americans said they had felt stressed about money at least some of the time during the past month, and 22 percent said they had felt “extreme” stress about money.

The consequences aren’t just psychological. In a 2013 study, researchers at Northwestern University found an association between debt and health in 8,400 adults ages 24 to 32. Among the findings: Those with more debt and fewer assets reported higher perceived stress and depression, demonstrated worse self-reported general health and showed an increase in diastolic blood pressure.

Rx: Financial Wellness
What’s a person dealing with debt to do?

In order to make changes that positively impact their health, people must understand how they can get out of debt, says Michael Wesley, senior vice president and director of retail client strategy at Cleveland-based KeyBank. In 2015, the bank announced a new strategy focused on the concept of “financial wellness.”

“The outcome of being financially ‘well’ is peace of mind,” Wesley says.

Money experts agree that the three biggest opportunities for reducing debt, easing stress and improving one’s fiscal heath are:

  1. Emergency savings: “It starts with emergency savings, which is one of the biggest financial gaps in society today,” says Wesley. Having at least six months’ worth of living expenses saved in a bank for use in an emergency, he says, will go a long way toward reducing your stress when faced with having to come up with the cash to deal with a financial crisis.
  2. Budgeting: “Everything comes down to the budget,” says Lacey Langford, an accredited financial counselor in Landrum, South Carolina. She recommends “mindful” instead of “mindless” spending. Knowing exactly how much money you have coming in and what expenses it should be allocated toward can remove the financial surprises and uncertainty..
  3. Debt repayment: “Are you going to start with the credit card with the highest interest rate, or the card with the lowest balance? Different people work differently, but you’ve got to have a plan for paying off your debt,” says Leonard. Whether you use the snowball or avalanche method — or some other strategy — to tackle debt, she says people who set and achieve debt repayment goals over time will have less stress and therefore better health.

Focus on your health — and debt
In the same way focusing on your debt can improve your health, focusing on your health may be able to reduce your debt, says Langford.

She recommends taking advantage of low- and no-cost resources — coupons for fresh produce, for example, and free fitness classes at your community center or church — to achieve your financial and health objectives simultaneously.

“When you have a healthy mind and body, you have more energy, more patience and more clarity to help you get your finances right,” she says. “It puts you in a positive state of mind, and having a positive attitude is a huge part of handling money successfully.”

Adds Leonard, “It’s never too late to pull things together. Your problems aren’t going to be cured overnight, but when you have a plan you can make yourself better.”

Tags: , , ,