BenefitsRetirement

Indicators of Financial Wellness: How Do You Score?

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Guest blog provided by Fresh Finance

Financial wellness is a state of being where you are in control of your personal finances. Financial wellness means you can cover expenses and save for future goals. Consider financial wellness as your relationship with money- healthy or unhealthy. Improving your financial wellness is essential to meeting your goals and being financially secure throughout your life. Here are eight indicators of financial wellness to help you gauge your financial wellness:

#1- Your income and spending are in balance. You are aware of your spending patterns, limit your use of credit, and are mindful of not spending more than your income.

#2- You follow a monthly budget. Each month you know exactly where your money is going and aren’t living paycheck to paycheck due to overspending. Budgeting can help you save for retirement, pay off debt, and learn to live without wants because you can see where each hard-earned dollar is going.

#3- You save money to cover unforeseen emergencies. Ideally, you have three to six months of living expenses saved in an easily accessible account that you intend to use only for emergencies. Once you reach six months of emergency savings, continue to save into your emergency fund until you reach another milestone, such as one year of living expenses.

#4- You save for retirement and other financial goals. You invest in yourself first by automating your monthly 401(k), IRA, or Roth IRA retirement savings contributions.  

#5- You discuss financial decisions with others. Before making financial decisions or purchasing big-ticket items, you consult with others before spending. Discussion helps determine if the financial decision aligns with your budget and goals.

#6- You regularly monitor and adjust your financial plan. You have a written financial plan that aligns with your goals, and timeline, and adjust it as necessary.  

#7- You work with a financial professional. You work with a financial professional who helps you determine strategies appropriate for your investment objectives. A financial professional enables you to develop a budget, create a financial plan, save for your child’s education, and keep you on track to achieve your goals.

#8- You don’t let your emotions impact your financial decisions. Weighing out the pros and cons of financial decisions before making a final decision is essential to financial wellness. When it comes to investing, emotions can be tricky since investors don’t always make rational decisions, according to the CFA Institute. Financial decisions require evidence and reasoning to make the most thoughtful choice so that you don’t regret your decisions later.

Financial wellness is essential for many reasons since it can impact your mental and physical health and overall quality of life. By improving your financial wellness, you can take the steps toward building wealth for a more financially secure future. 


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