Why You Must Understand Financial Wellness

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“Today, be thankful for how rich you are. Your family is priceless. Your time is gold. Your health is wealth.”

“Stay alert, stay alive” is every soldier's modus operandi. Today, this applies to everything else we do too: Business, Parenting, Economics, Health, Wellness, Nutrition, Relationships, Finances. They're all connected in one way or another.

Budgeting

You have to know which cash flows are coming in and when they’re going out. Budgeting is telling your money where to go instead of questioning where it all went. This is not supposed to feel like a chore for most people, it’s a way of life. When you can make this simple, easy, and fun, especially teaching your children, spouse, partner or others, you’ve mastered it.

Emergency Savings

Depending on which data you look at, roughly 70% — 74% of Americans live paycheck to paycheck. Simply put, that number is too high. With no margin or cushion, every unplanned expense could potentially turn into a crisis for some people. If you have emergency savings built for example of $1,000, you may feel more secure financially in the event of something unfortunate happening.

Debt Removal (Short-term focus)

It’s no wonder that people in America are strapped with a ball and chain of debt. We live in a debt-fueled economy and some of that is worse debt than the other. When you include mortgages, car loans, student loans, credit card debt, and many other forms, between 24% — 25% of take-home pay goes towards paying off consumer's debt. Imagine freeing up that money and those funds. Where would you put it? What would you do? Think about how much more you could invest in yourself, a business, a home, or even saving for retirement.

Retirement Planning (Long-term focus)

Most individuals in America don’t save for retirement until it’s too late. At that point, there’s not enough money or income to live off of anyways. So what do you do? Simply put, we consume too much in America and we don’t save or invest nearly enough. You have to inspire yourself and others to change their paradigm and focus on changing their habits to saving and investing at least 10% — 15% of their take-home pay. Set it in an account, a business, or a real estate property and forget about it for a long time. You’ll be amazed at what compound interest does.

  • Save for future purchases. Get yourself into a habit of saving. I can certainly get better at this. Start small by taking advantage of any automated savings or investments that do exist. Then build your habit, checking in as you get closer to your goal.
  • Only borrow what you can afford. Don’t deny yourself, but avoid spending on unnecessary purchases or to keep up with the Joneses. When you choose to spend now you may miss out on future long-term purchases. Remember, every dollar borrowed today is a dollar less to spend tomorrow. Don’t get caught up or trapped in credit card debt.
  • Grow your money. Work with a financial advisor (fiduciary or CFP) or tax planner (CPA) to structure investments so you can gain tax advantages. Contribute as much as you can to employer-sponsored retirement plans, especially if your employer makes matching contributions. Who doesn’t love free money? If you don’t have a 401(k), then consider opening and funding an IRA or Roth IRA.
  • Boost your earning capacity. Even as your earnings increase, try to live below your means and always add to your investments. Allowing your interest-earning accounts to grow will help you offset any downturns or emergency expenses.
  • Preserve what you do have. Rule #1 don’t lose money. Rule #2 remember rule #1. This applies to not only life insurance for yourself and your family, your property and income, but also to your investments. The preservation of capital and wealth is imperative.

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Philadelphia based teaching financial literacy | Prospering all other hours | Writer | Lifter | Reader | Traveler | Freedom & Wellness

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