Your relationship with money can greatly influence your overall well-being. When you feel a sense of control over your finances, it fosters feelings of security and tranquility, affecting more aspects of your well-being than you might realize. Although achieving financial wellness is a unique and personal journey, here are some key points to consider.
Create a balanced budget.
Do you know where your money is going each month? It’s so easy to swipe your card or send money via a payment app. If left unattended, these quick and easy transactions can quickly drain your bank account limiting your ability to save. A few quick and easy ways you can get a grasp on your spending:
- Go old school and balance your receipts to your bank statement. Get a receipt for everything you purchase for one month. Then, separate your spending into categories like restaurants/entertainment, groceries, personal care and household bills. At the end of the month, tally up each expense -you will be able to clearly see where your money is going.
- Find an app that will review your spending. There really is an app for everything! Many apps will tell you where you are overspending and even scope out subscriptions that you forgot you had. Just make sure to do your homework and find one that is safe and secure to use.
Now that you understand where your money is going it’s time to make a commitment to yourself to only spend what you need to. A balanced budget is a careful balance of input and output. Although there is not a one-size fits all solution, there are countless ways to create a budget. Here are a few tips to get you started:
- First, make a list of all income sources.
- Then, a list of your re-occurring monthly expenses. These are expenses that do not normally change from month to month such as your rent or mortgage, car payment, loan debt, utilities and membership fees.
- Next, list your variable spending. This includes things that are not the same each month like entertainment, groceries, eating out, clothing, and travel expenses.
Once your lists are complete, it’s time to do the math. Simply add up your income and subtract your expenses. Do you have enough income to support your spending?
If not, start making a plan to downsize your spending. While it’s habit to look at the variable spending only when it comes to reducing expenses, review your re-occurring spending as well. Consider cancelling or downgrading subscriptions, review your car and home insurance plans to ensure that they’re still suitable, or contact providers for a loyalty discount.
Remember, a budget is not about limitations, it’s about making thoughtful and informed financial decisions allowing you to live the life you want. You may not meet your budget every month, and that is ok. Make adjustments and keep moving forward.
Set realistic financial goals.
Whether it’s saving for a home, car, vacation, building an emergency fund, or planning for retirement — setting specific goals provide direction and motivation building excitement for the future. When setting your goals, envision your short term “to do list” items but also your long-term financial “wish list”.
Remember to revisit your goals often to review your priorities and track your progress.
Build an Emergency Fund.
Life is unpredictable and full of surprises — not all of them are pleasant. Having a separate emergency fund as a safety net can alleviate stress and provide peace of mind when the unexpected happens such as medical expenses or job loss. A good starting point is to have three to six months of your living expenses put into an easily accessible savings account.
Invest in yourself.
It’s never too early to start saving for retirement. If you haven’t already, start putting aside money for retirement on a consistent basis. The earlier you begin, the more you’ll benefit from the magic of compound interest.
Many employers provide retirement savings plan benefits. Maximize your contributions to your retirement account and fully leverage any employer matching options. If those aren’t available, consider other retirement accounts such as an Individual Retirement Account (IRA) to help you reach your financial goals. Remember to diversify your investments to achieve a balance between risk and growth potential.
Downsize your debt.
If you have debt, create a strategy to reduce it. There is no universal solution for prioritizing debts, so it’s crucial to find a method that aligns with your individual life circumstances. Some of the most common strategies involve:
- Focusing on high-interest debts or those with larger balances first.
- Considering consolidation or refinancing if it serves your needs.
The main objective is to eliminate debt and free up your funds. Think about directing your savings into a tax-advantaged retirement plan or a Health Savings Account (HSA), enabling your money to work for you rather than against you.
Remain Flexible.
Life changes and so do your financial needs. Unexpected events, career changes, or shifts in personal priorities can all impact your financial situation. By keeping an open mind and being willing to adapt your financial strategy, you ensure that your plan remains relevant and effective. Regular review of your financial plan allows you to be prepared for whatever comes your way, ensuring your financial wellness journey is resilient and responsive to change.
Educate Yourself.
Whether you’re just starting out or looking to refine your financial strategy, tapping into educational resources and understanding your finances is key to making smart financial decisions. Check out BPAS University for tailored resources on various financial topics —from budgeting basics to investment strategies, you’re bound to find something that will empower you to take control of your financial future, make informed choices, and ultimately, achieve the financial wellness you desire. Financial wellness is not a destination but an ongoing personal journey. Stay curious, embrace the learning process and celebrate small victories along the way. Take comfort in knowing that every step you take gets you closer to achieving a healthier relationship with your money and finding the financial peace of mind you’re striving for.