The Importance Of Financial Wellness And How To Achieve It

When we think about health and well-being, it’s natural to think about the physical, mental, and emotional parts.

We know that our most basic needs are food, a place to live, and safety. We know people want to be with others and do social things. We all know that mental fitness and health are essential for feeling well.

But financial wellness is a part of well-being that was only sometimes thought of in the same way a decade ago. The 2021 Financial Wellness Survey by PwC shows that stress is getting worse. 63% of workers say that their financial stress has worsened since the pandemic started.

It also says that 42% of full-time people find it hard to make ends meet. People need help paying their bills on time every month. And with student loan debt, housing and food costs, and financial insecurity on the rise, it’s essential to be financially healthy.

What is Financial Wellness?

 wellness is a person’s overall financial health and relationship with money. It means taking care of one’s finances by thinking about short-term and long-term goals.

Both physically and mentally, being financially healthy makes life better. Financial well-being is not a goal to be reached but a journey that never ends.

  • Stable Income

Money is the foundation of financial well-being. Economic well-being requires a stable income. You don’t need to be rich, but income stability is crucial. Financial security begins with a steady income and a payment schedule.

Try to live off a set salary and invest as you earn more. You have a stable income when you know when and how much your next few months’ paychecks will be. Growing your interest-earning accounts will help you weather financial storms.

  • Budget

Even if you hate budgeting and planning, create goals. Goals and progress help you stick with them. You can see the what, why, and how through planning. If you need a household budget, obtain your current bank statement and your monthly income. Add fixed expenses like rent or mortgage, utilities, insurance, and more. Assign flexible expenses to each dollar of leftover money. If you like trying different eateries, budget $100 a month for eating out. Suppose you don’t have an emergency fund—Budget a monthly contribution.

  • Emergency Funds

Start emergency savings now. Emergency reserves are for unexpected expenses or unemployment. You can immediately access a large cash reserve, so you won’t have to worry about money. Financial experts recommend keeping three to six month’s worth of expenses in your emergency fund. If you have no money, saving $25, $50, or $100 a month is excellent. Consider investing it in a high-savings investment. It’s your preference.

  • Understanding Credit

Another critical financial factor is your credit score. Banks and lenders trust borrowers with higher credit scores. Late payments, significant debt, and having high balances will lower credit scores. Many financial institutions offer free credit report reviews.

Living well requires good credit. It affects your interest rate, mortgage rate, loan approval, and credit card eligibility.

  • Reduce Debt

With several established tactics, you can slowly pay down debt. Debt reduction advice might help you cut your debt to a sustainable level.

To achieve overall well-being, you must consistently strive toward your goals. While finances and priorities vary, everyone will focus on the financial wellness principle above. Your circumstances are unique, so you can choose which advice will help you achieve your goals. If you are ready to improve your financial well-being, contact Heritage Financial Credit Union.