Your steps to financial wellness

Written on the 21 February 2023 by Parkside InvestorPlus

To say we’re living in somewhat very challenging times could be considered as relative.

While we are experiencing higher interest rates and cost of living expenses, for those who can remember the days we had interest rates at 18% and an inflation rate of 8%-10% in the mid-80s, things don’t look so bad right now.

However, as I said, it’s all relative and the pain we’re feeling right now is real - regardless of the past.

So, it’s no surprise that the concept of financial wellness is top of mind for many pre-retirees and those in their retirement phase.

Financial wellness is concerned with more than just your retirement funds – rather, it relates to a range of financial health concerns – from mental health, work-life balance, emergency funds and of course, cash management.

What is financial wellness?

The U.S. Consumer Financial Protection Bureau defines financial wellness as

“a condition wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.”

So, how can you work towards financial wellness. Well it starts with setting specific financial goals, which is never too late.

Steps to financial wellness

First and foremost, regardless of your current monetary situation, don’t simply outsource your wealth plan to someone else.

I’m not saying you should not do this, in fact, a professional and reputable fund/wealth manager will be a huge asset.

Rather, my point is that you also need to be ‘mentally’ invested in your finances.

And if you are not the kind to read financial articles, market trends and movements, then it’s now time to become financially literate.

There are numerous blogs, podcasts, YouTube videos focused on providing financial knowledge and insights – the challenge is to know which ones to trust and follow and which ones not to.

Second, do you know your current net worth?

The exercise could prove to be one of the most sobering exercises you can undertake in your financial literacy journey.

For many of us, we may have an inflated and inaccurate picture of how much we’re currently worth (financial worth).

If you really want to know your current financial net worth, then simply do the following:

·       On a piece of paper (or spreadsheet), on one side list all of the assets you own – e.g. house, any shares and bonds, cash in the bank and personal possessions, superannuation).

·       Then on the other side, list all of your debts, e.g. mortgage, personal loans, credit cards, line of credit etc.

·       Now subtract the total amount of your debts from the total amount of your assets – in very basic terms, this is your current net worth.

Often, this exercise comes as a shock to many people since they normally feel they are worth much more than this.

Next, it’s always a good exercise to check your current credit score (from a reputable credit agency, even if you must pay for the service). 

If you ever apply to refinance or re-mortgage your home loan, this is one area that could make or break the success of the application - regardless of whether you pay your bills on time.

Finally, it’s never too late to start increasing your retirement savings – any bonuses or salary increase you receive, consider investing in your superannuation fund.  The long-term benefits will totally outweigh and short-term gratification of spending this amount.

And of course, seeking professional advice early in your journey to financial wellness cannot be understated.

Do your homework and seek out independent financial advice from a financial/wealth management planner – yes, they can save you years of going it alone and wasted time and effort.

The advisers at Parkside InvestorPlus can advise and assist.

Parkside InvestorPlus.