Financial wellness studies over the past few years indicate that investors desire financial wellness. The recent pandemic, economic and inflationary conditions, changes in work-life balance, and more responsibility for financial decisions are all familiar sources of stress and anxiety for many people. Studies conclude that many factors influence our financial wellness:
- Personal characteristics: includes both personality factors and societal status; for example, age or marital status.
- Financial literacy: working knowledge of financial concepts and tools to make the most advantageous financial decisions.
- Financial behavior: refers to financial actions, for example, financial planning, saving, and investing.
- Financial situation: refers to objective wealth, such as homeownership, salary, benefits, and accumulated wealth.
- Financial stressors: financial events such as losing a home, personal bankruptcy, or job loss.
Source- MetLife Study of Financial Wellness Across the Globe
Unfortunately, people often lack the financial skills necessary to tackle financial decisions that impact their financial wellness. Financial wellness is essential because it equips us with the knowledge and skills to manage our money effectively. You can start building financial wellness through these simple tips and help increase your financial stability:
Be an aware consumer: Purchasing has become easy; thanks to technology, we can purchase whatever we desire at any time in the comfort of our own home through smart devices. Being aware of shopping for what you need versus want can help decrease spending and increase saving and investing more for your future.
Use print or online coupons: Save on items you regularly purchase but choose other manufacturers that offer a discount coupon. Compare products and evaluate the savings since prices may change over time.
Educate yourself on financial concepts: Financial education is another way to help you achieve financial wellness. The more you know, the more likely you are to make sound financial decisions for yourself.
Create a budget: Budgeting for expenses enables you to save and plan accordingly for each month’s payments versus not having enough money to pay your bills.
Have a fully-funded emergency fund: An emergency fund is best kept in a savings account and can help keep you afloat in a time of need without having to rely on credit cards or high-interest loans. A fully-funded emergency fund is six to twelve months of living expenses.
Regularly contribute to your retirement savings: Saving today can help you achieve financial wellness in retirement.
Invest: Investing your money has the potential for a higher return than having it in a savings account. The higher the rate of return, the more you will earn on your investment. Deciding to invest involves setting a goal, assessing your income, age, risk tolerance, and the time horizon until you liquidate your investment.
Meet with your financial professional: Your financial professional can help evaluate your financial situation and provide you with recommendations to help you achieve financial wellness.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
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