Financial wellness is a crucial aspect of our lives and refers to having a secure and confident control over our finances. It encompasses the ability to make informed financial decisions, meet our financial obligations, and achieve our financial goals while also taking into account our hierarchy of financial needs.
But, how can we attain financial wellness? Here are some tips that can help you get there:
1. Budgeting: One of the most fundamental steps towards financial wellness is creating a budget and sticking to it. This can help you keep track of your expenses, ensure that you have enough money to cover all your essential outgoings and allocate some funds for savings and investment. It’s also important to factor in things that make you happy like hobbies or a nice dinner so that you can still do things you enjoy without feeling guilty about some reasonable spending.
2. Regular Savings: Another crucial aspect of financial wellness is to have a steady flow of savings. Make sure to set aside a portion of your income regularly, which will serve as a cushion in case of any financial emergency. A good rule of thumb is to have about 6 months worth of expenses readily available in savings.
3. Debt Management: Debt can significantly impact your financial stability and erode your wealth over time. Prioritize paying off high-interest debt first and make sure to keep your debt levels low. Debt management is also about prioritising the debts that cause the most stress, for example you might feel better paying off your car loan before your mortgage, or vice versa.
4. Retirement Planning: Planning for your retirement is another important step towards financial wellness. Make sure to invest in your retirement accounts which will allow your money to grow over time and provide you with a steady stream of income in your “golden years” (the years you’ll earn the most income). Make sure you review your super account to make sure you are getting the best returns available.
5. Risk Management: Managing risk through insurance is another essential step towards financial wellness. Having the right insurance coverage can help you protect your assets and ensure financial security in case of any unforeseen events.
6. Continuous Learning: Finally, financial literacy is critical to financial wellness. Keep yourself informed about the latest financial trends and best practices, and make sure to educate yourself on personal finance topics that are relevant to you.
At the end of the day, financial wellness is just as important as physical or mental wellness and requires a combination of smart financial planning and financial literacy.
Just like physical and mental wellness, consistency is key if you have any hopes of seeing improvement. Regular discussions with your financial planner can help you stay on track but is also a great way to monitor your progress and keep up to date with any changes you might need to make.
