Financial wellness refers to having the skills and knowledge necessary for effectively managing expenses, reducing debt, creating an emergency fund and saving for retirement – ultimately leading to less stress and anxiety about one’s finances in the long run.
Employers understand that money worries can be a source of strain, so many offer financial wellness programs as a solution.
Budgeting
Budgeting can help to bring order and peace to your finances, easing anxiety while keeping on target with financial goals.
Beginning by listing your monthly expenses – both fixed costs like rent or insurance and variable ones like groceries, subscriptions and dining out – as well as any variable expenses like groceries, subscriptions or dining out, subtract your total monthly income from these expenses to determine how much of an allowance there is left each month.
Step two is identifying which expenses can be cut or eliminated altogether, whether this means switching from buying coffee out every morning to brewing your own at home or cutting back on certain categories such as membership fees or vacation spending.
Set money aside for savings, debt repayment and retirement. Pay yourself first by setting up an automatic transfer from your checking account into an individual savings or retirement fund each paycheck.
Debt Management
Debt can be crippling and many people struggle to manage it. Accumulating debt has been linked to depression and other mental health conditions.
Debt management programs involve negotiations between you and creditors to reduce monthly payments by lengthening repayment terms, lowering interest rates or waiving certain fees – not including reduction in principal balance due to settlement or other means.
Be careful when selecting a debt management plan provider; some companies have been known to mislead consumers.
If you are having difficulty managing your debt, seek help from a credit counseling agency or non-profit that offers free consultations. They can assist in compiling a list of all of your creditors, amounts owed, and interest rates so that you have an overall picture of where things stand.
Savings
For long-term goals such as buying a home or saving for retirement, financial wellness requires that enough savings is put away each month. You can achieve this through tracking spending habits, creating a budget and finding an effective savings plan that meets your needs.
Many companies now provide financial wellness programs in response to understanding that stress caused by finances can hinder employee work performance and health. Ask your employer if such programs exist and how you can participate.
Implementing the principles of financial wellness can reduce stress levels and help you reach both short- and long-term goals. A financial professional may make this easier, or educational resources at work or school may provide great assistance. Remember it may take some time to reach this state; should difficulties arise remember that solutions will come in small steps that build upon each other.
Investing
Money issues can be a source of great anxiety for many. From managing debt repayment to maintaining savings or managing an investment portfolio, managing finances can become stressful.
Financial security can be a long and arduous journey. To stay financially healthy over time, it is vitally important that we set aside time to organize our finances and protect for the future. Like going for an exam at your doctor, financial planning is an integral component to living an economically secure life!
Investing can provide relief from financial stress by offering regular income streams and the potential to grow wealth over time. Before embarking on this path, however, it’s essential that you know how much capital is available and your risk tolerance in order to determine what kind of investments to consider and their rate of return; investing could even help offset inflation and make dollars go further today’s uncertain economy.