Let’s face it, the way we approach finances has changed drastically in the last century or so. Where people only used to buy new clothing for very special occasions, we are now subjected to an avalanche of ads and the ability to buy anything at any time – on credit to boot.
Fast fashion didn’t exist, gadgets weren’t around, and there wasn’t as much pressure to have the perfect home on display all over your social media.
In short: financial wellbeing was easier to attain in many ways and used to be a priority around basic living rather than today’s so-called luxuries. But in the wake of the pandemic and global unrest, financial wellbeing is slowly creeping to the forefront of peoples’ minds once more. So what is it, and how can you go about improving yours (without sacrificing the things you enjoy too much)? Follow on for Financial Wellbeing: What is it and How Can You Improve Yours?
What is Financial Wellbeing?
In short, financial wellbeing is making the most of the money you have. This includes sticking to a budget for your basic items such as groceries and bills and setting aside enough to safeguard against emergencies, as well as planning for old age. Finance personality Dave Ramsey suggests giving every single dollar a job, so that nothing is left over. As scary as this may sound, what he means is setting aside a percentage for everything you need, including money for fun activities.
What Causes Poor Financial Wellbeing?
Take a look at your current spending habits and identify your problems. Getting behind the psychology of your spending is the first step towards financial wellbeing. Anxiety and stress can be great contributors to bad habits (and not just when it comes to your finances). As a result of the pandemic, statistics show that people are now spending 18% more than they had been just two years earlier.
When times are tough, people have a tendency to make quick purchases to cheer themselves up rather than think about longer-term improvements. Poor short-term decisions can be detrimental to your long-term financial wellbeing.
How Can You Improve Your Financial Wellbeing?
Start by listing all of your incoming funds and assets, as well as everything outgoing. If you have a lot of random smaller bills and things like app and post subscriptions this may take a while, but it’s worth it. Organize all your outgoings into red (vital), yellow, and green (just for fun) categories, and eradicate anything you don’t need or want.
Once this is done, make a budget that allows you to save regularly for emergencies, your pension, any children, as well as anything ‘fun’ you’d additionally like to put aside cash for (such as those extra clothes and gadgets we mentioned above.)
One great rule to apply once you’ve finished paying off any debt is the 50/30/20 plan, where you use 50% of your budget for essentials, 30% for fun stuff, and 20% for your savings.
Whatever You Choose, Stick With It
The key to financial wellbeing isn’t very different from, for example, a fitness goal: you need to make a plan and stick with it in the long term to see results. It’s worth it though.
Remember that you can’t enjoy wealth without health, so always ensure you get at least 30-60 minutes of solid exercise in daily! You can get an incredible daily workout in with squats in conjunction with simple breathing techniques and you’ll be set for your best possible day!