Financial Wellness - Importance, Meaning & How to Get It (2024)

What is Financial Wellness?

Financial Wellness is the ability to live a healthy financial life and plan for the future. It involves managing your income, expenses, savings, debt, and investments wisely and responsibly. Financial wellness can reduce stress, improve physical and mental health, and enhance your quality of life.

Many factors such as income level, job security, health-care costs, and personal goals affect your financial wellness. You can improve your financial wellness by creating a budget for basic expenses, investing for your retirement, and paying off debts, if any.

Importance of Financial Wellness

We are financially healthy when we have the knowledge to handle our finances responsibly. The ability to monitor spending, create and adhere to a budget, and save money is crucial for achieving financial stability and independence.

Signs Indicating Good Financial Wellness

Signs of good financial wellness are:

• Creating a budget and developing a plan for handling financial resources.
• Keeping expesnes in check.
• Gaining an understanding of debt and its management.
• Attempting to restore credit.
• Setting up long-term financial plans like a retirement fund, an investment portfolio, opening and maintaining a healthy savings account.
• Feeling emotionally balanced about money.
• Having an emergency fund in place for unforeseen circ*mstances.

Tips to Improve Financial Wellness

Some simple ways to improve financial wellness are:

• Create and Stick to a Spending Plan or Budget: Establishing and sticking to a budget is a significant step toward monetary security. Making a strategy for how you'll spend your money will help you stick to it.
• Maintain Steady Savings Rate and a Contingency Reserve for Unexpected Expenses: Save enough money to cover your bills for at least a few months. It's wise to set aside some money each month for use in case of emergencies.
• Pay Off your Debts: Paying off debts will help in planning your finances better.
• Keep Tabs on when your bills are due: Keeping a check on due date of your payments will help to avoid late fees there by keeping you on track with your budget plans.
• Review your Credit Report Annually: Performing financial statement audit on monthly expenditures and savings will give you an idea of your financial situation and areas for potential growth.
• Set aside money for retirement: It is recommended to save 10-15% of your salary towards retirement. The earlier you begin, the better it is as it helps plan your spendings better .

Conclusion

To sum up, having financial security will help promote wellness on all levels — mental, physical, and emotional.So if you want to improve your financial situation and other aspects of your life, all you have to do is establish some objectives for yourself.

Source: lynchburg, careersourcecentralflorida, commbank, womenshealthmag, betterup, unh.edu, everydayhealth