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  • Writer's pictureSteve Coker, CFP

Finance and Your Health

We all want to be just a little wealthier and healthier, and maybe just a little bit better looking. Luckily, a new study from Rutgers University gives us some clues on how to achieve at least the first two: plan. In fact, a number of studies over the past decade have found a strong correlation between our financial health and our actual health. It turns out that many of the causes of poor health and poor financial health are similar, and the paths to better health and wealth can also be linked.

Intuitively the link between having our finances together and having a healthy lifestyle makes sense. The stress of finances can impact us physically, affecting our long-term health. Moreover, financial stress can have a negative impact on personal relationships and job productivity, further adding to relationship stress and job stress, resulting in a downward spiral. One study by Garman estimated that 15% of workers have financial problems (e.g. high credit card debt) that negatively impact job productivity.

Health problems and financial problems can actually be quite similar. Consider the similarity between putting on a few extra pounds and adding a few bills to the credit card. Both issues are not that big of a deal at the onset. However, as the pounds add up and the credit card bills stack up the impact on our lives becomes very real and overwhelming. Many people fear the major lifestyle changes that are needed to solve the problem, and so they ‘freeze’ and do nothing. It seems impossible to get out of debt or to save enough for retirement so why even try. It seems impossible to get rid of the extra weight and so why even try.

The paths out of both issues can also be similar. In The Power of Habit: Why We Do What We Do in Life and Business Charles Duhigg found that individuals who began the discipline of budgeting, actually began to be more disciplined about their eating habits as well. Conversely, those who began a diet actually became more disciplined in their spending. Why would this happen? Researchers find that discipline is actually a skill - a muscle as it were. As we exercise discipline in one area of our lives it actually ‘spills’ over to other areas, allowing us to be a more disciplined person and achieve our goals in both health and in finance.

The recent Rutgers study focused in on one specific discipline. The discipline to plan. The study, conducted by Barbara O’Neill, Jin Jian Xia, and Karen Ensle tested the correlation between ‘planning behavior’ and successful financial and health outcomes. Not surprisingly, those who had a ‘propensity to plan’ had higher ‘successful outcomes’ in finance and health.

Those who are successful begin with a plan and then step by step develop the discipline to make it happen. It sounds so easy and yet so few of us do it. As with many things in life, making a change begins with a single step, followed by another, and then another, until the steps become a habit and the habit becomes a personality that is core to who we are. Here at Cedarstone, we have been proponents of planning for a long time, and we are proud to be helping our clients out of the trap of inaction and onto the road to achieving their goals.

Now if we could only figure out how to be a bit better looking…

So-hyun Joo and E. Thomas Garman. The Potential Effects of Workplace Financial Education Based on the Relationship between Personal Financial Wellness and Worker Job Productivity, 1998

Duhigg, Charles. The Power of Habit: Why We Do What We Do in Life and Business. New York: Random House, 2012.

O’Neill, Barbara; Xia, Jin Jian; and Ensle, Karen. Propensity to Plan: A Key to Health and Wealth? Journal of Financial Planning, 2016

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