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January Is National Financial Wellness Month

January Is National Financial Wellness Month

January is Financial Wellness Month making it a great time to connect with your financial professional to discuss your situation, aspirations for their future, and see if your financial strategy needs any adjustments or changes based on your specific circumstances.

Defining Financial Wellness

Let us start by asking what “financial wellness” mean to you? The answer may vary drastically from person to person. It is informed by who you are, where you are coming from, and what your experiences are with money. A person who has had serious financial troubles in their life might have different expectations from a person who has enjoyed relative financial stability.1,2

To begin to define financial wellness ask yourself what you need to feel secure, financially speaking. Here are some questions to consider as you explore this topic:

  • How much should you have saved? 
  • How much income should you be bringing in each month? Is this enough? Are there ways to increase this amount?
  • Do you have debt? What is the source of the debt (mortgage, car, credit card, student loan, medical, etc.)?  (As a reminder, we do not consider ALL debt to be bad.) 
  • Would things be simpler if you carried less debt? 
  • Do you have a plan for paying down your debt? Are funds or a plan in place for everyday discretionary expenses that are not urgent (taking your family out to dinner or on a small trip) versus larger financial goals (such as buying a new kitchen appliance)?
  • What if the refrigerator died tomorrow, would you have the cash to purchase a new one?
  • Finally, and perhaps most importantly, are you on track to meet your financial goals be they retirement, travel, giving to charity, or putting your child through college with minimal debt?

Financial Wellness Goals

Thinking about financial wellness is often a matter of setting goals for what you can accomplish now and what you can work on to make it a part of your larger financial strategy. For now, consider taking these actions:3

  • Have a values-based conversation with the decision-makers in your household, meaning any tax-paying adult who contributes income and shares responsibility for the bills. This could be your spouse or a family member. Make sure that the non-essential things you are spending money on line up with your commitments to meet your financial needs. This is not a “stop getting lattes” conversation; it is a “are we spending money on the things that matter?” conversation.
  • Consider automating payments, especially towards regular items, including student loans, credit cards and other installment payments.
  • Create an emergency fund reflecting 10% of your income before income taxes to build a cushion for when emergency expenses arise.  If that seems too ambitious, build the fund a month at a time until you reach your goal.
  • Make regular contributions to your retirement accounts. Take advantage of any matching contributions you might get from your employer. 
  • Make long-term financial goals. If you are thinking in terms of buying a house, for instance, let that guide your overall financial strategy. 

These are, of course, not hard and fast rules. As mentioned above, every individual has their own specific definition of financial wellness and set of circumstances which impacts their ability to meet their goals. Some of these examples might feel like a long reach. Others, you might already be practicing. The good news is there are ways to improve our financial wellness over time

Curious how we support our client’s financial wellness as their lives change? Our New Client Experience outlines the topics we address early in our relationship with clients.

  1. https://www.forbes.com/sites/riankadorsainvil/2020/04/21/steps-to-financial-wellness-during-financial-literacy-month/?sh=32a176133346
  2. https://www.cnbc.com/2021/01/21/12-month-roadmap-to-financial-wellness.html
  3. https://www.moneymanagement.org/credit-counseling/resources/financial-literacy-month

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.