The tremendous weight of maintaining your financial health can seem less than pleasing at times but these 5 pillars of financial wellness can be a defining factor of your life success.
Managing Money
To successfully manage your money there are several factors that come into play:
- Budgeting: Setting a budget can assist in putting guardrails on your spending habits
- Spend tracking: Tracking your spending gives you full control over how loose you’re being with your wallet
- Paying off debt:Paying off debt gives you the financial freedom to afford the lifestyle you want
- Saving: Saving money includes the benefit of affording life purchases like homes, cars, and having children
Earn Money
There are several ways to sustainably earn money. However, the keyword is “sustainability”. Earning sporadically can be both counterproductive and inefficient. There are two main ways to earn money that will yield financial wellness:
- Passive Earning: Utilizing dividend or real estate income that you don’t have to physically log hours to earn.
- Active earning: More like a 9 to 5 where you perform a service to receive compensation.
Grow Your Money
Growing your funds is quite different than earning. Many do this through saving and investing. This leads to investing through retirement accounts (i.e. 401K’s, IRAs, etc.) or dividend stocks. There are many ways to grow your income but it’s important to remember these aspects:
- Be consistent
- Be intentional
- Be committed
Smart Borrowing
Borrowing is utilizing certain forms of finance, such as credit, and can benefit you in the long run when establishing credit and gaining financial history. To borrow effectively you need to avoid overspending while also building up a good payment history. This means:
- Only borrowing what you can afford
- Making payments prior to the due date
- Not opening too many lines of credit
- Not closing any outstanding lines of credit
Borrowing is also taking out loans such as auto loans or home loans to establish and build credit. Borrowing is a major responsibility, and you should give careful consideration to this decision, but they can yield exceptional rewards for your financial health if done properly.
Protect Your Money
Insurance is one major factor to consider when securing and protecting your assets. Insurance allows you peace of mind by paying a premium and receiving protection or possibly reimbursement for any potential financial losses. Some other ways to protect your funds include:
- Creating solid passwords for your financial accounts
- Only financing with FDIC accredited banking services
- Using your own personal computer with encryption for your financial management
Key Takeaways
Financial wellness doesn’t just happen, it’s a conscious effort that must be reinforced with smart decisions. These include:
- Having a solid budget in place
- Monitoring your money to prevent overspending
- Smart investments to help grow your funds
- Protecting your money through credible institutions and insurance
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