Money can affect nearly every part of your life, including your stress levels and health. When your finances are stable, it can give you peace of mind. When they aren't, every financial decision you make can feel overwhelming.
Improving your financial wellness can help you feel more secure and prepared for the future. With the right tools and resources, like those offered by Fibre Federal Credit Union, you can develop healthy money habits to reach your goals. This financial wellness guide will walk you through the steps to take control of your money.
WHAT IS FINANCIAL WELLNESS?
Financial wellness is about more than the balance in your checking and savings accounts. It’s also about how confident and secure you feel about your money. According to the Consumer Financial Protection Bureau (CFPB), financial wellness is defined as:
“… a condition 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.”
Making good financial decisions over time can greatly influence your overall quality of life. By strengthening your financial stability, you can also improve other areas of your life.
WHY IS FINANCIAL WELLNESS IMPORTANT?
No matter how much you improve your health, work, or relationships, you can still face challenges if your financial situation causes stress and uncertainty. Studies confirm that money worries can significantly impact your quality of life.
In 2018, the wellness site Everyday Health surveyed more than 6,700 Americans and found that financial worries were the top source of stress across all ages. A separate study by PwC involving 3,000 workers from various industries uncovered a direct connection between financial concerns and serious health effects. The research showed that personal finance issues directly led to a variety of health issues:
34% of respondents reported a “major to severe” impact on their mental health
33% reported a similar impact on their ability to sleep
23% reported a direct impact on their physical health
Financial health is often described as a subjective “feeling” or peace of mind. But financial stress can also affect your physical health. That’s why it’s essential to your well-being.
HOW TO IMPROVE FINANCIAL WELLNESS
According to the CFPB, financial well-being is made up of four parts:
Having control over day-to-day and month-to-month finances
The ability to handle unexpected financial setbacks
Making steady progress toward your financial goals
Having the financial freedom to make the choices that let you enjoy life
Financial wellness is both the sense of security you have today and the freedom to make choices for the future. The elements of financial wellness can be summed up as follows:
| Present | Future | |
|---|---|---|
| Security | Control over daily and monthly finances | Preparation to handle financial setbacks |
| Freedom of Choice | Freedom to enjoy life today | Progress toward long-term goals |
TIPS FOR FINANCIAL WELLNESS PLANNING
Successful financial wellness starts with creating a clear financial plan. That means setting goals, creating a budget, managing financial risk, and planning for the future.
Here's how you can get started:
Identify Your Goals
Start by identifying what you want to achieve. Take time to reflect on where you are now and where you want to go. Do you want a home for your family, freedom from debt, money in your account, or the ability to enjoy life today?
Honestly assess your current financial situation by reviewing your account statements. Then, set financial goals to help you get where you want to be. Short-term goals that can be achieved in less than a year help you stay motivated, while long-term goals help you work toward financial security.
Take Charge of Your Finances
A budget can help you track your progress toward your goals. Start by reviewing your income and expenses to see how much money you have coming in and where it’s going each month. Then, create a budget to control your spending and save for emergencies.
The 50/30/20 rule is a popular budget because it’s simple to create and use:
- 50% of your income goes to your needs: mortgage or rent, utilities, healthcare, groceries, transportation, and childcare.
- 30% of your income goes to your wants: dining out, entertainment, and discretionary spending.
- The remaining 20% goes to savings or debt: retirement and college funds, student loans, or credit card balances.
Carrying debt limits your ability to save, invest, and achieve financial security. Work on paying down debt, if you can. Start with high-interest accounts like credit cards. A personal loan can also be used to consolidate debt.
Finally, monitor your credit regularly. Paying bills on time and keeping credit card balances low can raise your credit score over time. A strong score makes it easier to qualify for loans, get better interest rates, or even rent an apartment.
Manage Financial Risk
Personal finance experts recommend keeping 3-6 months of living expenses in an emergency fund to cover unexpected bills, like car repairs or medical bills. If you don’t have an emergency fund, a sudden expense could derail your budget and create unnecessary stress.
Also, make sure you have sufficient insurance coverage. Insurance provides a critical safety net that protects your savings and helps you avoid debt when something unexpected happens. Make sure all of your assets are covered, including your health and your life.
