“Financial Wellness”, a term that we’ve all probably heard too many times before. However, while it may seem like something that can only be achieved with a massive monthly paycheck, that couldn’t be far from the truth.
In fact regardless of the amount of money you’re earning, poor financial management can leave anyone struggling to make ends meet.
That’s why, when we talk about financial wellness, we’re talking about your ability to make the most of your income and manage money more efficiently. In this piece we aim to offer some tips on how to take small steps towards your own financial goals.
Here’s 3 unique and practical financial wellness tips that will not only help you save more money but also help you leverage the financial resources that surround you.
Let’s get started
1. Create a Comprehensive Budget
The first step to financial wellness is strong financial discipline. This requires creating a comprehensive budget and then, more importantly, ensuring that you stick to it.
While it may seem as simple as writing your income and expenses on a piece of paper and carrying on with your day, taking action is the most crucial step. However, getting everything written down is a good start and often the hardest step to take.
Once you list down your income and expenses, you need to understand where your money’s going. Are you spending all of the money you earn in a month? Do you have anything left over to save? Are you spending money on things you can do without? These are some questions, you’ll have the answer to after a quick look at your outgoings.
The easiest way to do this accurately is to run through your last few month’s bank statements.
The next step is to do something about it.
Identify any unnecessary expenses that you can cut back on which may include things like eating out, any subscriptions you no longer use or impulse purchases.
Next, set aside a part of your income for all the essential expenses like rent, utilities, groceries and debt repayments, and use it only for those purposes. To make sure you’re not tempted to spend your remaining money, it works best to move your remaining money to a separate savings account.
This keeps it easily accessible if needed, but not so accessible that you can accidentally spend it.
This allocation will help you cut back on any wasteful spending immediately and help you prioritise your well being.
2. Reduce and Manage Debt
Now that you have all the budgeting techniques that you need in place, it’s time to focus on the next big financial pain. Debt.
Most people believe that while a balanced debt profile is beneficial, too much of it may result in many financial problems. That’s why it is highly recommended that you work towards reducing and managing your debt effectively.
To achieve this goal, you can explore a few debt management strategies and see what works for you.
One of the best ways to streamline your debt repayment is debt consolidation. Not only beneficial in ensuring you’re not paying over the odds on your monthly interest, but it may also help reduce the overall cost of your debt. If you wish to learn more about this, here’s an insightful blog on debt consolidation strategies.
3. Build an Emergency Fund
As one of the most crucial financial wellness tips in this blog, building an emergency fund is at the core of your financial wellness. Not only is it a perfect way to save for any unexpected expenses, but it can also protect you from financial stress.
Knowing that you have a strong financial cushion to fall back on no matter what is a great way to reduce stress when it comes to your finances and put your energy elsewhere.
The target should be for this emergency fund to cover about six months of living expenses. However, if you’d prefer to take a safer approach, you can slowly build this up to one year’s worth of living expenses.
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As we’ve seen, with a few practical tips for financial wellness, you can effectively save more money and make your way to a better future.
However, at Salad Money, we realise that financial situations are not the same for everyone. That’s why we’re here. If you ever find yourself in need of emergency money, we’ve got you covered.
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