"Farewell Seminar" for Rutgers Cooperative Extension colleagues

1. Financial Wellness:
Twelve Timeless Tips
Barbara O’Neill, Ph.D., CFP®
Rutgers Cooperative Extension
boneill@njaes.rutgers.edu
@moneytalk1

2. Wellness Wheel Activity

3. Financial Fitness Quiz
https://njaes.rutgers.edu/money/assessment-tools/financial-
fitness-quiz.pdf

4. Health and Financial
Behavior Relationships:
Rutgers Research

5. Personal Health and
Finance Quiz

6. Key Points About the Quiz
• High quiz score: Respondent is frequently
performing activities that health and financial
experts recommend
• Quiz questions: “Step in the right direction”
activities; not necessarily at the highest
recommended level
– Example: Investing $3,650 annually for
retirement

7. Health Questions1 = Never
2 = Sometimes
3 = Usually
4 = Always
Daily Health Behaviors:
___ 1. I eat breakfast before starting my day (e.g., work, school, or other daily activities).
___ 2. I avoid drinking sugar-sweetened beverages (e.g., regular soda and sweetened coffee, tea, or waters).
___ 3. I eat 3 ½ to 4 ½ cups of fruits AND vegetables daily.
___ 4. I get at least 7 hours of sleep per night.
___ 5. I eat at least 1-2 high fiber foods each day (e.g., whole wheat bread and pasta, oat bran, beans, lentils)
___ 6. I eat and drink fat-free and/or low-fat dairy products.
___ 7. I avoid high-calorie salad dressings, gravies, spreads, and/or sauces.
___ 8. I eat foods that are low in fat and/or saturated fat.
___ 9. I get at least 30 minutes of aerobic and/or muscle-strengthening physical activity at least 5 days per week.
___ 10. I read the Nutrition Facts Label on food products before making a purchase
Health Score: __________
• 10-16 points- Your health choices could be better, but don’t despair. It’s never too late to take action to improve your health.
• 17-24 points- You are doing a fair job of managing your health practices and have taken some steps in the right direction.
• 25-32 points- You are doing a good job and are above average in managing your health.
• 33-40 points- You are in excellent shape managing your health. Keep up the good work!
• Note: Items that you scored with a 1 or 2 are actions that you should consider taking in the future to improve your health.

8. Finance Questions
Daily Financial Behaviors:
___ 11. I follow a hand-written or computer-generated spending plan (budget) to guide my spending and savings.
___ 12. I maintain an emergency fund equal to at least three months of basic, essential household expenses.
___ 13. I save the equivalent of at least $1 daily ($365 annually) in loose change in a savings account and/or or jar.
___ 14. I invest the equivalent of at least $10 daily ($3,650 annually) in investment accounts and/or retirement plans.
___ 15. I avoid payday loans, car title loans, pawn shop loans, cash advances, tax refund loans, and other high-cost debt.
___ 16. I owe less than 20% of my monthly net income on monthly consumer debt payments (e.g., credit cards, car loans)
___ 17. I eat at least two meals a day prepared at home instead of eating out (excluding traveling).
___ 18. I use advertisements, coupons, promo codes, sales, web sites, and/or discounts to save money on purchases.
___ 19. I live below my means (i.e., spend less than I earn).
___ 20. I make written “to do” lists or specific plans to organize my financial goals, spending, and/or daily activities.
Financial Score: __________
Score Interpretation
• 10-16 points- Your financial choices could be better, but don’t despair. It’s never too late to take action to improve your
finances.
• 17-24 points -You are doing a fair job of managing your personal finances and have taken some steps in the right direction.
• 25-32 points -You are doing a good job and are above average in managing your finances.
• 33-40 points -You are in excellent shape managing your finances. Keep up the good work!
Note: Items that you scored with a 1 or 2 are actions that you should consider taking in the future to improve
your personal finances.
TOTAL (Health + Financial) Score: __________

