Take route to financial wellbeing

Money plays a critical role in our lives and not having enough of it impacts health as well as work, family and social performance. Financial stress is repeatedly found to be a common source of stress, anxiety and fear for most people.

Keeping track of expenses, making a budget, and sticking to it are important skills to have in order to be finically responsible and independent.

Rest assured that you are not the only one in the process of learning how to manage finances more efficiently, am also in the same process. Everyone’s financial situation is different, so it is up to you to select the proper mix of resources that work best according to your needs. The most important point to remember is that maximising financial wellness is a process that does not occur immediately.

Be proactive by seeking related resources and learning about money-managing strategies to build your financial wellness. Learning how to maximize your financial wellness now will help you feel prepared to handle potentially stressful financial situations in the future.

FINANCIAL WELLNESS TIPS:

Have a retirement account. This should be structured to fill the gap between how much you would like to have in your investment pot upon retirement and the total amount you would have actually accumulated in all of your other retirement portfolios at that time. Make a retirement plan that will make you have enough money when you retire.

Education investment is for your young dependents. It is an important way to avoid the financial embarrassment of the escalating cost of post-secondary education in the future.

Life insurance is designed to fill the gap between how much wealth you have already accumulated and how much financial liability your dependents would incur if you suddenly pass away.

A good investment programme should cause your wealth to increase over time and therefore, make the need for a life insurance to decrease with time.

Life insurance

You should consider purchasing a life insurance if you have an earned income; you have dependants such as spouse, children, and parents; and they will suffer a financial hardship in the event of your untimely death. The face value of your policy should approximate how much your dependants would require to pay for outstanding financial obligations – such as children’s education and upkeep, home and household expenses, and current family debt.

Many people associate financial well-being with a sense of security and freedom. Estate planning and property inheritance can be met by setting up a will or better yet, a living trust.

I prefer living trusts. They are simpler and cheaper. Unlike a will, a living trust bypasses the costly and time-consuming process of probate. However, similar to a will, it spells out exactly what your desires are with regard to the distribution of your assets after you pass away. A living trust is set up by you. If you die without a will or living trust, your property will go to probate and the courts will make the decision as to who gets what. Is that what you want?

Diversify your investments: In general, you should maintain a healthy long-term investment in a well-diversified stock mutual fund. Long-term is typically considered to be a period of 10 years or longer.

Conventional long-term investments include those designed for future home and auto purchases, house maintenance, and any other financial goals with a similar long-term horizon.

Mutual funds

I am a big fan of stock index mutual funds as a vehicle for long-term investments. These mutual funds move with the market and are hardly outperformed by other specialty funds – in the long run. Also, they have an expense ratio that's next to nothing.

Such a mutual fund is already well-diversified so there is no need to invest in more than one. As your investment goal approaches; you should gradually shift your funds to more conservative and safer investments.

Safe investments are those used to satisfy financial goals of a few months to no more than a year or two. Due to their short-term nature, such investments are better held in safe, liquid assets. These include money market deposit accounts, money market mutual funds and certificates of deposits.

One way to bring down the fear factor is to remember that you don’t have to be wealthy to achieve financial well-being. Setting and meeting financial expectations can improve your general well-being. So, do you have a healthy financial life?