This month, Talk Money Week takes place. Between Monday 6 and Friday 10 of November, everyone and anyone is encouraged to have more open conversations around money, which can still be a taboo subject.
But with this taboo, and the consequent silence around money, comes an increased chance of financial problems. That might be you taking more financial risks or even falling into unmanageable debt. Opening up about money is the best way to try and stop these problems in their tracks.
The theme for this year’s Talk Money Week is Do One Thing, which encourages all of us to do one thing that can help us with our financial wellbeing and to really shout about it.
Financial wellbeing is a crucial aspect of overall wellbeing, happiness, and quality of life. It involves more than just having a comfortable income, it encompasses financial security and resilience, the ability to meet financial goals, and the peace of mind that comes with adopting good financial habits.
Fortunately, there are several steps that individuals can take to enhance their financial wellbeing, even at a time when domestic and housing costs and interest rates have been on an increasing trend. Here are a few ideas for things you could do to support your financial wellbeing in the coming days, months, and years.
Create a budget (and stick to it)
One of the fundamental steps toward improving financial wellbeing is creating and adhering to a budget. A budget provides a clear picture of income and expenses, helping individuals to manage their money effectively.
To create a budget, list all sources of income and categorise expenses, distinguishing between necessary costs, like mortgage payments, and luxury spend, such as subscriptions.
Once you have a budget in place, try and make every effort to stick to it. Regularly track your spending, adjust your budget as needed, and prioritise savings. This practice not only helps you manage your finances but also provides a sense of control and reduces financial stress.
Develop an emergency fund
An emergency fund is a crucial financial safety net that can protect you from unexpected expenses such as medical bills, car repairs, or job loss. If you can, aim to save at least three to six months’ worth of living expenses in an easily accessible account.
Start by saving a small amount each month, making this a non-negotiable part of your financial budget. Having an emergency fund provides peace of mind, increases financial resilience, and prevents you from going into debt when unexpected situations arise.
Reduce and manage debt
Higher interest debt, such as credit cards, can significantly hinder financial wellbeing. To improve your financial health, focus on reducing and managing your debt.
Start by prioritising debts with the highest interest rates and make extra payments whenever possible. Consider consolidating high interest debts into a lower interest rate term loan if it makes financial sense and reduces your monthly outgoings.
Also, be mindful of your credit score as it can affect your access to credit and potentially, the interest rates you qualify for. Paying bills on time, using your credit card account wisely, and reviewing your credit file to ensure there are no mistakes can all help to boost your credit score.
Set financial goals
Setting specific financial goals gives you a sense of purpose and motivation to work towards a better financial future. Whether your goals include saving for a down payment on a home, paying off student loans, or going on that holiday of a lifetime, having clear objectives can guide your financial decisions.
Break down your goals into smaller, manageable steps and create a timeline for achieving them. This makes it easier to track your progress and stay committed to your financial plan.
Invest for the future
Investing is a powerful tool for building wealth and securing your financial future. Consider contributing to retirement accounts or personal pension plans. These accounts offer tax advantages and can help you grow your wealth over time. It’s essential to start investing early to benefit from the power of compounding interest and returns. Even small, regular contributions can accumulate significantly over time.
Educate yourself about personal finance
Financial literacy is a crucial aspect of improving financial wellbeing. Take the time to educate yourself about personal finance, including topics like budgeting, investing, taxes and retirement planning. There are countless resources available including books, online courses, and financial advisors to help you gain the knowledge and skills necessary to make informed financial decisions.
Talk to someone
It might feel uncomfortable to have a conversation with someone about money, but it’s important. Whether it’s talking to a young person about saving pocket money or sharing your worries about your financial future with a relative, no matter how big or small, having an open and honest conversation about money is a great first step in supporting your own, and others’, financial wellbeing
Improving your financial wellbeing is a continuous journey that requires discipline, planning, and commitment. However, we understand that this may seem a daunting process, particularly at a time when domestic costs have been rising so significantly.
However, by creating a budget, building an emergency fund, managing debt, investing for the future, setting financial goals, educating yourself about personal finance, and feeling more comfortable in having open conversations about money, you can take significant steps towards achieving financial security and peace of mind.
Remember that small changes in your financial habits can have a significant positive impact on your overall financial wellbeing, so start today. Do one thing and start to make positive strides toward a brighter financial future.