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Complete Guide to Financial Wellness + Checklist

May 22, 2023

Financial wellness is a way of looking at our relationship with money as an essential part of our overall personal well-being, one that affects our long-term health and happiness in the same way that our relationships with food, exercise, and other people do.

At Fibre Federal Credit Union, we consider financial wellness to be so important that we offer our members access to exclusive resources to assist them in establishing and maintaining healthy money habits that will help them and their families live better lives.

We’ve also put together this handy guide to explain what financial wellness is, what it entails, and how you can go about achieving it. We’ll answer questions like:

  • What is financial wellness?
  • Why is financial wellness important?
  • How can you improve your financial wellness?

We’ll show you how to set realistic money goals and offer practical tips on how to improve financial wellness over time. And we’ll take a look at the educational tools you already have at your fingertips as a Fibre Federal member, including Zogo, an innovative program that makes learning about financial literacy fun.

Read on to learn how to make financial wellness a part of a healthy lifestyle, and the resources Fibre Federal offers to help you and your family thrive.

WHAT IS FINANCIAL WELLNESS?

Financial wellness defines financial security not only in terms of the state of your pocketbook but also how you feel about your money. The U.S. Consumer Financial Protection Board (CFPB) defines financial wellness as:

“… a condition wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.”

The idea is that making good financial decisions over time has wider implications for your quality of life and taking positive steps to improve your financial stability and resilience can improve other aspects of your life too.

WHY IS FINANCIAL WELLNESS IMPORTANT?

Financial wellness recognizes that striving to improve your health, work life, and relationships can only take you so far if you are not financially secure enough to meet your needs and enjoy your life. And, while talk about wellness might sound like a health fad, recent research supports the idea that worries about money have a real effect on your quality of life.

In 2018, the wellness site Everyday Health published a study of more than 6,700 Americans of all ages showing that financial worry was the leading source of stress across the board. Another study by business consultancy PwC of 3,000 workers across a range of industries found a direct link between financial concerns and real health consequences. The study found that as a direct result of personal financial issues:

  • 34% of respondents reported a “major to severe” impact on their mental health
  • 33% reported a similar impact on their ability to sleep
  • 23% reported a direct impact on their physical health

While financial wellness is often described as a subjective “feeling,” these measurable effects of financial worries on key aspects of our physical health make it hard to argue that financial security is not a key part of your overall well-being.

At the same time, recognizing the role financial wellness plays in our overall ability to thrive also empowers us to make positive, practical steps to achieve it.

HOW TO IMPROVE FINANCIAL WELLNESS

The CFPB maintains that financial well-being includes the following four elements:

  • Having control over day-to-day and month-to-month finances
  • Having the capacity to absorb a financial shock
  • Being on track to meet your financial goals
  • Having the financial freedom to make the choices that allow you to enjoy life

In other words, the CFPB says, financial wellness is a combination of a feeling of having financial security in the present as well as financial freedom in the future. The elements of financial wellness can therefore be expressed in this way:

PRESENT FUTURE
Security Control over your day-to-day and month-to-month finances Capacity to absorb a financial shock
Freedom of Choice Financial freedom to make choices to enjoy life On track to meet your financial goals

Source: CFPB Financial Well-Being Scale

These elements provide clear financial wellness goals we can all work toward. Now let’s look at some concrete steps you can take to make these goals a reality.

The great thing about financial wellness is that you get to define what success and financial freedom looks like. While it’s important to be able to meet your financial obligations, there really is no right way to do it.

That said, there are some best practices for planning toward financial wellness. Let’s take a look at some of them.

TIPS FOR FINANCIAL WELLNESS PLANNING

Successful planning for financial wellness involves setting your financial priorities, taking control of your budget and debt, managing your risks, and building resources for the future. Not sure where to start? Here are a few pointers.

Set Your Priorities

First, determine what your values and goals are, where you are coming from, and where you want to go.

Know your values. What do financial security and freedom look like to you? Is it a home for your family, freedom from debt, money in your account, or the ability to enjoy life today? Think about your financial values. What is it important for you to achieve? Is it important to share your wealth with others or pass it on to your descendants?

Assess where you are. It may be hard but take a careful look at your account statements so you can understand where your money is actually going—not where you wish it were going. You may be surprised. How does this line up with your financial values?

Set your goals. Use your insights to set short-, medium- and long-term goals that you can use to guide your financial decisions and keep you motivated as you work toward financial security and freedom.

Take Control

Now get a handle on the things that are stopping you from controlling your own money today.

Create a budget. A budget is a crucial tool for financial control and can help you track your progress toward your goals. Assess your income and expenses to create a plan that ensures you’re living within your means. Use a budgeting app if you’re not good with spreadsheets. Struggling to allocate funds? Try the 50/30/20 rule popularized by Senator Elizabeth Warren:

  • 50% on things you need: including unavoidable expenses like mortgage or rent, utilities, healthcare, groceries, transportation, and childcare
  • 30% on things you want: including eating out, entertaining, and discretionary shopping
  • 20% on building savings and paying debt: including retirement and college funds, student loans, or credit card balances

Manage your debt. Prioritize paying off high-interest, unsecured debts like credit cards first, or look for ways to consolidate what you owe into a single fixed-interest personal loan. Find out if it is possible to get debt relief or lower the interest rate on student loans. Stick to used cars rather than new ones. Understand that debt eats up the resources that you need to achieve your financial goals.

Monitor your credit: Check your credit report regularly, and improve your credit score by paying your bills on time and keeping credit utilization low. A low credit score is largely in your own hands and is potentially worth hundreds of thousands of dollars over the course of your financial life.