Plan for the Future
The future may feel far away, but the sooner you start saving, the better prepared you will be.
Here’s how you can start preparing:
- Start saving: The sooner you start saving, the more time you will have to grow your money through compound interest. Start with a small goal, like saving $500 for emergencies, then steadily raise your goals over time.
- Plan for retirement: Saving in an Individual or Roth IRA helps to ensure you have sufficient resources in retirement. Does your employer offer a match for your 401(k)? Employer matches are free money that can help you reach your retirement goals.
- Prepare for college: Set aside money in a 529 college savings plan. Also, be sure to explore scholarships, grants, and employer tuition assistance programs that can significantly reduce the amount you'll need to save or borrow.
- Invest wisely: Investing is how you make your money work for you. Stocks, bonds, mutual funds, or ETFs may offer higher returns than interest earned in a savings account. Be sure to speak with a financial advisor to create a customized investment strategy.
YOUR FINANCIAL WELLNESS CHECKLIST
Ready to start building your financial wellness? Here are six steps to get started:
- Create a monthly budget and commit to following it. Track your spending and make adjustments as needed.
- Build an emergency fund so unexpected expenses don’t derail your budget, drain your savings, or push you into debt.
- Pay off your credit cards, if possible. High-interest debt can prevent you from building wealth. If you can't pay it off, consider consolidating into a lower-interest loan.
- Automate your savings to ensure your money continues to grow when you’re busy. Consider setting up automatic monthly transfers from your checking to savings.
- Invest early to take full advantage of compound interest over time. Consider various accounts, like retirement accounts, share certificates, or money market accounts, to diversify and maximize your savings potential.
- Build a strong credit score to make it easier to qualify for mortgage loans, car loans, and other opportunities. Start with small purchases that you need to make anyway, such as gas, groceries, and other essentials, and always pay your bills on time.
- Grow your financial knowledge to make smarter money decisions. Take advantage of free resources offered by your credit union and work with a financial advisor to create a personalized plan.
- Stay consistent to reach your goals, and keep looking for ways to improve. Refine your budget, lower your risks, boost your savings, or explore new investments to keep moving forward.
FINANCIAL WELLNESS PROGRAMS & SUPPORT
Working toward financial wellness can feel challenging, but you don't have to do it alone. Organizations like the CFPB and the American Savings Education Council offer free programs and resources to help you take control of your finances.
At Fibre Federal, we understand the importance of financial wellness. That's why we provide members with access to financial education and counseling resources to support their goals.
Here’s what we offer:
Zogo: Get Paid to Get Financially Smart
Zogo is an interactive financial literacy app that makes learning fun and profitable. It turns financial education into an engaging experience. 22 topics are covered, from opening your first account to planning for retirement.
The games may be fun, but the rewards are real. You’ll gain practical skills to build financial security. And you’ll earn gift cards to your favorite retailers by completing quizzes and joining daily trivia challenges.
Getting started is easy:
- Download the app to your device
- Sign up using the sponsor access code “FIBRE”
- Choose a reward goal and build your profile
Once you’re set up, you can start learning, earning, and having fun right away!
Greenpath Financial Wellness Counseling
Fibre Federal partners with GreenPath Financial Wellness to offer free financial counseling services to our members. Greenpath helps you develop a plan to:
- Pay down debt faster
- Improve your credit score
- Make smart housing decisions
GreenPath also offers access to free online resources, including webinars, online financial courses, downloadable worksheets and guides, and a debt calculator. Fibre Federal members can reach out to GreenPath directly for free, confidential support.
PARTNERING WITH YOU FOR FINANCIAL WELLNESS
At Fibre Federal, your financial wellness is at the heart of everything we do. It isn’t just about numbers on a budget or statement. It's about having peace of mind and being prepared for the future. Financial wellness is something you can build by creating a plan and setting goals so you can reduce stress and open the door to new opportunities for yourself and your family.
Financial wellness is a journey, and we are with you every step of the way. If you’d like to learn more or explore your options, contact us today. Our team is ready to help you build a stronger financial future.
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