How to Achieve Financial Wellness

young couple exhibiting financial wellness

Financial wellness is a term used to describe a person’s ability to meet financial obligations and stay on track to meet future goals.1   Several factors impact financial wellness, and it’s important to recognize them.  They include:

  • Financial Commitments
  • Spending Habits
  • Future Goals

Because the financial climate shifts over time, managing both short-term and long-term goals and expectations is important.  Below are some steps to take in your journey toward financial wellness.

Financial Commitments

Understanding your current and future financial commitments will help develop a blueprint for your expenditures and savings.  Start by having a checking and savings account and split your income.  Have direct deposit with a percentage of your paycheck going to checking to cover your monthly expenses and another percentage going into savings to work toward your short-term and long-term savings goals.   At Welcome Federal Credit Union (WFCU), you can have a checking account with no minimum balance and a savings account with as little as a $5 minimum balance.  You can even open an account online.

Next, determine your recurring monthly expenses.  You may want to include a bill you pay once or twice a year (i.e., car or homeowner insurance) and include 1/12th or 1/6th of those amounts in your monthly expense calculation.  This will allow you to visualize and understand your financial commitments – fixed expenses that must be covered.  And remember, you can set up automatic bill pay for fixed expenses that go out every month, so you never incur a late fee.

Spending Habits

In addition to financial commitments, you need to assess your spending habits and their impact on your monthly cash flow.  On average, what do you spend on groceries, clothing, activities, and other incidentals?  Accounting for spending habits allows you to determine if you spend too little or too much on some items or activities.

Accounting for spending habits helps determine how much of your paycheck can be directly deposited into savings.  Perhaps you start with 95% directly into checking and 5% into savings.  Once you are assured you have correctly accounted for your financial commitments and spending habits, you can increase the amount going to savings.

Remember, your savings account is also your emergency account for unexpected expenses.  You can quickly pay an unexpected expense with features like online transfers and Zelle.  You can set up account alerts when a larger-than-usual amount has been withdrawn, or a payment due date is upcoming.  You set your thresholds and alerts to help you control your financial wellness.

Future Goals

Financial well-being is the driver to achieving the financial goals you set.  Creating goals, prioritizing them, and revisiting them each year is necessary to reach them.  Life circumstances will require you to adjust your goals, reprioritizing or making new ones.  Whether you need to fund a future education, accrue a downpayment for a home, or save for a vacation, understanding your financial commitments and spending habits will help you understand what steps you need to take to meet your goals.

Schedule a complimentary in-person financial health check with our Welcome Federal Credit Union financial counselors, Liz Koehler or Thomas Boone, and start your journey to financial wellness.

1 https://investor.vanguard.com/investor-resources-education/news/a-three-step-framework-for-financial-wellness#:~:text=The%20term%20%E2%80%9Cfinancial%20wellness%E2%80%9D%20is,track%20to%20meet%20future%20goals.

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Now is the time to get the best returns on your cash with higher interest rates on your Certificate & Money Market accounts!   

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