Guest blog provided by Fresh Finance
Financial wellness is a state of being in which you are living a healthy economic life and feel good about your financial situation. It is also an essential part of taking care of yourself and those around you. Financial wellness can also reduce money needs, improve mental and physical well-being, and lead to financial security. Those who practice financial wellness tend to spend wisely, have emergency funds, save for retirement, have financial goals, and utilize a budget. Financial wellness encompasses these key areas:
- Taking control of your money before it controls you.
- Determining how safe your money is.
- Planning what to do with your money.
So how can you start your financial wellness journey?
1. Save for your financial future through investing. Regularly contribute to your retirement savings through your employer’s retirement savings plan, IRA, or Roth IRA.
2. Establish an emergency fund. Extra money put aside to cover living expenses, unforeseeable medical or maintenance expenses. It should not be used for vacations, new cars, etc., but actual emergencies that can lead to more debt or bankruptcy if you don’t have the financial resources to cover them. Emergency fund money should never include your retirement assets or other investments that are stock market performance sensitive.
3. Educate yourself. Financial literacy is the combination of economic, credit, and debt management knowledge necessary to make financially responsible decisions. A lack of financial education is one of the reasons why people struggle with saving and investing. The more you know, the more likely you are to make good financial decisions.
4. Save money by making good financial choices. Identifying wants versus needs is a good place to start. For example, drink watering while you’re eating out instead of ordering a drink from the menu. Or, going through the sales rack or using online coupons to save on items you regularly purchase.
5. Create a budget. A budget helps you review your revenue and expenses over a period of time that is re-evaluated on a periodic basis. A budget helps you review your revenue and expenses over time, such as monthly. A budget is a tool to help keep your finances on track as you adjust to changing financial situations.
6. Work with a financial professional. A financial professional can help evaluate your financial situation and provide you with ideas to become financially well. They can also help you create a financial plan to prepare you for the future that is aligned with your goals.