The Importance of Financial Wellness
Financial wellness is the practice of managing your money with the goal of living a healthy and prosperous life. It encompasses economic education, goal setting, and planning, as well as budgeting, investing, and debt management. Financial wellness can help you reduce stress, increase savings, and improve your credit score. Let’s take a look at each of these benefits with the goal of demonstrating just how important financial wellness really is.
Money is known to be one of the leading causes of stress in adults. Contrary to what some people think, financial wellness is not just about having a lot of money; it is about having control over your finances and being able to afford the things you need and want. When you are financially well, you are living on a budget, you know how much money you have coming in and going out, you have a savings plan, and you are able to pay your bills on time. Having this level of control over your finances will reduce your stress levels and you won’t be left wondering when your next pay check is due in.
Most know that in order to have financial stability they need to save money. Surprisingly, a large percentage of people do not follow this advice and having zero savings. This is troubling because having a nest egg can help protect you from unexpected expenses and help you achieve your long-term economic goals. So why don’t more people save money? One reason may be that they don’t know how to get started or they feel like they don’t have enough money to save.
Financial wellness education can help change this mindset. When people learn about the benefits of saving money and how to create a budget that works for them, they are more likely to start saving. You’ll learn how to cut down on your monthly expenses and part of your education will be highlighting areas where you can save money. A good place to start is if you have outstanding education debt, you might be able to refinance your existing student loans into a new loan. This may help to reduce interest rates and leave you with more money to save at the end of each month. But how are you to know this if you’re not financially aware of what’s going on in your life?
Improves Credit Score
People who are financially well tend to have higher credit scores. This is not surprising, as they are often more disciplined in their spending and more likely to repay their debts on time. A high credit score can be the difference between getting a low interest rate on a loan and being denied credit altogether. There are many things you can do to improve your credit score. One of the most important is to make sure you always pay your bills on time. You should also keep your debt levels low and avoid opening too many new accounts at once. If you are having trouble improving your credit score, there are several things you can do to get back on track so never feel like you are out of options.