Financial Wellness - What It Is And How to Attain It
Financial Wellness - What it is and How to Attain It
Financial wellness (or well-being) is a popular topic these days. The economic and financial uncertainty of recent years has placed more focus on the necessity to gain control over our financial security and offers us peace of mind when we achieve our financial goals.
So what is financial wellness?
Financial wellness is a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.
What are the four key elements of financial well-being?
- Having a good relationship with money and a positive mindset
- Having clear plans to achieve your goals
- Regaining control of your day-to-day finances
- Having the ability to withstand financial shock
6 Tips to Keep Your Financial Health In Check
Your Financial Wellness Checklist
- Maintain a Household Budget - Establish a household budget and stick to the 50/30/20 rule: 50 percent of your income for needs (mortgage/rent, food, clothing, and so on), 30 percent of your income for wants (travel, entertainment, dining out), and 20 percent of your income for savings and paying down debt.
- Monitor Your Credit Score - Your credit score is the metric used to determine your creditworthiness. It can range between 300 to 850 and is based on your credit history. It monitors how much credit and debt you carry, and whether you pay your bills on time. Maintaining a 670 or higher matters and impacts even the insurance rate you're going to pay on auto, home, or renters insurance.
- Watch your DTI Ratio - Financial health is monitored by your debt-to-income ratio (DTI). It’s the amount of monthly debt payments you owe (student loans, car loans, credit card debt) divided by your gross monthly income. If your debt becomes more than your income, it will make it harder to borrow money or even offer a mortgage.
- Keep an Emergency Fund - An emergency fund is a necessity. Experts recommend having 3-6 months of living expenses set aside for emergencies. However, be certain to strike a balance between saving for emergencies and investing for money growth; while still having access to it in case you need it.
- Save for Retirement - Only 37% of retirees in the United States say they have no retirement savings. It’s why you must figure retirement savings into your financial wellness plan. Start planning as early as possible, and reassess your retirement plan periodically.
- Assess Your Insurance - Consider what types of insurance you may need to offer peace of mind, and speak with a Covered Insurance Advisor on how you not only prepare for the future with life insurance or long-term care insurance but also review what you are paying now and find eligible discounts to apply and ensure money spent on insurance may make more sense going back into your savings or for paying off debt.
Get Started Adding an Insurance Assessment to Your Financial Wellness Plan
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