Financial wellbeing is more than just having enough money in the bank. Read on to find five steps to financial wellbeing.
We’ve all been there: financial stresses weighing us down, month after month of just barely surviving, convincing ourselves that things will turn around “next month” only to find that they haven’t.
If this sounds like you, it’s time for a financial check-up.
Just as we visit the doctor for regular physicals, it’s important to give our bank balances and budgeting practices a once-over from time to time.
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What is financial wellbeing?
Financial wellbeing is more than just having enough money in the bank. It’s about taking control of your finances, feeling secure in your decisions, and, most importantly: having peace of mind.
That’s why it’s so important to take care of your financial wellbeing – no matter where you are on your financial journey!
How our finances affect our wellbeing
Your financial wellbeing is directly linked to your overall wellbeing.
Feeling secure and in control of your finances can reduce stress levels, help you achieve financial goals, and give you the financial freedom to focus on other areas of life.
On the other hand, financial insecurity can take a toll on our mental health and leave us feeling overwhelmed and anxious.
Find your financial wellbeing score
It’s a simple assessment that can help you understand exactly how your financial decisions impact your financial wellbeing.
All it takes is three steps:
- Answer a few simple questions about your financial habits,
- Compare your answers to other people in your age group, and
- Get an overall financial wellbeing score.
5 Essential steps to financial wellbeing.
1. Define Your Goals
The first step on the road to financial wellbeing is defining your goals.
- What do you want to achieve in the next 12 months? 3 years? 5 years?
- Do you want to be debt-free? Save up for a down payment on a house?
- Do you want to invest in income-producing assets so that you can work less?
- Want to have enough money saved for retirement?
- Do you want to donate to causes that you care about it? or be able to help out family and friends?
- If you’re in a relationship with a significant other, what do you want to achieve together and individually?
Once you know what you want, you can begin working towards it.
2. Make a Plan
They say that failing to plan is planning to fail, and that definitely holds true when it comes to finances.
Without a plan, it’s easy to overspend or make impulse purchases that set you back instead of moving you forward.
Sit down, map out a budget that aligns with your financial goals, and stick to it! Automating your savings can help make this step easier.
3. Reduce Your Expenses
We all have expenses that we could stand to cut back on, whether it’s that daily Starbucks habit or unnecessary monthly subscriptions like streaming services (bye-bye Netflix or Disney Plus!).
Reducing your expenses frees up more money that can be put toward achieving your financial goals.
Take a close look at your spending habits and see where you can cut back—you may be surprised how much money you’re wasting each month.
Try out the cash envelope system. It could help you identify what to cut back and manage your expenses.
4. Invest in Yourself
Investing in yourself is one of the best things you can do for your future self.
Whether it’s taking courses to advance your career or investing in a good financial planner, making moves that will pay off down the road is crucial for long-term success.
It may require some upfront investment, but trust us—it’ll be worth it in the end.
5. Stay disciplined
Discipline is key when it comes to financial wellbeing. It can be tempting to splurge on a new handbag or take an impromptu vacation when things are going well, but resist the urge!
Staying disciplined now will pay off later when you reach your financial goals.
Review your progress regularly and celebrate your successes, but don’t let yourself get off track.
5 Tips for Financial wellbeing
Make a Budget
The first step to Financial wellbeing is creating a budget. figure out what your regular income and expenses are.
Then, identify areas where you can cut back on spending. For example, if you spend $50 a week on coffee, that’s $200 a month or $2400 a year!
Just by making coffee at home, you can save a significant amount of money each month.
Invest in Yourself
One of the best investments you can make is in yourself. Investing in yourself means taking the time to learn about personal finance and financial planning.
There are lots of great books and online resources that can help you get started.
Additionally, consider working with a financial planner to get tailored advice for your unique situation.
Know Your Credit Score
Your credit score is one of the most important factors in determining your financial wellbeing.
A good credit score will help you qualify for loans and get lower interest rates. You can check your credit score for free once a year from each of the major credit reporting agencies.
Build an Emergency Fund
An emergency fund is crucial for Financial wellbeing because it gives you a buffer if you experience an unexpected expense, such as a car repair or medical bill.
Aim to have 3-6 months of living expenses saved so that you know you can cover your bills even if you lose your job or face another financial setback.
Understand Your Benefits
If you have health insurance through your employer, take some time to understand your coverage so that you know what costs are covered and what your out-of-pocket costs will be if you need to use your insurance.
Many employers also offer other benefits like retirement savings plans, gym memberships, and tuition reimbursement, so make sure you take advantage of all the benefits available!
Now you’ve got some ideas to improve your Financial Wellbeing – what next?
Achieving financial wellbeing is within reach if you take the time to assess your situation, set goals, make a plan, reduce your expenses, invest in yourself, and stay disciplined.
By following these five simple steps, you can take control of your finances and enjoy the peace of mind and security that comes with being financially healthy.
This article is part of How to be healthy – a guide for busy women.