Manage Risk

Next, do whatever you can to limit risks to your income, assets, or ability to borrow money.

Build an emergency fund. It’s important to have an emergency fund to cover unexpected expenses such as car repairs or medical bills. Start by saving a small amount each month and gradually increasing it until you have three to six months’ worth of living expenses saved. An unforeseen expense or loss of income could set your savings back years.

Use insurance: Take out insurance on your health, life, livelihood, and home. Both health and disability insurance ensure you will be able to continue to earn an income. Home and car insurance protects the value of your biggest fixed assets. While it might not look like it most of the time, your insurance policies work to protect your savings and help you escape debt.

Protect your health: Financial wellness is a more holistic way to look at your well-being and that includes your physical and mental health. Over a lifetime, exercising, eating healthy, and taking precautions against health risks are money in the bank—literally.

Build for the Future

As soon as you are able, start savings for the future. Time is your friend when you invest early.

Start saving: Saving always seems to come last, but your dreams of long-term financial security and freedom start here. Make small goals and meet them. Save $500 in a money market account and then put it in a certificate account or save $5,000 and invest it in a college savings account.

Plan for retirement: Start early on retirement savings and smaller contributions will go a long way over time. Put away whatever you can into an individual or Roth retirement account. Does your employer offer a match for your 401(k) contribution? This is essentially free money that you can invest. Don’t leave it on the table.

Get college smart: A college degree will significantly increase earnings and open up new opportunities. Start contributing to a tax-advantaged savings fund early and take advantage of any assistance from your employer. Many retirement funds also allow contributions to be withdrawn if they are to be used to pay for education costs.

Invest wisely: Effective investments in stocks, bonds, and mutual funds are essential to making your money work for itself. Consider seeking advice from a financial advisor to help you create a diversified portfolio that aligns with your goals and risk tolerance. This will help you manage risk and potentially grow your wealth over time.

YOUR FINANCIAL WELLNESS CHECKLIST

If you’re ready to get going on building your financial wellness, here are six practical, essential steps to get you started.

  1. Set a monthly budget and stick to it. Track your spending and adjust it. A budget is a crucial tool for financial wellness and for tracking progress toward your goals.
  2. Start an emergency fund. It will prevent an unexpected event from destroying your budget, eating up your savings, or forcing you deeper into debt.
  3. Pay off credit cards in full. High-interest debt destroys wealth before you’ve made it. Get rid of it now by paying it off as soon as possible or consolidating.
  4. Automate savings. Make starting to save easy by setting up a direct deposit of a certain amount of your paycheck into a separate savings account.
  5. Invest early. There is no substitute for long-term growth and compounded interest over time, so invest in retirement accounts, share certificates, or certificates of deposit early to reap the most benefits.
  6. Build your credit score. Impeccable credit is very valuable. Start early with smart, sensible debt, and always pay your bills on time.
  7. Knowledge is power. Focus on financial literacy. Understand how interest builds wealth. Work with a financial wellness consultant to align your goals with your strategies.
  8. Repeat. Consistency is the key to long-term financial security. Make your budget better. Reduce risk and save. Consider a new investment. It might not feel like it at first, but these essentials will put you on the road to true financial wellness.

FINANCIAL WELLNESS PROGRAMS + RESOURCES

Working towards financial wellness can be tough, but you are not alone. Organizations like the CFPB and the American Savings Education Council recognize that the benefits of financial wellness go beyond your account balance and therefore have developed free programs and resources to help.

As a long-established local credit union, at Fibre Federal we know how important financial well-being and long-term financial security are to our local communities. That’s why we offer Fibre CU members access to valuable financial education and counseling resources. These include:

Zogo: Get Paid to Get Financially Smart

Zogo is a gamified financial literacy app that makes it fun—and profitable—to learn about managing your money better. The app offers more than 400 modules on 22 different financial literacy topics from opening your first account to retirement.

And, while the financial games are fun, the benefits are real. Not only will you get the tools you need to build financial security, but you can also earn gift cards to your favorite retailers by taking quizzes and competing in daily trivia contests.

You can get started by downloading the app onto your device, signing up using sponsor access code “FIBRE,” choosing a reward goal, and building your profile. Once approved, you’ll be ready to play!

Greenpath Financial Wellness Counseling

Fibre Federal also works with GreenPath Financial Wellness to offer free financial counseling services to our members. Greenpath works with you to make your financial goals happen by:

GreenPath also offers access to free online resources including webinars, online financial courses, downloadable worksheets and guides, and even a debt calculator. Fibre Federal members can contact GreenPath directly for free, confidential help.

FIBRE FEDERAL CREDIT UNION: YOUR FINANCIAL WELLNESS PARTNER

As a member-owned financial co-op, at Fibre Federal we know we can only succeed when our members thrive. That’s why we’ve placed your financial wellness at the core of everything we do.

Our not-for-profit status means we offer lower fees and more generous dividends on our accounts including money market accounts and share certificates, as well as lower rates on our home, auto, and personal loan products. With roots deep in the communities of Southwest Washington and the Oregon Coast, we know a lot about where our members are coming from and where they hope to go.

That’s why we always take the time to sit down with you to understand your particular needs before recommending financial products. It’s also why we offer our members innovative learning tools like the Zogo financial literacy app and access to free financial counseling through our partnership with GreenPath.

At Fibre Federal, we know that financial wellness is a journey, and we are with you every step of the way. Click below to learn more.

Financial Counseling

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