If you’d asked me what financial health meant several years back, I’d likely have answered with “Being able to pay all my bills without running out of money”.

That’s because I was in debt and struggling to make ends meet. (I wasn’t alone, either. According to CFSI’s Consumer Financial Health Study, 57% of Americans – approximately 138 million adults – are struggling financially.)

But there’s so much more to financial health than “just” being able to pay your bills without running out of money. (That’s an important part, but it’s by no means the only part!)

What financial health really means

To me, financial health means being able to do the things you want in life. (click to tweet)

I feel like we’re at that place now, but it took quite some time to get there, and involved systematically changing the way we interacted with money.

Getting financially healthy meant:

• Building an emergency fund so we could weather storms of unemployment and hospital bills
• Planning ahead for those irregular expenses (so that I was no longer surprised every year when Christmas rolled around or my car insurance came due)
• Automating payment of my monthly bills (cell phone, Netflix, etc) so that I wouldn’t be hit with late fees
• Saving regularly for big goals (I’m a huge fan of Digit)
• Investing for the future (in stocks, bonds, and real estate, mainly within retirement accounts)
• Getting related things in order that could impact us financially (preparing a will & trust, making sure beneficiaries on retirement accounts were updated, getting appropriate property, health, life & disability insurance, checking our credit reports for errors, and so on)
• Tracking our spending and planning out what we wanted to do with our money (aka budgeting) in a way that prioritized our needs and wants
• Paying attention daily to make sure we’re on track and continuing in the right direction
• And last but not least: paying off debt! (We paid off ALL our debt, and couldn’t be happier about that)

Getting all that stuff in order may sound like a lot of work, but it’s nothing compared to the stress and effort it takes to remain OUT of shape financially. And every little step in the right direction helps.

Why it matters

When your financial health is a little shaky (or a lot, like mine used to be) the smallest financial mishap – like a flat tire or an overdraft fee – can send you into a stressful tailspin that’s hard to recover from. It’s even worse if you become disabled or lose your job, or feel stuck at a job you hate because you can’t afford to quit. It takes an emotional and physical toll on you.

But when your financial health is in good shape (or even heading that way!), things are different. That’s exactly why it matters.

Needing a car repair no longer ruins my month and derails my financial plans. Instead, it’s a minor inconvenience. And job loss? Imagine feeling like it’s an opportunity to find something better and advance, instead of feeling panic and desperate to take anything that will pay the bills. That’s how we felt when my husband lost his job a while back.

Being in good financial shape has also allowed me to take advantage of opportunities that I wouldn’t otherwise have had a shot at. (Things like taking my dream trip to Antarctica, quitting my job to work on my own things, helping my son with college, etc.)

Where to start

If you’re looking for a place to start improving your financial health, choose something that seems doable to you to start with. That could be anything from tracking your spending for a single day to opening up an emergency fund. “Where” you start doesn’t matter nearly as much as “that” you start.

Remember that any step in the right direction is a good one, so don’t stress about picking the perfect thing. They’ll all help, and you’ll likely end up doing them all anyway. Take a look at the list above and pick something. You’ll be glad you did :)