4 financial wellness tips to help you worry less and achieve more
Your financial situation has a profound impact on your overall wellbeing. Over three-quarters of Americans are anxious about their finances and the stress caused is no joke. Think about the potential health problems you might have to pay for, or the unpaid days off work leading to a smaller paycheck – it’s a vicious circle you certainly want to avoid.
The good news is that you’re in control of your personal financial wellness. It can be a little intimidating to take charge of your finances and fully plan what to do with your money, but the peace of mind it generates is worth it.
When you are financially secure, you can take time off to explore new options, invest in yourself, or even retrain in a career that makes you happier.
So, below are the financial wellness tips for you:
Tip 1 – Assess your current situation
First, figure out your income and expenses. Split your expenses into two groups – core and unnecessary. Core expenses include utility bills, housing payments, basic groceries, transport costs, debt repayments, insurance, tax, and every other thing that you can’t go without. Cutting back here is often tricky, but there are always areas to explore:
- Are there energy providers with better rates?
- Is your insurance deal the best you can get?
- If you have a lot of debt, have you considered consolidating it into a more manageable monthly rate?
- Are your mortgage payments too high? Can the company you’re with restructure?
The unnecessary category includes everything you spend money on but don’t need. If you’re looking to build a nest egg, cutting back on luxuries is the best place to start. One option might be to compromise rather than cut out completely, such as reducing the number of times you eat out or grab a Starbucks.
Once you know exactly how much you’ve got coming in, and how much you’ll have going out, you’ll have an approximate figure of what you have to work with and can start looking at what to do with it.
Tip 2 – Set up an emergency fund
One way to give yourself peace of mind in the short term is to plan for if the worst happens at work.
According to the Bureau of Labor Statistics, the average duration of unemployment in the US is 21.6 weeks, or about 5 and a half months. It’s important to have a plan in the form of a budget and savings to mitigate this hit to your finances.
Using the data from your overall assessment, work out how much you need to save to cover it, and make sure you put the money in a place that is easily accessible – many Certificate of Deposit (CD) or other types of savings accounts will penalize you for withdrawing money prematurely (our Flex anytime withdrawal investment account doesn’t!), so factor that into your decision.
Also, don’t be too proud to accept government help and claim your unemployment benefits as soon as you’re able to. After all, you’ve paid into that system with your taxes and you’re entitled to it. In the UK, it is known as “Jobseeker’s Allowance” and that’s a healthy way of looking at it – it’s designed to support you while finding a suitable job.
Tip 3 – Self-development
There are many different ways to develop yourself, but deepening your understanding of personal finance is a great place to start.
In recent weeks we’ve published articles on how inflation works, what to look for in a mortgage, and how to invest in peer-to-peer loans – all with the clear purpose of helping you get a better understanding of finance and how to make it work for them. In any case, making full use of the resources you have available will take some of the mystery and stress away from your financial planning.
There are other forms of self-development too. Sometimes the best way to improve your overall wellbeing is by planning your finances so you can afford to either get a new qualification or retrain in an area you’re interested in – investing in yourself, if you like. It’s worth looking at how additional qualifications impact salaries in your industry, but in most cases, it lands you more money.
Tip 4 – Shore up your retirement funds
Nobody knows the future, but I’m sure you don’t want to be one of the 25 million Americans who are over 60 and economically insecure. In order to avoid this situation and have a better chance of enjoying your later years, you should plan for your retirement now not later.
In terms of your financial wellbeing, it’s certainly a weight off your mind to know that you’ve done what you can to financially secure yourself in your old age. Even if you’re only in your twenties, it’s never too soon to start paying into a pension plan.
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