By: Nicole Del Percio
Financial Wellness is self-care. American Psychological Association’s latest Stress in America survey found that 72 percent of Americans reported feeling stressed about money at least some time in the prior month. Stress can negatively affect mental and physical well-being. How can you spend less time worried about your finances?
Make a budget with your needs and your wants
Look at your spending and know where your money is going. Tracking your spending teaches you to take control of your money — and not have it control you! We often avoid doing just this due to the painfulness we may feel while working through this process. A review of your spending is a very valuable tool to gaining confidence in knowing what you can afford and help you to meet your goals.
Spending in perspective: How long does it take to earn this money? Is this item worth that time?
Look at your money as a tool in setting priorities for your spending and savings.
Automate your finances
When you automate your finances, you are setting up your bill payments and savings accounts to be paid every month automatically; you’re basically putting your money on autopilot.You still need to review your finances, but this is a great way to take control of your money.
You can also automate your contributions to your savings and investment accounts. If your employer offers direct deposit, your income is automatically deposited into your account, and you can set up direct deposit to your savings and investment accounts via your employer. This makes automating your finances much easier. This way you are paying yourself first, this is an essential habit to build because you are putting your financial goals first.
Build an emergency fund
Creating a financial buffer to pay for emergencies such as a broken-down car, home repairs, or an unexpected job loss can ease your mind in a time of crisis. Bulking up your emergency fund or a peace of mind account is one of the best money moves you can make.
The right amount for you depends on your financial circumstances, but a good rule of thumb is to have enough to cover three to six months’ worth of living expenses. You should keep these funds in an easy to access high yield savings account. Your account should be separate from the bank account you use daily, so you’re not tempted to dip into your reserves.
Grow money by investing
To grow your money and build wealth, you need to start investing. Saving money is important in building a healthier financial future. However, your savings are eroded each day by inflation. Although your savings account might have the same balance ten years from now, that money will not have the same purchasing power that it has today.
“The average stock market return is about 10% per year for nearly the last century.” (“James Royal Ph D., Arielle O’Shea”). Those returns can grow your savings dramatically over time. Instead of trading your time for money in order to build wealth, you can have your money work for you with the power of compound interest.
Tracking your progress throughout this journey will help you see the big picture and allow you to celebrate your successes. When you reduce your financial concerns, you can focus on other important areas of your life and relax, knowing you have a plan.