It can be hard to determine what path to follow when it comes to financial wellness.
We’re all different and have varying financial goals. The core of financial wellness boils down to one question: Does the way you manage your money align with your financial goals?
All reputable financial programs share a few core components:
- Spend less than you earn
- Minimize debt
- Save for the future
Creating a Budget
The first step in taking control of your finances is creating a spending plan. For many people, the idea of budgeting has gotten a bad rap and triggers feelings of deprivation. However, it allows you to be more intentional with your money and prioritize where it goes.
Monitoring your spending to create a plan for the future allows you to analyze your needs versus wants. When you look at your expenses on paper, it helps you determine whether you want designer clothing more than you want to travel. Creating a spending plan is empowering!
Although living debt-free may be ideal, the reality is most of us will have some debt. There are a variety of methods for paying your debt. The “debt snowball method” suggests starting with your smallest debt and paying as much as you can toward it while maintaining your minimum payment against all others. Once the smallest debt is paid off, roll this payment into your next smallest debt, and so on. Other financial experts suggest paying off your debts with the highest interest rates first because it will save you the most money in the long run. Whichever debt-payment method resonates and inspires you, go for it!
Saving for the Future
Lastly, save for your dreams for the future, both in the short- and long-term. Did you know the majority of Americans can’t cover a $1,000 emergency without going into debt? Build easily accessible savings for financial emergencies to ensure you can cover a surprise expense.
It’s also wise to allocate a portion of your income into retirement savings, such as an IRA or a company-sponsored 401(k). By spending less than you earn, minimizing your debt, and saving for your future, financial wellness is within reach.
Nextep’s benefits team is here to help! Whether you have questions about saving for retirement or taking advantage of other company-sponsored benefit plans, reach out to us at email@example.com. We would love to partner with you in reaching your financial goals.