‘Financial wellness’, which is also often referred to as financial wellbeing, is a buzzword at the moment. There are blogs, magazine articles and podcasts all dedicated to helping individuals get to grips with their own financial wellness. It’s the ultimate end goal for most, but the actual meaning can be difficult to define because it doesn’t mean the same thing to everyone.
Here we take a look at what financial wellness means and how it can be achieved and maintained by anyone, and not just the wealthy few.
What is financial wellness?
According to UK-based consulting company Mercer, financial wellness is not dependent on the income of a person or how wealthy they are, but it rather has to do with how they manage their income.
It can basically be defined according to the following factors:
If you’ve said yes to all the above statements, then congratulations! You are one of the lucky few who can boast financial wellness.
How do you achieve this state of financial wellness?
If you cannot answer yes to the above question, don’t panic. With just three simple adjustments to your mindset and day-to-day lifestyle, you can be on your way to a personal state of financial wellness.
1. Control debt – the best way to do this is to pay off credit cards with high-interest rates first. Put in as much as you can on your smallest debts and at least the minimum on the large ones. Once the small debts are paid, you can focus on the large ones. The smallest amount of progress can bring huge motivation to continue until you have paid off everything.
2. Live within your means – make a realistic budget and monitor how much you are spending from month to month so you can see where your money is going. Before spending on something that is not a necessity, ask yourself if you really need it, then wait a few days or even a week before deciding. It’s a simple enough concept, but it can make a big difference to your finances as you near payday and money gets tight.
3. Save as much as possible – try and prioritise saving money; consider it as important as paying bills. Start with as much as you can afford and build up as your salary grows. Put saving for an emergency fund of 3 to 6 times your monthly expenses at the top of your to-do list and persevere until you get there. This saved money could make all the difference if you come up against one of life’s unplanned events.
The information contained in this article is for information purposes only and does not constitute professional advice.
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