January is Financial Wellness Month, created to remind us that how we spend our money affects our quality of life. Perhaps not surprisingly, personal finances are the biggest source of stress for most Americans, according to the 2022 “Stress in America” survey ‒ bigger than jobs, health, and relationships combined.
Financial Wellness Month encourages us not to live too much in the moment. Planning our finances helps reduce anxiety, survive sudden shocks, and reach our goals, whether it’s buying a new home or traveling through Europe. Because we can all benefit from better monetary decisions, here are seven ways to achieve financial wellness in 2023.
Track Your Spending
Many of us spend without thinking. We grab a coffee in the morning, go shopping in the afternoon, and head to the movies in the evening without stopping to tally our expenses. Once added up, many are surprised to see how much they spent on certain items, such as dining and entertainment. Tracking spending doesn’t mean giving up the things you love, but knowing where your money goes shows you where you can save.
Create a Monthly Budget
Overspending is a common problem. A lot of people wind up in debt because they estimate what they can afford rather than working it out beforehand. Sometimes it works out fine. Other times, they end up stuck with a stack of bills they can’t pay. But with a monthly budget, you’re always thinking ahead, ensuring your expenses never exceed your income.
Start by writing down how much money you bring in every month. Then write down your expenses, divided into two categories: essential items (rent, gas, utilities, etc.) and optional items (takeout, Netflix, mini-golf, etc.). Once you know how much you have to spend on the first, you’ll know what you can afford to spend on the second.
Check Your Credit Report
Good credit makes it easy to borrow money. With good credit, you’re not only more likely to get approved for a loan, mortgage, or credit card, but lenders will charge you lower interest rates as well. By law, everyone is entitled to a free copy of their credit report every twelve months. Request yours and see where you stand. If your score is low, there are steps you can take to build it up again.
Pay Off Debts
Paying down debt with consistent monthly payments is the fastest way to raise your credit score. If you have a lot of outstanding bills, free up cash by paying the smallest ones first. Then roll your money into the next bill, making larger payments every time until you have zero balance.
Because banks normally charge less than credit card companies, people in serious difficulty should consider consolidating their debts with a personal loan. For borrowers with good credit and multiple high-interest liabilities, consolidation is a way to lower monthly payments and get clear faster.
Putting money aside every month gives you more options down the line. Are you thinking of going on vacation? Buying a new car? Changing jobs? A little extra money will help make it happen. With online banking, you can transfer money into your savings account automatically each month. When people don’t have to think about how much to save, they usually end up saving more.
Consider setting up two separate savings accounts, one for the long-term and one for emergencies. Unlike a long-term account, an emergency account only needs to contain enough cash to cover your biggest potential crisis, $10,000 for instance. Once you’ve reached your goal, stop paying into it until an emergency occurs and you need to fill it up again.
Plan for Retirement
It’s never too early to start planning for retirement. Whether you’re fresh out of school or near the end of your career, you should always be looking ahead. Invest in an IRA, 401K, or annuity plan. Remember, when it comes to retirement, time is a crucial factor. Investing even a small amount at an early age will pay off big in your golden years.
While emergency funds protect your budget; warranties and insurance protects your assets. Few people can save money fast enough to repair their car or home. They need additional protection, which is why Agway introduced EnergyGuardTM.
Home insurance covers you in the case of theft or disaster, but not wear and tear. Heating, cooling, and electric systems are prone to breakdown as they age. It’s unfortunate but inescapable. Fixing home systems can cost thousands, but with EnergyGuardTM, when something goes wrong, you don’t pay a dime.
Every Agway customer is automatically enrolled in EnergyGuardTM when they sign up. If a problem occurs, we pay the cost of repairs on all covered parts. There are no service fees or deductibles. Just reliable service 24/7. One of the many ways we’re hard at work helping you achieve financial wellness every day. Contact us to learn more and become a member!