We know that financial wellness is one of the aspiring freedoms of everyday life. Tragically, the financial wellness of too many Americans has been affected significantly by the COVID-19 pandemic. The virus has left millions worldwide unemployed, and millions more under-employed. While some states have begun to open and increased economic activity has begun, rising COVID-19 cases have caused those states to reconsider their rules and have begun to retract on who and what companies are allowed to open. We don’t know how this new increase is going to play out. With this uncertainty, what does appear to be clear is that this pandemic isn’t going away soon.
With our heads still caught in the wildness of our current world, it may be appropriate to recap what experts believe constitutes financial wellness. Corporate Wellness magazine defines financial wellness as “effectively managing your economic life,” and gives various examples as to what it indicates, such as being prepared for emergencies and lacking any outstanding debt. By addressing these events in a planned manner, you gain a certain amount of freedom knowing that your bank account isn’t getting in the way of living your life on your terms.
Let’s get real – the safety and health of you and your family takes precedence during this time.
The tremendous changes in purchasing groceries, homeschooling children, and bringing college/university students back home is unprecedented. However, you must still focus on your financial situation, as your financial wellbeing is still a crucial component to your overall wellness. Simply put, being financially healthy directly impacts both your physical wellness (ease of access to healthy foods and exercise options) and your mental wellness (stress and anxiety caused by financial issues). Paying close attention to your financial wellness will benefit you both for the short term as well as the long term.
You might be asking yourself – it’s three months into the pandemic, is it too late to start preparing? Not at all. It is never too late to start making steps to improve your financial future. Even presuming that the pandemic will last longer than first hoped, getting to know your status with respect to financial matters, along with knowledge of how to get yourself back on track towards financial wellbeing will assist you in all walks of life.
Here are some fundamental principles and game plans to consider as you begin to work with your finances:
Find Your Goals and Create Your Plan. It is often said that the key to becoming a healthier person comes through setting proper goals. This will create the motivation needed to get over the hump and work towards your desired outcome. Likewise, the key to achieving financial wellness comes through establishing your goals out front. The SMART method of setting goals is a particularly effective method, which states that goals must be specific, measurable, assignable, realistic, and time-specific.
Making sure that your goals exude all of these qualities allows you to figure out which goals are most appropriate for your current situation. Saying to yourself that you want to become a billionaire within the next month may be measurable, assignable, and time-specific, but it isn’t at all realistic or specific. Similarly, saying you want to retire before the age of 50 may be realistic, in addition to being measurable, assignable, and time-specific, but lacks specificity. Once you establish what your goals are, you’re ready to start acting upon them.
What are you going to do within the next year to get closer to achieving your goals? Being as thorough as possible in your plan will allow you to be more prepared as time goes on. It may also be wise to gather financial advice from a qualified individual, if possible.
Small Steps are OK. The path to financial stability appears daunting, especially in the middle of a financial crisis. Particularly due to the great amount of stress financial issues can have on an individual, the effort needed to climb out of it will produce more anxiety than previously.
Thankfully, your goals are not a simple point-A-to-point-B process. There are many steps along the way, where each one can exist as a sort-of micro goal in the overall picture. Instead of thinking big picture, direct your attention to the immediate next goal. This narrowed vision of the often-tumultuous image of financial wellness will dramatically improve your outlook while bringing you closer to your end goal.
Spend Within Your Means. As established during the pandemic, living situations are temporary and are ever-changing. Thus, it is easy to slip into a trap of living beyond your means or spending more than you’re earning. Humans are beings of habit, and even if your previously viable method of living is no longer suitable, it can be hard to change not only your livelihood but your family’s as well.
While this process can be challenging, downsizing during tough financial times is crucial. If your rent is causing unnecessary financial strain, it may be time to move to a less costly location, even if it is less glamorous. Alternatively, you can attempt to renegotiate your utility bills or switch providers if possible. That way, when your living situation becomes more sustainable, you’ll have a lot more saved up to reach your next financial goal.
Saving Money is Key. This aspect of being financially stable goes hand-in-hand with living within your means. Why else cut expenses below what you’re currently making if not to save it? It’s easy to lose sight of your savings, especially when you’re working a low-income job and supporting a family.
But despite what your mind may tell you, the best time to start saving isn’t when you start make more money. It’s right now. So, start taking a specific amount out of every one of your paychecks and either saving it in a separate account, investing it into your stock portfolio, or planting it into your firm’s stock options or 401K.
If you’re having trouble figuring out how to save your money, perhaps try creating a “family treasure chest.” Instead of simply relying on your individual means to create a safety net, inspire your partner, parents, and even your children to chip in small amounts every week. Before you know it, these small savings will add up. From there, you and your family have the freedom to choose what to do with it. In times of financial stress, the best decision would be to use these savings for emergencies. But if you’re in need of some well-earned emotional relief, perhaps you can use this extra money to do something fun. A shoreline vacation does sound great right about now.
It may be that you feel at this moment that your freedoms have been stripped away. Being told to socially distance, wear face-masks, and give up numerous opportunities in the effort to stop the spread of COVID-19 restricts ways of living in a way many of us have never seen. While your financial future may seem bleak now, it is very possible to change the trajectory towards a more positive future.
Even with the slightest amount of savings, you gain the freedom to steer your life in your chosen direction. The smallest amount of freedom will take you a long way, especially right now.