Financial Wellbeing: what does it mean and how can you get it?
Having money is one thing, how to manage it is another. When seeking the goal of financial wellbeing, you should have three ducks in a row: attitude; knowledge; and a consistent approach. Financial wellbeing is the state of being in control of your financial situation, feeling secure about your finances, and having the means to make choices that allow you to enjoy life. It goes beyond just having money – it’s about how effectively you manage your finances to support your current and future needs, as well as your overall sense of peace and satisfaction regarding money.
The way you begin your relationship with money early in your life can colour the way you feel about money and your management style throughout your life. Financial wellbeing is as much about your emotional approach as it is related to the amount of money you are dealing with, or the goals you have in mind. To be comfortable with money is firstly a mindset – and a key to that mindset is control. If you are in control, you can actually change gears by taking the right decisions with regard to your saving and spending habits.
Key values in building financial wellbeing
- You actively save for the future, keeping major events and specifically retirement in mind.
- You aim to cover commitments and expenses without having to borrow money.
- You have savings or resources to handle unexpected expenses or emergencies.
- You understand that money can bring either joy or strife with equal power – but that you have the map to choose your route to wellbeing.
How to take control of your financial wellbeing
- You begin by tracking your income and expenses to see where your money is going. This gives you opportunity to cut out unnecessary spending. Set realistic spending limits for categories like food, housing, and entertainment, always keeping what is necessary in mind, while allowing room for occasional splurges; remember control of your money should not be an unpleasant process, because this defeats the purpose.
- Most financial advisors will advise keeping around 3 – 6 months of living expenses in a separate, easily accessible account.
- Debt is sometimes impossible to avoid entirely – but it can become the elephant in the room. Never let debt grow to the point where it controls your life instead of the other way around. Always have a plan for debt repayment, and to ultimately exclude it from your accounts.
- It may be difficult to set long-term goals when you are starting out, but with the help of professional advisors you can get the ball rolling by working on steps to work towards them incrementally, such as buying a home or funding education.
- Staying informed – and making a habit of this – is one of the key tactics to maintaining financial wellbeing. Read books, attend workshops, or listen to podcasts on personal finance, and stay informed about financial trends and tools.
The financial mindset
Throughout all these positive and sensible practices, you must work on cultivating a positive attitude toward money, avoiding unnecessary stress or guilt, building a sense of achievement as your financial situation grows and succeeds. Intricately tied in with your mindset is your investment plan. And nothing helps you more at this point than your trusted financial advisor or organisation. Ask questions, consider options, and be prepared to take wise advice.
- Learn about basic investment options, such as stocks, bonds, or mutual funds – and always diversify your investments to minimise risk.
- Make sure you have the best insurance options to safeguard against losses and ill health; insurance can play a vital role in financial wellbeing.
- Create income streams through dividends, interest, or rents.
- Risk tolerance is keenly influential with regard to financial wellbeing. Make sure you understand yours, and work with your advisor for both value and security.
- And with that in mind, review your portfolio at least once a year to ensure it aligns with your goals and risk tolerance.
- Financial wellbeing through Investing is a long-term game. Ignore short-term market noise and stay committed to your plan built on four fundamentals: start early; start small; do research; keep consistent.
Empfin Solutions – the team that keeps your team happy
We’re an Old Mutual franchise with our primary focus on the three main areas of concern in everybody’s financial planning:
- Your Company Benefits – advising on, and servicing umbrella pension and provident funds.
- Your Personal Financial Planning and Provision – Estate planning, Wealth Creation and Retirement Planning.
- Your Assets – motor and household insurance.
Always striving to be a trusted partner in facilitating financial solutions for organisations and individuals, our dedicated team of fully accredited, experienced professionals have a passion for satisfying customer needs and providing a truly client-centric service.
Find out how you can benefit at: www.empfinsolutions.co.za
###
