What Is Financial Wellness?

Mental Health

3 Min Read

A piggy bank with a stethoscope, symbolizing financial wellness.

63% of Americans say they live paycheck to paycheck. When you combine this statistic with rising housing costs, changing work environments, systemic and historical money issues, and the detrimental impact of the Covid-19 Pandemic, you may conclude that financial wellness is a pipe dream to most people.

As bleak as the prospects may seem, it is possible to obtain financial wellness in the same way you achieve health wellness by developing and embracing a sound plan. In this article, you will learn what financial wellness is, how to define it, and how to begin achieving it.

What Is Financial Wellness?

Have you ever had to sell your a prized possession to pay the utility bill or fix your car? If so, you know the strain of coming up with an ad-hoc solution to a challenging money problem. Financial wellness is a state of being that marginalizes these types of financial challenges. For the most part, it defines your relationship with your finances and your ability to create a balance between obligations and enjoying life. And it's becoming more and more when talked about in terms of financial stress and mental health.

What Does Financial Wellness Look and Feel Like?

You know you are in a state of financial wellness when you sleep well at night without worrying about your current financial condition or your prospects for the future. It gives you the confidence of knowing that you can handle most emergencies without turning to that rich aunt or uncle.

When you have financial wellness and less financial stress, you don’t feel guilty about taking a vacation or throwing a particular party for a loved one. Some good financial wellness examples are:

• Being in control of your weekly and monthly obligations

• Ability to absorb the impact of unexpected expenses

• Producing solid investment returns

• Having a successful financial strategy

• Staying on pace with your retirement goals

Top Tips to Achieving Financial Wellness

To improve your financial wellness, you need to mobilize your money managing activities toward financial independence and security. To help you get started, we have put together some good tips for reaching financial wellness.

Create a Budget

Keeping track of your money activities is essential to achieving financial wellness. For this purpose, a budget serves as command central for planning and recording all of your monthly spending activities. Mobile apps and computer software can help automate your budget by letting you set monthly spending limits and record your actual spending results.

For example, based on a $6,320-a-month income, a monthly budget ledger for variable expenses could look like this:

• Utilities: Budgeted Amount/$200, Amount Spent/$184, Difference/$16

• Groceries: Budgeted Amount/$650, Amount Spent/$748, Difference/-$98

• Entertainment: Budgeted Amount/$550, Amount Spent/$435, Difference/$115

• Transportation: Budgeted  Amount/ $415, Amount Spent/$356, Difference/$59

• Category Net Totals: Utilities/$16, Groceries/-$98, Entertainment/$115, Transportation/$59

• Net Total: $92

This sample budget summary of variable expenses shows that you spent $92 under your budget. As a result, you have $92 to put in your emergency fund, retirement plan, debt reduction plan, or other allocation.

Use Prioritization to Reduce Your Expenses

After you make a list of your monthly expenditures, assign a number to each expense ranging from one to five, with the number one being the highest priority. Then, take a good hard look at the 4’s and 5’s to see which ones are expendable. For example, you may have a gym membership that you seldom use. Working out at home or in the park may eliminate close to $50 a month in gym membership dues.

Using Cash to Stay on Budget

Paying for certain expenses in cash is a helpful method for staying on budget. When the cash box is empty, you’ll know your monthly allotment is gone. This method works well in a spending category that gives you the most trouble. You may decide to try it on your most challenging spending category, like entertainment. At the beginning of the month, stack a special drawer with your monthly entertainment cash allowance. Few things beat the physical effect of seeing how much you saved at the end of the month.

Another maybe more modern solution is to use an app like Monorail where you can create a separate savings track for different budget categories. Or, add the entertainment you want to your Monorail Wishlist so you’re more likely to not overspend.

Bring in More Money

Even in good times, extra revenue streams can help you gain more freedom from the paycheck to paycheck syndrome. Today’s technology has provided some exciting opportunities to add to your monthly income. In addition to side hustle jobs like driving for Uber or Lyft, you can:

• Sell second-hand items on eBay, Craigslist.com, and Facebook Marketplace

• Tutor online on sites such as Tutor.com, TutorMe.com, and Studypool.com

• Rent out a portion of your home through Airbnb

• Advertise on your car with the app Wrapify

And we realize that many people, such as yourself, may already be working multiple jobs to pay the bills. This is in no way to say that bringing in more money is this simple. There are many other factors that can cause someone to live paycheck to paycheck. We would recommend focusing on the other tips provided here to help you continue making the most of the money you have.

Financial Wellness Is Possible

Current events, market conditions, and personal financial struggles can work to keep you in a paycheck-to-paycheck existence. However, it is possible to change your storyline as you develop and follow your plans to achieve financial wellness and create a money mindset. It won’t happen overnight, but nevertheless, your day-to-day commitment to your financial wellness will gradually yield the gains required for creating financial balance in your life.

Along with following a sound financial plan, it is vital to be financially literate; to learn as much as you can about managing and increasing your wealth. You can start by using Monorail, a leading source of financial information and a powerful savings tool for all your wants and dreams.

See how Monorail can help you boost your financial wellness.

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