10 Steps to Financial Wellness – Twin Cities

References to financial wellness are everywhere, from workplace retirement plans to self-help books to personal finance media. It’s a hot topic as people look beyond retirement to consider a range of financial health issues, from mental health and work-life balance to emergency funds and cash management.

What exactly is financial wellness and how can we achieve it? It defines it as a state in which people are able to live independently, feel secure about their financial future, and are able to make choices that allow them to enjoy life.”

Broadly speaking, the quest for financial health begins with setting specific financial goals. The goal should be achievable and may include one or more of the following 10 steps.

1. Improve financial literacy. Read blogs and books about finance, sign up for educational seminars and webinars. Your local public library can be an excellent resource. Much of the content written these days is aimed at specific audiences such as millennials and Gen X, but much of it is more general in nature. Listen to podcasts. We offer a wealth of resources on our website, wellenhancement.com, on the Insights page.

2. Create a statement of net worth. On a piece of paper, write down all the assets you own (e.g. homes, stocks, bonds, cash, personal possessions) and everything you owe from that number (e.g. unpaid mortgages, lines of credit). , car or college loans). Such). This gives you a complete picture of your household’s net worth, making it a very useful financial planning tool. Be sure to do it every year to see if your net worth is increasing or decreasing.

3. Track your spending. Before you set your budget, you should be clear about how you will spend your money each month. Use a notebook or money-tracking app to track your daily expenses, breaking them down into both “must haves” and “goods”. Banks and brokerage firms often have apps that capture all the different threads of spending to help you set your monthly budget.

4. Reduce unnecessary spending. If you’re not getting the most value out of the products and services you buy every week, it might be time to cut back on exotic coffee, video streaming services, or cable services. Don’t! Balance is key. So that you don’t feel regret or guilt when you want to splurge on something you really love.

5. Increase contributions to retirement savings. Consider increasing your contribution with each year you get a raise. Or at least increase the amount enough to qualify for matching with an employer. Tax law allows you to make catch-up contributions to your 401(k) or IRA after age 50. road. We recommend that you speak with your financial advisor to see how increasing your savings might apply to your personal situation.

6. Pay your bill. Pay off loans, credit cards, and other debt (especially high-interest debt) to reduce what you owe. It may sound nagging, but you shouldn’t take on more debt than you can comfortably handle. Avoid carrying credit card balances with you, if possible.

7. Set up or add emergency funds. Save at least six months of living expenses, especially if your job is not stable, or your family is at risk of disability, or you need an unexpected car or home repair. No funding is required. Start small and build up over time. And keep this emergency fund in relatively safe and liquid funds. Any excess Emergency Savings can be transferred to a ‘Long Term’ Investment Account at any time.

8. Check your credit report or score. Your rating affects your ability to qualify for credit and the terms of that credit, so it’s important to check your score regularly, even if you always pay your bills on time. Additionally, with the number of identity theft and credit card fraud cases skyrocketing, we can’t afford to be too cautious. If you find an error, please contact the rating agency to dispute the problem. (You can check your credit score for free once a year through major rating agencies. Visit AnnualCreditReport.com or call 1-877-322-8228.)

9. Review asset allocation. At least once a year, talk with your advisor to determine if your quotas are aligned with your goals. Be honest with your expectations, especially when inflation is high and markets are volatile. Even if you manage your own money, you should do a self-assessment of whether your allocations (and risk his budget) are appropriate.

10. Work with your financial advisor. This is especially true if you own many assets and income streams, have children with special needs, or have complex tax situations. Having an advisor in your corner can be a big help in these situations. Having someone to help you is invaluable.

This list may seem daunting, but you don’t have to do it all at once. Pick one or two financial wellness goals and work at your own pace. You will soon feel confident in your ability to achieve the financial success you have always wanted.