7 Strategies to Help Build Your Financial Wellbeing
The average household income reached record levels in the U.S. in 2019. Then COVID-19 struck and created many economic challenges that are going to be felt for years to come.
If you’re weathering a financial storm right now, you’re certainly not alone. Millions remain unemployed or underemployed. Many small businesses are just barely getting by, doing everything they can to avoid closing down for good.
What can you do to protect your financial wellbeing? Read on to learn 7 tips to get control of your finances and have peace of mind.
1. Set a Budget
Financial wellbeing starts with awareness. You may want to bury your head in the sand and ignore your finances. That’s only going to make it worse.
You should take a look at your income and your expenses. Look at where you can cut expenses without sacrificing too much.
This is also the time to set financial goals. What would you like to achieve financially? For some, they want to have their debts paid off. Others want to have a rainy day fund or have enough money to go on vacation.
2. Check With Your Employer
There are a wealth of resources at your disposal, and you may not know all of them. For example, your employer might offer a program to improve employee financial wellness.
It may seem strange to talk about your personal finances at work, but employers know something. They started to realize that money stress limits productivity.
3. Have a Mindset of Growth
Your mindset around money is limiting you in some way. You have to adjust your mindset to one of growth, not just getting by.
Look for creative ways to make your money work for you. For example, a mutual fund that has high growth is likely to earn more money than a savings account at the bank.
You can also find ways to earn more money. A side job can be a great way to bring in more income to help you reach your financial goals.
4. Know How Much You Really Need
Do you know how much you need to retire? Many people think that having $1 million in the bank is a good starting point. When you’re nowhere near that, it seems impossible to reach and you shouldn’t bother at all.
The fact is that you probably don’t need all that much to retire or to live. Take another look at your budget and look at your essential expenses. That amount is really all you need.
The rest is just noise.
Calculate how much money you really need each month and when you retire. You can put your mind at ease and set realistic goals to get there.
5. Don’t Always Get the Least Expensive Thing
This step may seem counterintuitive. However, when you take the long view of your purchases, it makes perfect sense.
Let’s say you have to buy a new toaster. You find a cheap one on sale for $10. It’s a great deal, so you decide to pick it up.
The problem is that it’s garbage. It breaks down in 6 months and you have to spend more money to replace it. You might as well spend more money on the toaster and get one that lasts.
When you shop, you need to strike the perfect balance between cost and quality.
Food is another area where it helps to look at the total cost of the product. It’s no secret that our food choices have consequences. Americans’ poor diets cost nearly $50 billion in health care costs.
Healthy food does cost a little more, but it’s better than spending money on insulin shots. Make healthy food a priority.
6. Track Your Expenses Regularly
Do you know where your money goes each month? You may wonder why you’re always in the same financial position.
It’s important to track your expenses and see where your money is going. There are tons of apps and tools to help you manage your expenses and categorize them. Many of these sync with your bank account, so data entry is minimal.
If you pay with cash, it helps to have a small notebook to track your expenses and cash withdrawals. Another option is to keep the receipts and upload them into your tracking app.
Your app generates reports that show you where your money is going. For example, you could have cut your television cable to save money. Then you joined 5 streaming services, saving no money whatsoever.
7. Don’t Get Discouraged
It’s hard to look at your bank account and not stress out. You immediately start to think about what you’d like to do and what’s lacking in your life because you don’t have enough money.
That thought pattern is a downward spiral for a lot of people, and you can easily get tripped up. It takes discipline, but you need to shift your thoughts to what is working.
Look at the steps you’ve taken to improve your financial situation. Maybe you paid $5 more than the minimum payment on a credit card. You might have put money aside into a rainy day fund.
You need to celebrate those moments. Not by going out a buying something, but by sitting back and appreciating what you have in your bank account and what you’ve done to improve it.
Boost Financial Wellbeing One Step at a Time
You don’t need to feel powerless over money. The fact is that you can take control. Even if you’re in debt and had a significant drop in income, you can take small steps to improve your financial wellbeing.
That starts by setting up a budget and sticking with it. You need to check your mindset and have patience. Take small steps to improve your situation and they’ll add up like compound interest.
Do you want more helpful money tips? Visit the Finance section of this site.