Top 10 Tips to Achieve Financial Wellness (2023 Update)
In this article, you’ll learn the best financial wellness tips for growth, investments and money management.
It is becoming increasingly demanding for individuals to seek financial wellness tips anywhere they can get. The pandemic is hitting the world at large. Financial stress has become one of the key sources of anxiety for a large population. That’s why the time to think about your long-term financial well-being is right now!
Staying financially afloat in today’s economy comes with its own set of challenges. It does not matter whether you are a business owner or an employee. The growing uncertainty has had adverse effects on all industries. So how does one manage a steady flow of cash?
This is everyone is searching for tips for achieving financial wellness in the present day. Let’s talk about the key ways through which you can maintain your financial well-being in these troubled times.
Financial wellness definition: What is financial wellness?
Put simply, financial wellness is your overall financial health. It encompasses your capacity to deal with emergency financial situations.It includes your control over the daily and monthly expenses. There are several types of business expenses to keep an eye out for apart from the obvious salaries. It also includes your meeting of daily and monthly saving targets. It also includes your ability to meet your monetary goals.
Financial wellness examples
A financially sound individual has the money and financial security that allows them to live the life they have always wanted. Financial wellness is the successful management of your finances. You should not only be able to meet your short-term expenses but also think about your goals for the future. Just knowing where your money is going is not enough.
Financial wellness goals: what should be yours?
Your ultimate financial goal as a businessman should be to maximize profits while reducing costs. There are several ways around this, including reducing costs or maximizing sales. However, your secondary goals should include be ensuring brand recognition and maintaining employee satisfaction. Personal happiness is also of utmost importance as well. You should also have a socialist viewpoint on your business to benefit the society around you. All these goals require financial stability. Your financial goals should include a future where you’re insured of risk, have a stable income, and increased quality. Your assets should be making you cash and your liabilities should be reduced.
Financial wellness benefits for employees
A financially well-off business is great for employees too. A business that ensures a stable supply of income also passes on the benefits to its employees. Financial wellness for employees includes good competitive pay, incentives, bonuses and extra pay for overtime. Some businesses may even offer other benefits. These include health insurance, travel, communication bills reimbursement, business trips etc. A happy employee ensures a happy steady business! Financial wellness also includes healthy habits like remembering to save your receipts for tax calculation.
10 Tips to achieve financial wellness
Here are some financial wellness tips that can help you achieve your financial goals:
Re-calibrate according to your financial situation
The most important tip to get started on maintaining your financial wellness is to define clear and timely financial goals for yourself. Remember to be realistic with money! It is not always about over-achieving, it is about being realistic with your spending and creating a steady flow of money. With the upheavals in the market, it is also important to re-evaluate your fiscal goals from time to time.
Rethink what you can achieve on a year-to-year basis. While defining one’s money-related goals, it becomes pertinent to think of your debts.
You should have a clear timeline on how and when you plan to pay off your debts. It should also be a part of your financial goals apart from ideas about expansion and promotion. If you think you have been off track with your money goals for a long time, it might be time to reassess the situation and recalibrate your goals.
Evaluate your financial situation periodically
Keep a regular track of your income, savings, and expenses. Random auditing of your account books might be a smart way to keep control of your tabs. It might be upsetting to acknowledge certain debts and losses but it is definitely better than living in delusion. Make sure you space out your heavy personal purchases between financial years to avoid running into debts. Have your debts reduced over the last year? If yes, then you are in good shape and you can continue to budget accordingly. But if it’s a no, it’s time to rethink where you are going wrong!
Design and stick to a practical budget
The first step to designing an efficient budget is to realistically identify your expenses, your income, and your target savings. Monthly bill payments and debts are some of the most important things you need to keep in mind while designing your budget. Unexpected expenses, for example, health emergencies, family events, luxury spending, personal spending, rattle up the monthly finances.
You need to keep track of your expenses and identify your spending leeks. Before investing in a luxury product/service, always ask yourself: do I have the budget to spend on this product/service? And even more importantly, is now the best time to invest in this luxury product/service? Build healthier spending habits by creating a money spending plan. Go back to your financial goals to remind yourself of your financial situation.
Build your savings
Let’s talk about your savings. Regular savings go a long way in ensuring financial security. The first step to meet your targeted savings is to open a high-return savings account at a reputed bank. Your general mantra should be: save more money, spend less money. Strike the right balance and you will be surprised to find extra money on your hand.
You can think about putting this cash in your emergency fund. Instead of keeping extra money at home, deposit it in a good savings account and reap the benefits. Using automated banking tools auto-deposit money into your savings account is a good way to ensure maximum savings.
