Financial wellness is something we should always look to achieve as it helps improve our well-being as well. They say money can’t buy happiness and although that is true to a certain extent, being in financial difficulty can cause more problems.
Financial stability can be difficult to achieve for those who don’t earn a lot of money. Furthermore, if you don’t have a good relationship with money then this can dictate your life.
What Is Financial Wellness
Financial wellness is a term that surrounds your relationship with money and how you use it in your life. This doesn’t necessarily mean the amount of money you earn. Financial wellness means more about how you are stressed about your money. Instead, you have a better understanding of how to use your money rather than spending it.
Why Is Financial Wellness Important?
Financial wellness is essential for your mental health and also to help achieve your financial goals. It will help improve your life satisfaction and not let money decide how you think and feel.
Dealing With Day To Day Finances
Ensuring you are managing your finances for the necessities is a good step forward for improving financial wellness. This includes your grocery bills, rent or mortgage, utility bills and paying for your vehicle. Bills that need to be paid are considered necessities and if you are paying these off then you are on the right track.
Plan For Your Financial Future
Having a financial plan for your future is another great way to improve your financial wellness. Establishing financial goals you wish to achieve in life will benefit you because you have something to aim for. For example, if you need to put money down for a deposit on a house, you know how much to save. If you wish to retire earlier then you can put money towards a separate retirement fund.
Offers More Financial Flexibility
Once you achieve financial wellness, you will also experience more financial flexibility. This means you can start spending more money on the things you enjoy or spontaneous outings with your friends. Financial flexibility is where you can enjoy your life without worrying about money.
Allows You To Have Financial Independence In The Future
One of the best parts about financial wellness is the ability to be more independent with your lifestyle in the future. It means you won’t be financially reliant on other people so you have peace of mind that you won’t be struggling.
How To Help Improve Your Financial Wellness
There are several ways in which you can improve your financial wellness and as soon as you do these, you will automatically feel better about money.
Understand Your Budget
Understanding your budget is one of the first things you need to do. This means you need to write down and track your finances. A good way to do this would be to create a spreadsheet. Being aware of how much money you are spending and how much money that is coming into the account.
The things that you need to track include regularly occurring bills. Water, electricity, rent, fuel, food, Netflix, and music subscriptions are all regular expenses that leave your bank account each month. Make sure you write these down on your spreadsheet to ensure you can afford to pay these bills. There could be other things that you pay for monthly as well so make sure you write those down as well.
Create An Emergency Fund
Another great way to improve financial wellness is to create an emergency fund. There can be unexpected expenses that occur in your life and you must be prepared to pay them. This could be anything from a broken down vehicle of yours or having to pay for water damage restoration.
Ideally, you should aim for around three months worth of expenses stored in a pot somewhere. This could be in a savings account where the interest rate can gradually increase or another pot of some sort. No matter what it is, you should have an emergency fund.
Build Your Savings and Investments
Building up your savings account is another way to improve financial wellness. This just gives you even more security if you have an emergency fund. Savings accounts are great for short-term financial goals and investing is another great idea. Investing can offer you better growth rates compared to a savings account however, your money is much safer in a savings account compared to an investment account.
Reduce Debt
Another thing you can do is reduce your debt. This will improve your financial wellness significantly because when you are paying off debt, you are also paying extortionate interest rates which are taking more money away from you.
When paying off your debts, there are a few things you can deal with. If you have multiple debts, you will be better off speaking to a financial debt advisor. They will discuss the various payment plans that you can consider to pay off your debts. Once you have agreed on the debt repayment method, whether that is DRO, an IVA or another repayment plan, your debt advisor will speak to your creditors. The debt advisor will put all of your debts in one pot and you will have to pay a minimum back each month to share.
Plan For Retirement
Planning for retirement can be difficult because you don’t know when you will be retiring. Plus, you don’t know how many years after your retirement you will need this money. Nevertheless, you can have a rough estimate of the amount of what you will need and when you want to retire. Ideally, we all want to retire early however, that is not the case due to some financial circumstances we can experience.
There are many pension calculators that you can use to work out how much money you will need. The sooner you start, the better it will be for your future so start saving or putting money into an investment to help your future. The last thing you want is you work during your later years when your body is struggling to do it.
Summary
Improving your financial wellness is very important and the sooner you start, the better your mental health will be. Try to acknowledge your problems towards money and understand why you have a bad relationship with it.
If you notice things are not improving then seeking support is very important. Support such as financial advisors or debt advisors if you are in debt that you cannot escape will be able to guide you. Sometimes, we need that financial support to put us on the right path. To help us develop new healthy habits with money which we can use for the future.