January Is National Financial Wellness Month

January is Financial Wellness Month, which means it’s a good time to plan and update your financial strategy.

As we prepare to schedule end of year reviews, it's also important to discuss your aspirations for the future - short-term and long-term goals. Does your financial strategy need any adjustments based on your lifestyle? Here are things to consider before our next meeting.

Defining Financial Wellness

The first thing to do is define what “financial wellness” means for you. This varies drastically from person to person. It is informed by who you are, where you are coming from, and what your experiences with money are. A person with serious financial troubles might have different expectations than someone who has enjoyed relative financial stability.

How, then, is “financial wellness” defined? First, ask yourself what you need to feel secure, financially speaking. Here are some questions to consider:

• How much should you have saved? 
• How much income should you be bringing in each month? 
• Where are you at with your debt? Would things be simpler if you carried less debt? 
• How fluid is your cash flow when it comes to expenses that are not urgent (taking your family out to dinner or on a short trip) versus larger financial goals (such as buying a new kitchen appliance)? 
• Are you able to put funds away in your emergency reserves?
• Finally, and perhaps most importantly, will you be able to retire at your target age?

Financial Wellness Goals

Thinking about financial wellness is often a matter of setting goals for what you can accomplish now and what you can work on to make it a part of your larger financial strategy. For now, consider taking these actions:

• Have a values-based conversation with the decision-makers in your household, meaning any tax-paying adult who contributes income and shares responsibility for the bills. This could be your spouse or any other family member. Make sure that the non-essential things you are spending money on line up with your commitments to meeting your financial needs. This is not a “stop getting lattes” conversation; it is a “Are we spending money on the things that matter?” conversation.
• Consider automating payments, especially for regular items such as mortgage payments, utilities, student loans, credit card bills, and other installment payments.
• To establish a stable foundation going forward, create an emergency fund that covers 3–6 months of household expenses. If that seems too ambitious, build the fund a month at a time until you reach your goal.
• Make regular contributions to your retirement accounts. Take advantage of any matching contributions you might get from your employer. 
• Make long-term financial goals. If you are considering buying a house, or would like to retire before age 65, for instance, let that guide your overall financial strategy.  
• Is becoming debt-free an achievable goal? It can be if you make it a priority. That said, being totally debt-free can be a difficult task for most households. Therefore, it may be better for you to focus on your other goals first and make debt freedom a target later: for example, being debt-free by retirement.

Of course, these are not hard and fast rules. As mentioned above, every individual has a specific definition of financial wellness. Some of these examples might feel like a long reach, while others you might already be practicing. The good news is that with careful practice and judicious scrutiny, many people can gain a feeling of satisfaction and even pleasure from maintaining financial wellness.

As we create your individual financial strategy, it can mean a great deal to you in the long term and may also provide you with some comfort in the short term. We look forward to scheduling a time to discuss this with you.