January is Financial Wellness Month, and it’s a great time to set some goals for 2023 to get more financially healthy. We caught up with Debbie Bickle, one of our fantastic Private Bank Officers, to learn how to avoid financial illness and steps that can be taken to correct it.
As a CPA with an extensive background in budgeting, forecasting and financial reporting in the energy sector, Debbie made the move to the other side of banking in 2019 by joining the Mabrey Private Bank group. She now advises and serves Mabrey customers daily to provide them with the tools and resources needed to achieve their goals.
1) Thanks, Debbie for taking the time to chat about financial wellness. Many probably think of financial wellness as having a lot of money, but true health goes deeper than a dollar amount in a bank account. How do you define financial wellness?
My definition of financial wellness is less about how much you make and more about how you manage your day-to-day cash flow and how much you have in your emergency, rainy day and retirement funds. In order to truly be financially healthy, you need to be able to pay your bills and living expenses on time and have ample money set aside for both the unexpected and the future. There are many theories of the best way to manage your money, but in a nutshell, earn a wage or salary, save a portion of your earnings, and invest a portion of your earnings.
2) What reasons do you see that lead to a person or business not being financially well?
In most cases, the reasons a person or business become financially unstable are similar. They fail to make and, more importantly, follow a budget and to have a source of liquidity (or savings) to use if something unexpected happens.
A good budget takes into account the potential ups and downs of income and expenses and builds in some “cushion.” I recommend looking at revenue streams and costs of living or operating expenses for potential changes that can negatively impact your net cash flow and then budget conservatively. Without a budget, and the disciple to work within that budget, cash flow can get tight. Once you get behind on bills, the costs escalate with interest, penalties, etc. – another reason having adequate money in savings is so important.
3) What is a simple first step or two that any person or business, no matter their income/revenue, can take towards becoming more financially healthy?
A first easy step for an individual or business to get financially healthy is to prepare a budget. Identify sources of income; then look at all potential expenses – consider which are necessary and which can be eliminated if cash flow is tight.
Another suggestion is to have a portion of your net pay go directly to a savings account. If your employer offers a 401(k), take advantage of it. The amount you put directly into a 401(k) plan is taken out pre-tax which reduces the amount of taxes taken from your check. Also, in many cases, your employers will match a portion of your 401k contribution – in essence giving you free retirement money. People tend to spend what they have, so if you allocate to savings first, you will learn to live with what’s left.
4) The Holidays and New Year are often a time when people receive bonuses and/or pay raises. How can those be utilized smartly to increase financial wellness?
For those that receive a bonus check, it would be smart to pay off or paydown any high interest debt. However, if you don’t have an emergency fund, it might make sense to use a portion of your bonus to pay down debt and the rest of the bonus to build your savings.
If you do receive a pay raise, similar to my answer above, I recommend determining the amount of the increase to your net pay and use that “increase” to pay down any high interest debt. Once paid off, start putting that extra money directly in savings.
Once you have eliminated or settled high interest debt and have solid savings funds, consider investing your bonus or raise.
5) How can products or services from Mabrey Bank assist in obtaining financial wellness?
Mabrey offers many interest earning products including money market accounts (MMA’s), savings accounts, certificates of deposits (CD’s).
Utilizing online banking, you can setup automatic transfers to your savings account or BillPay to send money to an investment advisor. Additionally, Mabrey offers a new tool called Money Manager, that can be found through our online banking system. This tool can help you budget and analyze your spending to help get a better understanding of where your money is going.
Don’t hesitate to reach out to your local Mabrey Officer or Relationship Banker if you have any questions about how we can help you achieve your goals.