The Basics of Financial Wellness
We all want more stable finances. We all want what is now being referred to as “Financial Wellness.”
That’s obvious. But what is the reality?
Fifty percent of Americans have less than one month’s income saved for a rainy day. Top personal finance advisors will tell you – and especially drawing from lessons in the economic crisis — to have at least six months of income saved, just in case.
Fifty-six percent of people have no idea their credit score is the most important factor for applying for a mortgage, car loan, and new credit card. A good credit score is above 700, only 58 percent of Americans scored above 700. The national average credit score is 692.
We aren’t talking about the difference between wealth and poverty here. We aren’t talking about hand-to-mouth versus upper affluent income brackets. We’re talking about a quality of life and a healthy financial life.
Here are some things that may help get you there:
1. Financial literacy
The more that you know, the more you can control and be responsible for, but statistics indicate that nearly two-thirds of Americans can’t pass a basic test of financial literacy.
Taking control of your own financial life begins with learning and understanding the ABC’s of finances. This could be as easy as finding a local community financial education class or researching online, but the point is that you are educating yourself.
2. Advisors
Find someone whose advice you trust and know has your best interests at heart — someone who will not push you into risky investments but rather a sensible middle ground approach to taking care of your money.
3. Budget
Know how much is coming in and how much is going out. And stick to your budget. Don’t get extravagant with your finances. That’s not to say you can’t treat yourself now and then, but make sure you have it in your budget beforehand.
Take a good look at your finances, and divide your spending into categories such as food, education, necessities, luxuries, etc.
And use the technology available to you. Nowadays we can access our accounts online from our phones and move funds between them. This avoids being overdrawn. There are also all kinds of budgeting apps and calculators available. Now there are even apps that can show you where you’re wasting money.
4. Credit
Look at ways to get better interest rates on your existing cards and loans. This could mean the difference between being debt free and being buried under endless credit card bills.
5. Mindset
This is a simple attitude shift towards your own financial scene and your own financial future. There is hope. Don’t feel ashamed or guilty about your finances. It’s a state of mind. Change your attitude, and take control of your own financial future.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC