January is Financial Wellness Month, but what does “financial wellness” mean? If you think of health and wellness as a three-legged stool, mental and physical health would be two of the legs, with financial wellness as the third leg. Just as with mental and physical health, it’s important to take care of yourself in order to maintain financial wellness.
Here are five ways you can take action to improve your financial health:
- Expect the unexpected. Unexpected expenses come up all the time; being financially well means being able to cover those unexpected expenses as they arise. Ideally, an emergency fund can cover six months of your living expenses, but it may take some time to build up that level of savings.
- Align your spending and values. Think back over recent purchases and how they made you feel. The goal here is to reduce expenditures that cause you stress and focus on those that made you feel good. That way, your money is going where you want it to.
- Invest in your own financial education. Just like riding a bike or playing an instrument, financial wellness is a skill that takes practice to improve. Being informed not only makes it easier to make financial decisions, it also makes you more confident in your decisions. Taking the time to educate yourself pays dividends for the rest of your life.
- Set—and work toward—future goals. If you don’t know where you’re going, how will you know when you get there? Setting concrete financial goals gives you a target to strive for and helps you determine the steps you need to take to get there.
- Eliminate stress. Just as stress is bad for your physical and mental health, it’s also bad for your financial health. Whether it’s debt, a lack of savings, or some other financial issue causing stress, identifying the source of the stress and developing a plan to reduce it is vital to improving your financial wellness.
Financial wellness is just as important as physical and mental health and requires just as much effort to maintain. The above are just a few ways you can improve your financial wellness. If you have any questions about this or other tax and investment related topics, please let us know. We’d love to hear from you.