When most people think of wellness they conjure up images of some bohemian looking woman telling you why you should start practicing yoga or eating kale. But wellness is actually about maintaining health and balance in each aspect of a person’s life. Much like emotional or physical health, financial well-being can have an enormous effect on someone’s life. Financial wellness isn’t about finding some scheme to get rich, it’s about managing the money you do have now while planning for the future in order to give you peace of mind.
According to consumerfinance.gov, there are four parts of personal finance that will give you an overall sense of financial well-being. Four benefits of maintaining financial wellness:
1. Feeling in Control
Understanding your monthly income and expenses is the first step to feeling in control over your finances. Many people struggle to live within their means often spending or borrowing too much. Using credit or borrowing money from a financial institution has received a lot of bad press in the last decade. But ridding yourself of all debt or credit cards isn’t the way to go either. Good debt consists of borrowing money that will return value over time such as owning a home or getting a college education. Also paying off credit card balances each month is a good way to build credit. Bad debt happens when you use credit cards or loans to pay for a lifestyle that is above your means and doesn’t give you any real value in the long run. For more on good and bad debt read here.
2. Being Prepared
Once you have taken the right steps to live within your financial means, it’s time to prepare for the unexpected. Having at least one savings account will help you be prepared for any surprises in the future. It’s recommended that you work up to having between three to six months of living expenses in the bank in case of job loss, medical emergencies or major home or auto repairs that might come up. Even if you aren’t in the financial place to save a lot, putting away a small amount can still help you in case of unanticipated expenses. Spending all of your leftover income on shopping, hobbies or going out might seem tempting but it’s much better to have a cushion ready in case something unexpected happens.
3. Meeting Financial Goals
Think ahead to what major life goals you might want to accomplish in the next 5 or 10 years. Maybe you want to go back to school, buy a house or prepare to retire. You won’t be able to finance those goals if you don’t have a plan in place to get there. If spending too much is a problem for you, set up automatic withdrawals either at a bank or through your employer so you are automatically saving a set amount each month before you have a chance to spend it.
4. Giving You Some Breathing Room
Life is no fun if everything you do is budgeted and planned out to a T. Giving yourself some financial wiggle room will make life more enjoyable. Over-planning your monthly budget might give you cause for anxiety if you go a few dollars over here and there. If you have no room in your plan to let you buy a small item that catches your eye or to have a night out with friends, you may feel like you are trapped by your finances. Of course, you should never purposefully spend past your income but freeing up some fun money or forgiving yourself for spending $20 extra dollars on groceries will leave you feeling less anxious about your budget and improve your relationship with your finances.
Veronique Hoebeke, Associate Editor
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