What is Financial Wellness: Financial wellness is an intricate balance of the mental, spiritual and physical aspects of money. This unique combination is an ideal to strive towards in our dealings with money. Financial wellness is having an understanding of your financial situation and taking care of it in such a way that you are prepared for financial changes. Maintaining that balance consists of being comfortable with where your money comes from and where it is going.
Caring for yourself is important but learning how to maintain your financial wellness is essential. While many adults pride themselves on their budgeting abilities, statistics show that 60 percent of 18 to 34 year-olds do not keep a budget. Understanding income versus expenses and determining fixed-cost items such as mortgages and car payments versus discretionary items such as entertainment and shopping help lead to financially sound decision-making.
Why Is It Important?
The term “wellness” refers to a state of health, happiness and prosperity. Similarly, ‘financial wellness’ is characterised as having a healthy relationship with your finances by understanding how you can spend and save your money thoughtfully. Having, at a bare minimum, a general understanding of the effects of the financial world and how it impacts the livelihood of all is something everyone should attain. It could guide you in managing some of these things:
- Credit/debt management
- Saving for education
- Supporting elderly parents
- Real estate
- Retirement planning
- Financial aspects of separation/divorce
How To Maintain Your Financial Wellness?
Preparation is the key to financial wellness. It is about learning how to manage your money and establishing a personal budget. It is not living beyond your means.
Here’s how to maintain your financial wellness:
You now know your net worth number, your debt, and saving goals. How do these things fit into your budget? Your normal monthly debt payments should be incorporated into your budget already.
Your budget is the key to putting your plan into action. After determining the exact amounts you need to pay and save each month, AUTOMATE. Automation is your best friend and will deter you from taking the money and doing something else with it.
Perform a Debt Analysis
Performing an analysis of your debt should be the next step after calculating your net worth. Even if your net worth is positive, you don’t stop there.So what does a debt analysis look like? Make a list of all of the debt you owe. For each debt owed, include the outstanding balance, monthly payment, and interest rate.After gathering the information for each debt, determine what strategy you will use to get rid of it.
If you want to see progress, you need order and a plan. After creating the plan, you need to put it into ACTION.
Determine Your Savings Goals
Although you’re paying down debt to improve your financial situation and net worth, you can’t forget about yourself. Setting financial goals will give you an idea of where your money should be going.
Be Good To Yourself
It’s important not to get consumed by what you have going on financially. Don’t get so caught up in the idea of financial success that you never take the time to enjoy your money. Remove the negative feelings you have and the taboo about being happy to make money and more of it. The happier and healthier you are, the better it is for your finances.
Reminder: Having your finances spiral out of control is a major stressor and can take its toll on you mentally, physically and emotionally. Live within your means and learn to manage your finances for the short and long term. Creating a good balance is important.