When we talk about financial wellness, we mean more than just tracking your spending or sticking to a budget.
We’re talking about an active lifestyle that prioritizes your personal finances, whether you make $50,000 or $500,000 per year.
According to Solos Advisor, achieving financial wellness includes managing all aspects of your financial life and practicing good money habits in all areas of your life.
From the way you spend money to the things, you value to the way you interact with others and what you do with your free time.
In this article, we’ll talk about what financial wellness means, why it matters, and some easy ways you can get started on your journey toward it today.
Table of Contents
What is Financial Wellness?
Financial wellness is taking care of your financial well-being. This is things like saving for emergencies, paying off debts, taking advantage of tax breaks
And doing all these things while maintaining a balanced approach to your finances. In short, financial wellness isn’t about how much money you have, but how well you manage that money and achieve your long-term goals. It’s not just a healthy dose of financial responsibility; it’s also an investment in yourself.
It helps you avoid financial mishaps
Poor financial decisions can happen to anyone, but they’re especially costly for young people who may not have a stable job or an emergency fund. The more financially secure you are, the less stress you’ll have in your life—and that means fewer mistakes.
You can achieve financial wellness in 5 simple steps
These steps can be repeated over a series of months/years or all at once. You can also apply them to any financial situation whether you’re just starting with your first entry-level job, you have $50 in your bank account, or you have $5 million in assets. The importance of developing a good financial routine early on will last for a lifetime so there’s no time like now to begin improving your finances!
Here are 5 things you can do to achieve financial wellness:
Making a budget
If you’re struggling to save, then sitting down and creating a budget can help you get your spending in order. A budget helps you plan for what’s coming next, whether that’s buying clothes for back-to-school or saving up for a new couch. For some people, making a budget can feel restrictive—which means they avoid it entirely.
But just because a budget limits your spending doesn’t mean it limits your life or makes you miserable. You’ll still be able to go out with friends, treat yourself when you need to, and pay your bills on time every month—you just might have to make some smart choices before reaching into your wallet.
Saving more each month
If you’re not saving enough for retirement or another big financial goal, there are some easy steps you can take to help get you back on track. In fact, in a lot of cases, your income level may not be as big of a factor as you think: something as simple as increasing how much you save each month—even by $50—can go a long way towards helping your overall financial situation.
Looking at how changes in your savings rate impact different aspects of your life can help illustrate that point even further. For example, if doubling how much you save each month helps boost how much money you’ll have in retirement by roughly 10%, that’s pretty huge.
Learning to live within your means
Laying out a budget can be daunting, but it’s crucial to building financial wellness. Live below your means by cutting back on unnecessary purchases and tracking your monthly spending. This will help you stay afloat when unexpected expenses come up, like replacing broken appliances or paying a parking ticket. It’s better to be prepared for what life throws at you than to constantly struggle to make ends meet—and end up paying extra money in interest rates or late fees in order to do so.
Taking stock of your finances every few months
A key component of financial wellness is self-awareness. You need to understand your spending habits—what you spend on, how much money you make, what debts are on your plate, etc.—so that you can build a healthy relationship with money. The only way to do that is by analyzing your finances regularly so that you’re aware of any downward trends as soon as they happen. A good habit to get into would be making a budget at least every few months.
Creating an emergency fund
An emergency fund can save you from falling deeper into debt if your car breaks down, you have to pay a medical bill, or if you lose your job. It helps prevent credit card debt and makes sure that your money doesn’t end up funding your lifestyle more than necessary. Experts recommend saving at least three months of living expenses for peace of mind. Start now—the sooner you begin building up an emergency fund, the better off you’ll be in case of any surprise expenses or bumps in the road.
Final Thoughts
First, financial wellness matters because financial stress affects our mental health. Second, financial wellness matters because money is a finite resource. Finally, financial wellness matters because there are consequences to living beyond your means. In short, if you don’t have a handle on your finances now (or in case something happens down the road), you’re not going to have any money for that rainy day when you really need it.