9. Research Papers
• O’Neill, B., Xiao, J.J., & Ensle, K. (2016a). Propensity to plan: A key to health and wealth?
Journal of Financial Planning, 29(3), 42-50. https://www.onefpa.org/journal/Pages/MAR16-
Propensity-to-Plan-A-Key-to-Health-and-Wealth.aspx.
• O’Neill, B., Xiao, J.J., & Ensle, K. (2016b). Positive health and financial behaviors: The impact of
time expenditure behavior and avoidance. Journal of Personal Finance, 15(2), 41-51.
http://www.iarfc.org/documents/issues/Vol%2015%20Issue2.pdf
• O’Neill, B., Xiao, J.J., & Ensle, K. (2017). Positive health and financial practices: Does budgeting
make a difference? Journal of Family and Consumer Sciences, 109(2), 27-36.
https://www.ingentaconnect.com/content/aafcs/jfcs/2017/00000109/00000002/art00007
• O’Neill, B., Xiao, J.J., & Ensle, K. (2017). Improving Health and Increasing Wealth: Research
Insights and Program Outreach. Journal of NEAFCS, 17, 11-23.
http://www.neafcs.org/assets/documents/journal/2017%20jneafcs%20final%202.pdf.
• O’Neill, B., Xiao, J.J., & Ensle, K. (2018). Reading nutrition labels: A predictor of health and
wealth? Journal of Human Sciences and Extension, 6(3), 1-24.
https://docs.wixstatic.com/ugd/c8fe6e_2c2b583fb22e4cedabc7b8e91f778371.pdf
• O’Neill, B., Xiao, J.J., & Ensle, K. (2018). Positive Financial Practices: Do Diet, Sleep, and
Physical Activity Make a Difference? 2018 ACCI annual meeting poster and accepted by Journal
of Family and Consumer Sciences (in press).
https://www.consumerinterests.org/assets/docs/CIA/CIA2018/O%27NeillCIA18.pdf

10. Planning Behavior Study
• Correlation analysis was conducted between the health and
financial behavior indexes. The correlation was 0.46 at a
significance level of p < .05. This suggests that desirable
health and financial behaviors are moderately associated.
• Support was found for all three hypotheses in this study:
– Respondents who reported frequent planning behavior had
higher health behavior scores than others
– Respondents who reported frequent planning behavior had
higher financial behavior scores than others
– Respondents who had higher health behavior scores also had
higher financial behavior scores

11. Budgeting Study
• Explored relationships between the practice of
following a formal budget and frequency of
performance of positive personal health and financial
practices (N =942)
• The results suggested that consumers who reported
following a budget more often scored higher in both
the health and financial practice indexes
• Budgeting and weight control both require discipline.
People who budget their money may be inclined to
budget their calories; i.e., have a daily calorie
“allowance”

12. Nutrition Label Study
• New data set (7/15-7/16); N = 3,414
• Support was found for four hypotheses:
– There are differences in demographic characteristics
between those who read Nutrition Facts labels and others
(i.e., female, older, higher education and income)
– Respondents who reported reading nutrition labels had
higher health practice scores and higher financial practice
scores than others
– Respondents who reported higher health practice scores
also had higher financial practice scores

13. Personal Health and
Finance Quiz
Research Summary
• All hypotheses to date have been supported
• Results clearly show associations between health
practices and financial practices
• Personal traits such as discipline, future-mindedness
and conscientiousness may be a key factor

14. 12 Ways to Improve
Your Financial
Wellness

15. 1. Have Enough Money to
Pay Expenses
• Can income be increased?
• Can expenses be reduced or eliminated?
• Both?
• No more than 15% to 20% of net pay for
consumer debt payments
– Credit cards and student, car, and family loans
• No more than 40% to 50% of net pay for
PITI or rent and consumer debt payments

16. 2. Set Aside Money For
Emergencies
• Three to six months of expenses is recommended
but…
– Any savings is better than no savings
• Keep first 3 months very liquid (e.g., bank)
– Next 3 months liquid (e.g., T-Bill, MMMF)
– Next 6 months somewhat liquid (e.g., CDs)
– Beyond 1 year: longer-term CDs, T-notes, short term bond
funds (some volatility), line of credit

