Finance

How to achieve financial wellness in 7 easy steps

- November 19, 2020 3 MIN READ
financial-wellness

Just as crash diets and getting fit by going to gym once a month does not work, setting aside some money every month without a plan, typically won’t get you to where you need to be financially (or maybe, but not in an ideal timeframe). Having disciplined goals, no matter what the discipline may be, is critical for long-term financial wellness writes Dean Perlman MD of Charter Finance.

7 habits for financial wellness

  1. Understand where your money goes

Most people are aware of their ‘big ticket’ expenses, but are unaware of how the smaller daily costs add up significantly over the month.

You should have an understanding of what you spend money on, and where you get your income from.

There are some good budgeting apps in the market which link your bank accounts and credit cards. This monitors the inflows and outflows and summarises your net position (as well as allows you to set budgeting goals).

You will be surprised to see just how much gets spent on the ‘small’ items – which will then help you cut back on some unnecessary spending.

  1. Review your spending plan

It is mission critical that you have more cash coming in, than you do have going out. You have to be squarely focussed on strengthening your savings and reducing your expenses.

Particularly in this covid world where we cannot travel and discretionary spending is generally down, now is a perfect time to review your budget to confirm that you are living within your means and saving enough money to achieve your long-term goals.

After you have a map of your overhead costs (rent, bills, insurance), you can see how much you have left for saving and spending. The more you’re aware of where your money is coming from and where it’s going, the better your overall financial wellness will be.

  1. Protect and potentially freeze your credit

Avoid credit cards like the plague if you do not have control of your finances. They are great for ease of use (and frequent flyer points), but not great when you get charged the usurious interest rates if you don’t pay your monthly account in full.

  1. Have multiple savings (offset) accounts

This is a great way of budgeting. As long as you are not being charged by your lender for these extra accounts (or don’t lose out on interest if accounts are split), this can be very useful. We recommend having accounts for:

  • Tax (particularly if self-employed)
  • Every day expenses
  • Holidays
  • Emergency Funds
  1. Allow yourself the occasional splurge

Just as having super strict diets is difficult to maintain longer term, the same goes for saving. You need to understand your personality and your relationship with money before setting yourself a goal. If you do like splurging, don’t set unrealistic goals of not buying any items if you know you won’t stick to it.

  1. Understand the use of Debt

Debt is often viewed negatively, yet with interest rates as low as they are, it can be an effective tool to grow your wealth, if the funds are being invested wisely.

  1. Ask for Advice

There are numerous employers that have teamed up with businesses like Charter Finance to help their employees get on top of their goals and finances. Reach out to them if this is the case or get in touch with a recommended credit adviser/mortgage broker and ensure that the one you chose does not just recommend a loan, but reviews your long term goals and objectives.

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