Search the right investments
It is also never too early to get started on investments to help your family in times of need. It creates economic security and reduces fiscal risk. Your investments should ideally have high returns and low risks. Find the right balance and focus on diversifying your investment portfolio.
Investing in mutual funds, insurance plans, pension funds, real estate, senior citizens saving schemes are some ways to kickstart your retirement plan with your investments. If you know you are going to need the money in a few years, invest in short-term, high liquidity assets like peer-to-peer loans or savings accounts.
Create an emergency fund
If there’s one thing that the pandemic has made us realize, rather harshly maybe, it is that we need be to be prepared for emergencies. Monetary emergencies are no different. You definitely need to have a plan of action for those unprecedented times when you would find yourself struggling to have money in your account. Creating a fund dedicated only for emergencies is just the first step, perseverance is the key! You could also invest in well-researched insurance plans. A well-paying life insurance plan is a must. Design your budget in a manner that it has space for both an emergency fund and a retirement fund.
Have a retirement plan
The best financial wellness tip is to remember it is never too early to be thinking of your retirement plan! The golden tip is: create a retirement fund and contribute generously. This might mean that you need to cut back on your purchases and monthly spendings but such planning ahead will create financial security in the long run. One of the most important questions is deciding how much you need to save or invest to secure a comfortable life after retirement. Remember that it is always a good idea to plan for more than you may need when it comes to matters of money. Don’t think of your retirement fund as your emergency fund, they are different. You could face an emergency once you are retired!
Focus on financial education
Search for financial education programs that suit your portfolio. Many free versions of these programs are available on the internet. They could help you understand how money works, how to budget better, how to build credit and increase savings, and how to reduce your debt. Here’s an obvious tip – if your workplace offers efficient financial wellness programs, register! There are a lot of financial wellness tools that aim to improve your financial health.
Not only do they provide standard coaching and appropriate financial advice but they also focus on custom training and e-learning to achieve financial wellness. Don’t be afraid to get professional help when it comes to finances. The internet is a great free resource. But if it can’t answer all your questions, consider sitting face to face with a professional and discussing your finances. The money you invest today would give greater yields tomorrow.
Track your credit card limits and your credit score
Keeping an eye on your credit card limits is another tip to avoid unexpected risks and achieve financial wellness. Budgeting before making any major spending decisions is an important tip for financial wellness. Regularly checking your credit report also helps you catch hold of identity fraud or any other illegal activity on your credit card. Your credit score is a number ranging from 300 to 850 which serves as a numerical representation of your credit history. The higher your credit score, the lower the risk of you defaulting on a loan. Remember to save your receipts!
Proactively managing your credit report, for example, paying down debt, paying your bills on time, maintaining a good credit history, and avoiding applying for several loans at a time help maintain a good credit score. High-interest debt, for example, personal loans and credit card debt, harm your credit score.
You can avail a free copy of your credit report from credit reporting agencies once every year. Automated payments are a great way of timely paying loan EMIs and maintaining a good credit score.
Think before applying for a loan
When one needs money during emergencies, loans prove to be the most beneficial financial tool. Whether you are going for a personal loan or for a business loan, you should always be on the lookout for low interest rates. Personal loans are unsecured and that’s why they come with high interest rates usually beginning from 11%. Before deciding on the perfect loan for yourself, take a hard look at your finances.
Look out for prevailing market interest rates for your income group. One of the best financial wellness tips includes going to a bank and securing a lower interest rate. Be wary of random advertisements that promise low interest rates and high loan amounts, they could be fraudulent. Proper due diligence is required before choosing the best loan.
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Financial awareness, Stability, fulfilment are the 3 levels financial wellbeing. Financial awareness begins when you have data and predictions of your assets in hand, liabilities and a plan for the future. Stability is when you break even and make steady progress. Fulfillment is when the system runs with minimal risks, your major purchases are done, and your dues are minimal.
A personalized financial plan will include a strategy for an organization’s long-term goals for the business. It should include personalized assessment of goals, risk tolerance and cash flow.
Financial wellness programs are intended to educate employees about financial management and increase their financial status. This is done by understanding debts:assets ratios, taxes, and formulating the best plan of action to take for stability and progression.
April is celebrated universally as financially wellness month. This is done since it marks near the end of a financial year in most countries. Some countries also celebrate January as the financial wellness month
Financial wellness provides you the stability to grow and expand your business. With financial wellness you have a larger hand to experiment with expansion and a better security for the longevity of your business.