This is a sponsored post written on behalf of Money Under 30 for M1 Finance.
Financial well-being is the ability to comfortably cover your needs, be prepared for emergencies and the future, and pay off your debts. Many people regret not having made a financial plan sooner; moreover, they believe that they do not have enough money to save.
Ensuring your financial well-being is easier than you think, but it takes discipline. You don’t need to have millions in the bank to start investing, but it’s important to prepare for the future and live within your means.
How to become financially healthy?
Incorporating financial well-being into your life can be overwhelming at first, especially if you’ve put it off until later. It is not uncommon for people to live beyond their means, and most of them have never made a budget to control their long-term and day-to-day expenses.
Setting goals and having a clear budget is probably one of the most important things to include in your life to make your money work for you. Assessing how you currently spend your money can open your eyes and help you cut unnecessary spending. It would be better if you were realistic about your budget.
There are four main aspects to consider when making a financial decision:
- Whether or not you are in control of your daily and monthly finances.
- Do you currently have financial freedom and can you comfortably live the life you want.
- Will you be able to financially survive extraordinary expenses, such as a serious illness or loss of a job.
- Are you on track to achieve your short and long term financial goals.
Budgeting and setting achievable goals will separate you from those who are struggling to make ends meet and those who are financially successful. Start with small, short-term goals and set aside minimal amounts. Over time, even the smallest amounts will grow exponentially.
While you’re saving money and cutting down on unnecessary expenses, you may feel overwhelmed and left behind by the crowd. It’s important to ask yourself if buying a newer car, fancy sofa, or branded bag is worth the long-term results, or would it be smarter to invest that money.
You can make big purchases as soon as you feel financially comfortable and know that you have an emergency fund to protect you – try to settle for temporary discomfort.
Manage your debt wisely. If you can afford to pay a small amount on top of the minimum payment, it’s worth it. Avoid unnecessary debt and remember the financial principle: “If you can’t afford to buy it twice, you can’t afford it.”
What are financial goals?
Financial goals should be both short-term and long-term. Goal setting ensures that you don’t get into unnecessary debt. In the short term, look at the things you would like to achieve.
Short term goals might look like this:
- Saving for rest.
- Buying the latest Apple Watch.
- Modernization of your furniture.
- Savings for a wedding.
It takes more patience and work, but setting short-term financial goals is rewarding. You avoid excessive interest and by denying yourself instant gratification, you protect your future. Spending $17 a month for 24 months on an Apple Watch 7 Series might seem tempting. However, this unnecessary debt will hang over your head for two years.
Long-term financial goals are often set aside to be addressed in the future. Thinking about a retirement plan can feel overwhelming, or buying your dream home can feel like an obstacle you’ll never get over.
Long term goals might look like this:
- Purchasing an additional home for investment purchases or vacations.
- Buying a franchise/starting a business.
- Setting a high amount to receive for the pension fund.
- Real financial freedom.
Once you have determined your overall financial goals, the next logical step is to determine your investment strategy. M1 Finance, a one-stop money management platform that helps potential investors achieve long-term financial health, offers helpful guidance on how to set financial goals to build your desired future. And if you’re new to the world of investing and want to feel your own risk tolerance, M1 Finance has a helpful test you can take to find out where you’re at.
Creating a plan and roadmap to achieve your goals will help you visualize what steps are needed and help you stay on track. Without a plan, it is impossible to achieve any goal.
Tips for incorporating financial wellness into your life
Be practical about how much you can afford to invest in savings and how much you need to pay off debt. Choose which goals are most important to you and make a plan for how much money you want to invest over the course of your life.
For example, you should have an idea of what financial goals you want to focus on now, in your 40s, in your 60s, and so on. Start small with goals for a year, a plan for five years, and a plan for 10 years.
You should not try to “keep up with the Joneses”. While having the latest technology is incredible, it’s best to live within your means and cut out unnecessary expenses.
Investing in life policies and insurance plans will best protect your future. Knowing that you have a back-up plan will help you avoid wasting your savings and taking out a personal loan to cover emergencies.
The key to achieving your goals is in the details. The budget you used in your 20s or when you only had one child will no longer be relevant when your life changes. Your plans must be adapted so that you can adapt to the life around you.
Take the time to constantly learn about the area of financial well-being. Hiring a financial coach or advisor can help you put your money in the right direction. Explore the best investment plans, find the policies that work for you, and constantly work towards creating a financially free future.
Ask yourself the following questions:
- Where do I want to be in 5 years?
- Do I have a secure retirement plan?
- Am I ready for an emergency?
- What is the main financial goal I need to achieve in the next year, ten and 30 years?
- Where do I not want to be in five years, etc.?
Conclusion
Everyone can live a financially free life, but it takes some work to comfortably achieve your goals. You must be willing to temporarily live with less if you want to live well when you get older. Financial success seems overwhelming until you break it down into smaller steps.
You must plan for the future and work within a reasonable budget. Your goals and budget need to adapt as life changes. Start by including small goals and keeping the amounts to a minimum. Everyone can afford to work for their future.
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