Financial wellnes_square

Financial Wellness

12/13/2023 Written by: Kristine Simmons

The first step in creating financial wellness is to gain knowledge. Knowledge is power—the power to build robust financial health. The more you know, the better. The financial world can be complex and confusing. Understanding where the opportunities lie and how to make your way through the muddle of money management may give you a distinctive edge.

If there is not a financial wellness program in your community, do the research. Google. Watch videos or online webinars. Remember, getting yourself a financial education may set you in the right direction. However, the most valuable, reliable, and up-to-date information may come from your financial advisor who can help you with financial wellness programs on budgeting, debt management, and retirement strategies. It’s never too late to chart your course to financial wellness.

Create a Budget: It may seem obvious but creating a budget may be your single most important step toward financial wellness. A budget allows you to monitor and manage your money and better develop strategies to pursue your goals, both short-term and long-term. A budget can be a tool to track your income and expenditures and better understand your financial habits that may be draining your wallet. Budgeting also enables you to spot positive habits and spending patterns that you may want to reinforce or enhance. Furthermore, a budget provides you with openings and opportunities to invest and build your savings. Balanced, sensible investment strategies developed with a financial professional can set you well on your way to a bright future. Here are 5 steps for building a budget:1

  1. Consider your net income. How much money do you have, and how much do you make? Determine your take-home pay, which is your gross pay minus deductions for social security, taxes, and other accounts. Add in any amounts from self-employment, freelancing, or part-time work.
  2. Know your spending. Track and categorize your spending. That way, you’ll know exactly where you spend your money and gain a better understanding of your outgoing financial habits. Start by listing your fixed expenditures, such as rent, mortgage, car payments, and utilities. Then, look at your variable expenses, such as groceries, gas, and entertainment. Record your daily spending on paper, an app, your phone, or on your computer.
  3. Create a strategy. Chart your fixed and variable expenses to get an understanding of trends or your projected spending habits. Gas expenses, for example, count as fixed (a need), while a magazine subscription counts as variable (a want).
  4. Make adjustments. Once you have completed your budget, determine the changes you want to make to pursue your goals. If your budget is tight, you can cut variable expenses to generate savings. You can also look at cutting fixed expenses, which may require a little more creativity.
  5. Keep it active. Review your budget frequently and regularly to ensure that you remain on track. Your budget may fluctuate (pay raises, paying off debts, or eliminating variable expenses), so frequent reviews are best in the beginning as you become more focused and disciplined.

Set Goals: While budgeting establishes the foundation of your financial health, setting goals sets the direction. Learning about money, debt, wealth management, and investing is good, but without goal setting, you may lack the motivation to make it in the long run. Goal setting provides you with vision. You determine what you have and want to do in your life, and strict money management helps create the catalyst for shaping your future. Here are a few ways to set lasting goals:2

  1. Seek inspiration. Your goals have to reflect more than merely your wants. You have to know why you want to set a particular goal. Attaching reasons to your goals can motivate you. An example is the goal of saving money for a family vacation. But where do you plan to go? How will you get there? Do you need to create an emergency fund in case you lose your job? How much money do you want to have in your emergency account? Another goal may be to eliminate your credit card debt. Why? This can be a very important goal for enabling you to make more money available for travel or for building your retirement fund. Dig into the details and put them on paper.
  2. Take a closer look. You may not know where to start or how to prioritize your goals. Start by looking at your immediate future. What about next week? Or next month? Then, consider next year. Look at how much you make, your taxes, and your net worth. Don’t forget that all-important part—your budget.
  3. Brace yourself for emergencies. Set aside enough money to cover 3-6 months of expenses.
  4. Contribute to retirement. Some financial professionals suggest setting aside 15% of your gross income per year for retirement. If you’re 50 or over, you may be able to contribute additional money into certain retirement accounts.
  5. Eliminate debt. Target the debt with the highest interest rates first, such as credit cards.
  6. Reward yourself. Setting goals is a discipline and can be challenging. To keep yourself on track, reward yourself after reaching benchmarks and milestones to provide an incentive to keep moving forward.
  7. Be “SMART”. Include all the elements in your goal setting. Being “SMART” means setting goals that are specific, measurable, achievable, realistic, and time bound.
  8. Make it write. After you’ve hashed out your goals, put them down on paper, a worksheet, a spreadsheet, or another computer document or application. Monitor your progress periodically. Go into detail. Dig deep. Exactly how much money do you want to have set aside for each goal at each particular benchmark?

Save, save, save. Part of goal setting is saving. Saving a portion of your income helps you develop financial discipline and allows you to envision your future more clearly. Saving also applies to—but is not exclusive to— preparing for your retirement.  Saving helps keep you smooth and steady on life’s path through emergencies and unexpected twists and turns. It also helps you develop your ability to focus on both your short-and long-term goals, as opposed to meeting only your immediate needs.


1, 2021

2, 2022

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