Financial wellness and mental health are closely intertwined. Financial stress, whether from debt, insufficient savings, or income instability, often leads to mental health challenges, including anxiety and depression. Likewise, poor mental health can make it challenging to maintain financial stability, sometimes leading to impulsive spending or neglecting essential financial responsibilities. It is also one of the leading causes of divorce in this country.

Buffalo Grove residents can benefit from understanding this connection. By working with a Buffalo Grove CFP® professional or financial advisor, you can address financial concerns contributing to stress levels. At SGL Financial, we help clients create clear, manageable plans to reduce financial anxiety, ensuring a solid financial and mental health foundation.

Mindful spending is about making conscious financial choices that reflect your values and lifestyle. For instance, if your goal is to retire early, directing more resources toward retirement savings rather than discretionary spending can help you pursue this vision. Mindful spending is not about eliminating joy but aligning expenditures with what truly matters to you in the future.

Here’s why it matters:

1. When you know where your money goes, you’re less likely to make impulse purchases that can lead to increased debt and reduced savings.
2. Mindful spending allows you to prioritize funds for things that truly matter to you, for example, saving for retirement, paying off a mortgage, or building an emergency fund.
3. Knowing you’re in control of your spending can relieve the anxiety that often comes with money management, fostering a greater sense of security.
4. Consistently making thoughtful spending choices can help you build savings in 401ks, IRAs, and personal savings accounts.
5. Being mindful of spending ensures your purchases reflect what’s meaningful to you, leading to increased satisfaction with how you use your resources.

Start by identifying key areas where you derive genuine satisfaction and allocate more resources toward those goals. By comparing your spending patterns to your values, you can make adjustments that bring a greater sense of purpose and satisfaction to your financial decisions. 

Setting financial goals gives you direction, purpose, and measurable milestones that guide your decision-making. Without goals, it’s easy to get sidetracked by day-to-day expenses and spontaneous purchases, ultimately undermining the pursuit of long-term goals.

Here are five reasons why setting financial goals matters, regardless of your age:

• Financial goals provide a roadmap for your money, helping you focus on your goals, whether funding your children’s education, buying a second home, or building a bigger retirement fund.
• With specific goals, you’re more likely to create a budget, track spending, and allocate funds toward savings, keeping you on track to pursue your more important goals. 
• Goals give you something to work toward, making it easier to stay motivated and make financial decisions that align with your objectives. Every month, you should see some progress towards a more secure financial future.
• Setting goals typically includes building an emergency fund to offer a safety net for unforeseen expenses and reduce financial stress during challenging times.
• Having clear financial goals promotes habits like saving and investing, which are the foundation for future financial stability and independence later in life.

Comprehensive financial planning goes beyond simple saving, budgeting, and investment; it’s about creating a well-rounded strategy supporting every stage of your life. Consider working with a Chicagoland CFP® professional or financial advisor who can help you develop a plan that considers the impact of rising income, investments, taxes, and estate planning in your pursuit of long-term financial independence.

Here’s how a comprehensive plan evolves:

• 30s and 40s: Establish a solid foundation with savings and early retirement contributions, focusing on building long-term wealth.
• 50s: Maximize retirement contributions, pay off as much debt as possible, manage investments strategically, and minimize your tax liabilities.
• 60s and Beyond: Finalize a retirement strategy that may last 30 years or more for one or both spouses. Strategies include spending, withdrawal rates, investing, and estate planning.

SGL Financial’s expert financial advisors guide you through each stage, making adjustments as necessary for life events that impact your financial priorities. Our comprehensive planning ensures you’re prepared for retirement while maintaining the flexibility to adapt to change and the unexpected.

Achieving financial wellness is a step-by-step process based on smart choices and disciplined spending habits. Small steps make a substantial difference over longer periods, enhancing your financial health and helping you work toward your larger goals.

Here are some actionable tips to improve your financial health:

• Automating contributions to savings and retirement accounts removes the manual step and helps you stay disciplined. Set up automatic transfers to build your emergency fund, retirement savings, and other essential accounts without extra effort.
• Regular spending reviews help you stay within budget and identify opportunities for increased savings. Many online tools and apps make it simple to monitor spending in real-time.
• High-interest debt, like credit card debt, will reduce your savings rates. Prioritizing paying down high-interest debt will improve savings and reduce financial stress.
• Periodically reviewing your goals ensures you’re on track and helps identify potential obstacles. SGL Financial’s top financial professionals can assist with this, providing objective advice as circumstances and priorities evolve.
• Effective tax planning helps you maximize savings by minimizing your tax burden. Our team at SGL Financial offers tax planning services nationwide to help you optimize deductions, deferrals, and other tax strategies.

When building financial wellness, many people wonder if they should handle their finances themselves or seek professional help. DIY (Do It Yourself) investing may appeal to those who feel confident doing that type of work and making those decisions. However, it has been our experience that most people need more time, specialized knowledge, or inclination to do this work themselves.

Choosing between DIY investing and working with a financial advisor depends on your goals, availability, knowledge, comfort level, and making unassisted financial decisions. 

On the one hand, you’ll have complete control over your financial decisions. On the other hand, you may not have the specialized knowledge required to manage your assets in volatile markets. There is also a risk of emotional decision-making during periods of market decline. It takes knowledge and discipline to make the right decisions.

Emotional investing—making financial decisions based on feelings rather than sound data-driven strategy—can significantly damage your financial situation, both now and in the long term. For example, you may make the wrong investment decisions when emotions run high.

When emotions like fear, excitement, or impatience drive your investment choices, you’re more likely to make impulsive decisions that undermine your pursuit of long-term financial goals.

For example, suppose the stock market takes a sudden dip that lasts for weeks or months. A fear of continued losses may cause you to sell when you should be buying because stock prices are lower. It takes knowledge and discipline to invest during down markets. 

Excitement often leads people to pour money into trending stocks or assets during a bull market. It stands to reason that just about anyone can make money in a bull market. It is also an opportunity to take gains and redeploy assets to reduce future risk. A more balanced investment approach may not be as exciting as the stock market, but it could be a safer bet for your financial future.

In the long run, emotional investing can lead to wrong decisions, reducing the amount of money available for retirement.

 Read about a few examples:

1. Missing Out on Compound Growth: Constantly buying and selling in response to emotions disrupts the steady growth of a well-diversified portfolio. When you react impulsively to market highs and lows, you miss out on compounding growth opportunities—the powerful impact of staying invested over longer periods. Missing out on compound opportunities can undermine long-term returns because markets tend to move in short spurts.
2. Underestimating the Value of a Long-Term Plan: The best investment strategies are built for the long term, not for quick day-to-day returns. When you let emotions dictate short-term investment decisions, there is a good chance the decisions will hurt the pursuit of long-term goals. 
3. Your biggest financial risk is not short-term volatility. It’s a failure to pursue your long-term goals. For instance, if you plan on retiring 20 years from now, making emotional choices based on day-to-day fluctuations in the securities markets may undermine the pursuit of your long-term goals. 
4. Emotional investing often leads to increased trading, which creates higher expenses and potential tax consequences. Every dollar of expense is one less dollar you will have available for future use. Many of these expenses are erosive because they impact performance and savings rates.

The key to overcoming emotional investing is to adopt a balanced, long-term strategy and stick with it, even when emotions run high. Working with a financial advisor can help because they provide the objective, disciplined guidance you need to stay the course and make the right decisions.