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5 Key Elements Of Financial Wellness

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Many conversations are themed around physical fitness as well as emotional well-being. However, not many people talk about financial wellness, yet it’s as essential as physical and emotional growth. It encompasses the need to withstand financial shocks, strategize everyday expenses, and achieve healthy financial goals.

Most importantly, financial freedom results from financial wellness. Knowing how to earn money online and offline, keeping multiple streams of income, as well as having enough savings and investments have all proven to lead to financial growth. But to achieve genuine financial wellness, here are the key elements:

1. Budgeting.

It’s impossible to build financial wellness without having a budget. Budgeting is like racing on a lawn field with your eyes set on the finish line. You don’t keep your eyes away just as you don’t stop running. You keep going regardless of the hurdles you face. This is precisely how a budget works. It helps create a plan to limit your spending, prepare for emergencies, and establish financial wellness.

Budgets vary, but incremental budget is often recommended for personal finance. This is because it’s easy to understand and works by basing a new budget on a previous one. Aside from being consistent, operational, and relatively stable over time, it reduces complacency by encouraging commitment. Its operational stability is why it’s perfect for improving financial health. 

2. Income, Savings, And Investment.

In finance, income is a function of saving, and saving is a function of investment. What you earn determines how much you save and invest. Theoretically, what’s left to be saved or spent on assets after the deduction of taxes and social charges is known as your disposable income. Therefore, the more significant your disposable income, the greater your financial wellness.

Since income is the most basic unit to achieve robust savings and investments, it’s always wise to have multiple income streams. In today’s world, making money through different channels isn’t a tall order. You can start a blog, take paid surveys, sell your skills online, and run affiliate marketing—all at the same time. The more money you make, the better positioned your financial health is.

3. Financial Insurance.

Insurance is a natural shock absorber. It mitigates you against financial risks and reimburses you for loss. To attain financial wellness and financial freedom, you need a shock absorber—a plan you can fall back to when everything else fails. This plan is an insurance policy. Becoming an insurance policyholder provides you with the option to create a contingent plan for financial security.

There are several insurance policies you can get for financial wellness. But the three most crucial ones are life, health, and long-term disability insurance. Life insurance covers the future of your finances and beyond. Health insurance takes care of your medical contingencies. Long-term disability insurance ensures you can still achieve your financial goals even when disabled.

4. Financial Counseling.

The financial waters are murky, no thanks to the surges of technology. Many things you think you know about money, savings, and investments are constantly changing. Trends are ever-shaping the market, establishing new tools, strategies, and innovation. To move alongside the dynamics of financial patterns, you need experts in the field to counsel you.

Sound financial education can do you a lot of good. Whether you’re receiving one as a mentee or through a paid program, counseling clarifies ambiguous financial terms and validates vague financial strategies. It teaches the habits of saving in you. It helps you make the best investment decisions and provides tips on achieving a more detailed financial wellness.

5. Financial Technology.

It’d be incredulous not to mention financial technology (fintech) as one of the key elements of financial wellness. Although fintech is often applied to large-scale financial operations, it’s also crucial to personal finance. The many available tools and online resources today are some fintech gifts anyone can leverage to achieve financial freedom.

For instance, you can use online tools to plan your budget effectively. Financial software likewise allows you to automate your savings and never miss a period. There are several applications, both on mobile and desktop, that guarantee you financial wellness through real-time investment plans and strategies. Moreover, you can learn anything online about personal finances by enrolling in a digital course.

Conclusion.

Finances play significant roles in your well-being, so it’s essential. Financial wellness leads to financial freedom, and there are ways to achieve this. By increasing your income, you can plan your budget, savings, and investments. But as trends keep shaping the financial world, you should get proper financial counseling and take advantage of the many benefits of financial technology.