What is the purpose of financial wellness?
It is important for people to understand the strong association between financial stability and wellbeing. While we live in a world of much uncertainty, there are still many actions that can be taken to facilitate individuals feeling more financially resourced.
Financial wellness is an emerging field that was not necessarily associated with wellbeing a decade ago. According to PwC’s 2021 Financial Wellness Survey, stress is on the rise. In fact, 63% of employees say their financial stress has increased since the pandemic.
Financial wellness is a state of financial health in which you can effectively manage all your finances. It involves the overall health of your financial wellness which includes saving, debt and spending.
How do you create financial wellness?
Unfortunately, you cannot control the price of food, fuel or energy, however, there are some things in your everyday life that you can have control over. For example, you have the choice of where you do your food shop, what utility company you use and the amount of energy you consume at home. All these small things combined will help in achieving financial wellness.
What are 7 ways that can improve financial wellness?
There are many small ways and habits that you can instil in your everyday routine that will help you achieve financial wellness and reduce your stress around finances.
Here are 7 ways to help you improve financial wellness
1. Keep track of your spending
Keeping track of your finances for a month or two will give you an accurate picture of where your money is going. After doing this you may be slightly surprised by how much money you spend on unnecessary extras. By tracking your spending, you will see areas where you can cut back, which will relieve some pressure.
2. Make sure you have emergency savings before investing
When it comes to financial wellbeing, one of the most important things you can have in place is an emergency fund. This pool of money can support you through difficult times, such as illness or job loss. It can also help put food on the table and pay for essential bills.
3. Create multiple sources of income
Creating multiple sources of income is an extremely powerful way to achieve financial wellness. By doing this, you will relieve stress and won’t solely rely on one source of income. Find creative ways to earn more money, such as freelancing or turning your hobby into a money-making activity.
4. Ask for help if you need to
It can be understandably difficult to ask for help when you need it, but it may be necessary for your financial wellbeing. Be upfront and honest with your service providers and the situation if it arises as they may be able to help and support you out of your financial difficulty.
5. Use a budget system that works for you and your lifestyle
While no budget fits every situation, it is important to find a method that works for you. There are several budgeting options available; however, two of the most popular are the 50/30/20 budget (also called the envelope system) and the 80/20 budget (also known as a percentage breakdown).
The 50/30/20 budget concept consists of you saving 20 percent of your income for future goals and using the remaining 50 percent for regular expenses.
The 80/20 method allows you to spend 80 percent of your money on needs and wants while saving 20 percent for future goals. To achieve financial wellbeing, it is crucial to choose a method that fits your lifestyle and that you can follow over time to reach your financial goals.
6. Live on less for a period of time
For a period of time try and focus on only spending on essentials and cut back on non-essentials. For example, if your car repayments are very high, consider replacing your car with a less expensive one to run.
7. Plan for retirement
A key component of financial wellbeing is setting yourself up for a financially successful future. If your employees contribute to a pension, be sure to take advantage and set that up as early as you can. You can also use a retirement calculator to assess how much money you will need when you retire so you have an estimated figure to work towards.
Zevo Health’s financial wellbeing training provides practical steps to improve an individual’s awareness of financial matters and how to be more strategic in building financial security. This training is perfect for organisations to support and help their employees achieve financial wellbeing.