5 Easy Steps To Financial Wellness
Although the United States is one of the wealthiest nations globally, a majority of Americans still live paycheck to paycheck. And for most Americans facing financial stress, emergency funds are often non-existence, and retirement account balances are low.
Financial independence is a goal that most Americans aspire for, but few attain. And the most common reason why people lack financial wellness is the lack of information about wealth creation or lack of confidence in their ability to create money.
However, there is a silver lining. Regardless of your credit score or income, if you seek financial literacy and apply the knowledge in your everyday activities, you are more likely to have financial freedom.
Below are some steps for enhancing your financial wellness.
1. Review And Revise Your Financial Plan Regularly
A financial plan is used in assessing, planning, and improving your financial situation. The financial strategy helps you establish an action plan based on your financial goals and current financial situation.
Although having a financial plan is arguably one of the key factors in developing financial wellness, creating a plan is not enough. You need to ensure that you are updating and evaluating it regularly.
To maximize the plan's effectiveness, you should update it monthly and review it every six months. You should also update your financial strategy after undertaking major life events such as having a child, getting a mortgage, or a pay rise.
2. Create A Budget and Stick to It
Having a budget will help you know how much money comes in and goes out of your accounts every month. You can easily get into debt or have bad credit without understanding this financial information.
When creating a budget, you should consider how much money you earn monthly, the amount you spend on needs such as groceries & mortgage, and the amount you spend on wants such as vacation, shopping, or eating out. Here is one of my faves!
3. Build An Emergency Fund
Everyone encounters unexpected bills at some point in life. You do not want a job loss or major household bill to force you into getting a credit card. Having an emergency cash fund will help you deal with unexpected bills more easily.
The amount of cash to save for emergencies will vary among individuals. But a general guideline is to keep at least three to six months' worth of living expenses.
4. Start Saving Early
It is never too late to start saving for your retirement. However, the sooner you begin, the better off you are likely to be throughout your retirement years. That is because of the compounding effect. Compounding is the act of reinvesting your earnings, and it works best over time. As a result, those who keep their earnings invested for a long time will make more money than those who invest their money for a shorter period.
5. Work On Your Financial Beliefs
Financially wealthy individuals are often motivated by their convictions and fundamental beliefs. These beliefs are the driving force behind their professional and personal success. You, too, need to believe in yourself, your financial goals, and your financial wellness solutions. If you have limiting beliefs, you can begin changing them into positive money affirmations by declaring money mantras such as, "my income is higher than my expense, money comes to me freely, or I am financially free."
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