17. 3. Set Written Financial
Goals
• Provide incentive to save and “reality test” for vague
dreams
• Set a specific deadline date and cost figure
– “Save $10,000 for a new car in 5 years [year]”
• Calculate benchmark progress indicators
– “Save 2,000 per year for five years”
• Review and revise periodically

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4. Follow a Written
Spending Plan
• Income = Fixed expenses (including
savings) + Flexible expenses + 1/12 of
Occasional expenses
• “Running balance method” includes irregular
expenses (e.g., property taxes) and irregular
income and “extra” paychecks
• Start by tracking income and expenses
• Review and revise as needed

19. 5. Know Your Federal Marginal
Income Tax Bracket
• 2019 federal marginal tax rates: 10%, 12%, 22%,
24%, 32%, 35%, and 37%
• Use tax rate to calculate after-tax return:
– Tax-equivalent yield = tax-free yield divided by (100%-
marginal tax bracket)
– Example: 4% (tax-free yield) divided by (100% - 22%) or
.78 = 4/.78 = 5.13%

20. 6. Calculate Your Net Worth
• Assets: everything you own
– Liquid (cash assets)
– Investment (e.g., IRAs, stocks)
– Tangible (property)
• Debts: everything you owe
– Short-term (paid off in a year or less)
– Long-term (e.g., mortgage)
• Provides a “snapshot’ of your finances:
http://njaes.rutgers.edu/money/pdfs/networthcalcworksheet.pdf

21. 7. Save/Invest Regularly For
Long-Term Financial Goals
• Mutual fund/stock automatic investment plan (AIP)
– Example: $50 withdrawn from checking account on 15th of
month to buy shares
• Tax-deferred employer retirement plan
• Employer credit union
• Checking to savings account transfers
• Other accounts

22. 8. Increase Savings When
Salary/Earnings Increase
“Kick it up a notch” when…
– You receive a raise or bonus
– You get a higher-paying job
– When a spouse enters the workforce
– When you get a new source of income (e.g., home-based
business)
– When expenses (e.g., child care) end

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9. Establish a Personal
Retirement Savings Account
• Individual Retirement Account
– Traditional IRA
– Roth IRA
• Employer tax-deferred retirement plan
– 401(k)s- For-profit corporations
– 403(b)s- Schools and non-profit organizations
– 457 plans- State, county, and local government
– TSP- Federal government and service members
• SEPs, SIMPLEs, Keoghs for self-employment

24. 10. Diversify Your Investments
• More than one type of asset class (i.e., stocks, bonds,
cash, real estate, etc.)
• Different investments within each asset class (e.g.,
stock in different industry sectors)
• Already diversified investments
– Mutual funds
– Exchange traded funds (ETFs)

25. 11. Purchase Adequate
Insurance For Big Risks
• Purchase insurance according to “large loss principle”
• Large potential losses include:
– Liability
– Disability
– Destruction of home
– Large medical expenses
– Loss of household earners’ income

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12. Comparison Shop For
Major Purchases
• Follow “The Rule of Three”
– Check at least three competing product or service providers
– Make an “apples to apples” comparison
• Always ask “Is this the best price/fee available?”
• Inquire about available discounts
• Time purchases for better deals

27. A Financial “Physical” Is As
Important As Medical Physical
• Can assess problems
– High debt level
– Lack of disability insurance
– Lack of investment diversification
• Can evaluate progress toward goals
• Can help identify action steps
• Can provide motivation to change

28. Key Financial
Wellness Indicators
• Having money when you need it
• Living within your means
• Saving money regularly for emergencies and goals
• Investing to achieve long-term goals
• Having no debt or manageable debt
• Having adequate insurance for financial risks
• Preparing up-to-date legal documents

29. Final Thoughts
• Financial wellness encompasses many areas
of personal finance
– Examples: Banking, borrowing, and budgeting
• There are many action steps that people can take to
improve their financial fitness
• Pick a few action steps that work for you
• Small steps make a difference
• Get help when needed

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Your Turn….Questions?
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