A new year is a natural time to take stock of your life and reflect on positive changes you can make. With a whole year ahead, anything seems possible. While dieting and quitting smoking are common resolutions, many people also resolve to spend less and save more. Paying attention to your pennies is a positive step but why not take a broader view and make this the year you achieve financial wellness.
What is financial wellness?
Financial wellness means understanding your financial situation, nurturing it and preparing for emergencies. With a study revealing that 92% of Americans are losing sleep over their finances¹, it’s clear that most people can benefit from improved financial wellness. These five resolutions will help put you on the path to a financially savvy future:
- Know what you’re dealing with – Spend some time getting to know your finances. How much debt do you have and what interest rates are you paying? What are your monthly expenses versus your income? Are you spending more than you make? Document everything and file it in one place. It may seem cumbersome but you cannot achieve financial wellness without a clear picture of your current situation.
- Create a household budget – Experts agree financial wellness is not possible without a budget. The key to successful household budgeting is realistic numbers and accurate information. Account for every daily, weekly and monthly expense and if you’re not sure, keep a spending diary for one month. There are many free online budgeting tools available to help you create a budget and track your success.
- Start an emergency savings fund – Unexpected costs like auto repairs and appliances that need to be replaced can put a dent in the best-laid plan and take you back to square one. An emergency savings fund – even if you can only deposit a small amount per month – will give you give you peace of mind and watching it grow will increase your financial confidence.
- Manage your debt – Whether you borrow to pay the bills or to enhance your lifestyle, it is difficult to feel financially savvy if you are worrying about rising interest payments. Make a plan to attack your debt, paying off debts with the highest interest rate first (e.g. credit cards). If you’re motivated by faster results, try paying individual debts one-at-a-time.
- Protect your family’s future – If you haven’t already done so, prepare a basic will and power of attorney. If your children hope to attend college, do you have a plan to fund it? If your loved ones would struggle without your income, it may be time to consider life insurance as an essential part of your financial plan. For more information on life insurance products, visit foresters.com. Spread these resolutions over 12 months to make it easier. Even if you only achieve one of them this year, it is a positive step towards a financially savvy future.