These financial wellness skills can help you focus on top-level goals for life and money success.
What is financial wellness? Financial wellness is about your health and wealth. It’s about the overall quality of the life you’re living. It’s not simply about the tactics but the overall strategy that improves your overall wellbeing. You can learn more in our comprehensive financial wellness guide.
Now, it’s important to set personal and financial goals when it comes to financial wellbeing. The more prepared you are to meet life’s challenges financially, the less stress you’ll feel. And living with less financial stress is my definition of success that supports a healthier, happier, and purpose-driven person. That’s you–achieving your financial goals and living your best life.
Continue reading for the best financial wellness skills to help you achieve financial success.
1. Have a vision
Take time to articulate a vision for life through a vision statement so your journey has a direction. A vision statement includes your hopes and dreams and your thoughts and feelings about the ideal lifestyle.
Start with the vision statement and create the goals that support the vision. Then, associate the financial aspects of those goals followed by an action plan. Start with the reason (the why) before setting goals, strategies, and tactics.
2. Focus on your health
Health is wealth. Financial stress impacts our health and can lead to exhaustion, depression, and anxiety. No amount of money will make you feel healthy if you’re physically and mentally ill. Do not deprioritize your health and wellbeing when you’re working on financial goals. You want to be able to enjoy the future you create.
Eat properly, get plenty of rest, exercise, and allow for downtime and play. Set annual and quarterly health screenings and budget accordingly for them. Are you feeling stressed about your finances? Learn coping techniques to help you manage your stress level.
3. Recognize what’s important in life
Money is a tool. Use it to achieve some fantastic things. But, understand money isn’t the goal in life. The goal is to live your dream lifestyle however you envision that life. We often confuse what’s essential in our lives by comparing ourselves to what others deem necessary. It’s the dreaded keeping up with the Joneses. It’s not simple either because money is emotional, not just numbers. Learn more about the Psychology of Spending and how it’s impacting your wellbeing.
As a goal, stop letting others influence your thinking and spending habits and stop getting into debt to impress people who don’t matter. Achieving financial independence is best experienced when spending your time on what matters to you–family, friends, or projects.
4. Grow your network
There’s a saying that your network is your net worth. Take time to grow your network. It will expand your support system, expose you to different thinking and ways of doing things, and offer new opportunities. Allocate time to develop your network of people who challenge you to become better.
At your job, consider joining interdepartmental projects and volunteering in company-wide events. Not only will this grow your connections, but it’ll also give you valuable experience to share when asking for a pay raise. Outside of work, think about groups that interest you. Check meetup.com for entrepreneurial meetups, outdoor activities, and theme-focused group discussions.
5. Learn a new skill
Learning a new skill can have a tremendous impact on your career and financial life. Don’t get stuck in a dead-end job where you can’t get ahead. Consider going back to school part-time or taking a course that gives you skills to qualify for a promotion and enjoy absolute career satisfaction. Learning a new skill can also serve as a backup plan if your position slowly becomes obsolete. It can open the door to a new field and better opportunities.
Gain new skills online through sites like Skillshare or the college-backed website Edx.org. At work, ask your manager or HR associate about workplace training sessions and certifications. Check your employee benefits for tuition reimbursement programs that can pay for classes at your local university.
We’re halfway through the financial wellness skills. Now, let’s focus on some money-specific tactics.
6. Pay yourself first
Make your future self a priority and always pay yourself first. With every payday, allocate a percentage of your income and automatically transfer it into your savings accounts. Start with a $500 rainy day fund for unexpected expenses—also, add to your emergency fund to cover periods of underemployment or unemployment. You’ll want at least six months to cover your basic living expenses.
Pay yourself first by setting a split deposit directly with your payroll department or set up auto-transfers when your paycheck hits your checking account.
7. Make money with money
Master the financial skill of making money with money. Start allocating some of your paychecks to activities that generate income. For instance, saving money into an account that earns interest allows your money to make money. And with compound interest, you’ll start earning interest on the interest you’ve earned. That’s how your money grows. Earn more with your savings using high-yield online savings accounts.
Investing is another way for your money to grow with a longer-term horizon. Investing helps your money grow when the value of the stock appreciates over time. You also benefit through compound growth when dividend reinvestment–profit sharing to stockholders used to buy more stock.
8. Manage debt and control credit
Debt is a ball and chain that traps you into working more hours to pay for items you’ve purchased in the past. Stuff that may not have any present-day value. Debt and credit management means reducing the cost of borrowing. You can manage debt by refinancing, consolidating, and eliminating it for a positive net worth impact.
Credit is a tool and, when used wisely, can help you leverage other people’s money to achieve your life goals. However, mindlessly using credit can lead to long-term debt and the financial stress of any financial obligation. Learn how credit works, improve your score, manage your debt, and track your spending to keep you from relying on credit.
9. Protect your income, assets, and loved ones
Financial wellness skills include protecting yourself from life’s events. As mentioned earlier, start with a rainy day and an emergency fund. Review your insurance coverage. That includes your health insurance, disability benefits, and group life insurance offered by your employer. And consider the following:
- First, think about term life insurance to protect your loved ones.
- Second, determine how to protect your stuff. Are there supplemental insurance plans you can have? Do you need renters insurance? Can you get a better auto insurance policy?
- Third, add or update your beneficiaries in your banking accounts, insurance policies, investments and brokerage accounts.
- Finally, gain peace of mind by having a healthcare directive, POA and a will that outlines your wishes in the event you become disabled, seriously hospitalized or upon death. Learn more about estate planning.
10. Invest in your retirement
Retirement will happen, whether it’s by choice, circumstance, or age. The federal government sets an age that became the generally accepted time people leave the workforce. But basically, retirement age means you’re eligible for federal benefits. Investing for retirement will help you retire well. Start investing for your retirement as soon as you start earning income. You’ll benefit from a longer time horizon than waiting until you’re 50 years old.
First, contribute to your employer’s 401(k) or retirement plan. Even though you cannot max out contributions yet, any contribution is better than none. Second, begin contributing the max allowed for Roth IRAs. Finally, consider investing through taxable brokerage accounts to grow additional assets.
Let these financial wellness skills guide you. Remember that each new day, week, month, or year is a fresh start to become a better, less financially stressed version of you.
Here’s a bonus financial wellness skill: Only use the best financial tools. Find the best money apps for your needs in the marketplace.