Financial wellness. You've probably heard that term a lot! It's one of the hottest buzzwords. Network Marketers use it to get you to join their programs. Financial consultants use it while offering you their services. Coaches and gurus use it. Even some health professionals use it. EVERYONE wants you to have financial wellness.
But what exactly is "Financial Wellness"? And how do you know when you've got it?
According the Consumer Financial Protection Bureau, you are financially healthy when you have financial security and financial freedom of choice, both in the present and in the future.
In other words, financial wellness is your ability to manage your money...to be able to afford necessities (food, clothing, shelter, etc), to be able to save (for emergencies or other future expenditures), to invest and grow your money (so you can increase your net worth), and to protect your wealth (from market fluctuations, loss of employment, etc).
Your financial wellness includes things like your budget, your savings, your credit, and much more.
If any of things aren't where you want them, now is the time to fix them. So your overall financial wellness is a healthy as possible.
Here's some tips:
1. Stick to your budget. Ah...you thought I was going to say make a budget, didn't you. But the truth is that while plenty of folks have made budgets of some sort, most don't actually stick to them. So once you've created your budget, figure out a plan, some system of accountability, to help you actually stick to it!
2. Build that emergency fund. What do we talk about all the time at Smart About Stuff? Being prepared for emergencies. And one way you make sure you are financially prepared is to have an emergency fund. So when life's hiccups happen, big or small, you can cover them until you get back on your feet.
3. Save for your future. No one wants to work until they die. So start planning and saving for retirement now. There are many vehicles to get you there. Which brings me to my next tip...
4. Consult a financial advisor: Unless you are already a financial expert, you need someone to help you determine what type of financial plan is right for you. It’s best to use an advisor that charges a flat fee for a financial plan, not one that earns commissions by selling the products that you need.
5. If you're credit is good, keep it that way. If it's not, fix it!: You're credit score can do more than get you better interest rates. Many employers now run a credit check before making a job offer. Apartment managers run credit checks when you try to rent a place to live. Insurance companies my run them. In fact, you would be surprised at how many times your credit score has an impact on something other than getting a loan or a credit card. So if it's good, keep it that way. Don't go into unnecessary debt. And if you do borrow money, play it back promptly!
If you're credit isn't so good, fix it. Usually this means you either have too much debt compared to income, or you are delinquent on paying your bills. Or both. Whichever it is, the best way to fix it is to pay what you owe. There are no magic ways to fix your credit. So get your credit report and review it for errors. If it's accurate and your credit still sucks, contact your creditors and work out payment plans with them. Trust me...most of them will be willing to work with you.
6. Create multiple income streams: If 2020 proved anything, it was the need for multiple streams of income. So many people lost their jobs. Some did go on to find alternate ways to earn a living. But many were totally reliant on unemployment and the government. What a mess that was! Yes, your emergency fund is there to help cover expenses if you lose your job. But wouldn't it be better and a lot less stressful if you had other sources of income so you always had cash flow coming in?
Anyone can become for "financially fit." It just means learning some basic money management skills. And then putting what you learn into practice. So what are you waiting for? Let's get started. When the next crisis comes along, and it will, you will be much better prepared. I promise, the peace of mind you'll have is worth it!
