5 Pillars of Financial Wellness

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Each money decision you make impact financial wellness. Here are 5 pillars to help achieve and maintain wellness.

The tremendous weight of maintaining your financial health can seem less than pleasing at times but financial wellness can be a defining factor of your life success. To completely embody this success, you first need to lay a sustainable foundation. This comes in the form of the five pillars of financial wellness. Today we’ll take you through each pillar and how to actively implement them into your financial health routine.

Managing Money

Managing your funds comes in multiple forms. Depending on how your spending habits work you can cultivate these principles to fit your needs, but the foundation remains the same. To successfully manage your money there are several factors that come into play:

  1. Budgeting: Setting a budget can assist in putting guardrails on your spending habits
  2. Spend tracking: Tracking your spending gives you full control over how loose you’re being with your wallet
  3. Paying off debt: Paying off debt gives you the financial freedom to afford the lifestyle you want
  4. Saving: Saving money includes the benefit of affording life purchases like homes, cars, and having children

Earn Money

Another major aspect of financial wellness is earning money. There are several ways to sustainably earn money. However, the keyword is “sustainability”. Earning sporadically can be both counterproductive and inefficient. There are two main ways that earn that will yield financial wellness:

  1. Passive Earning: Utilizing dividend or real estate income that you don’t have to physically log hours to earn.
  2. Active earning: More like a 9 to 5 where you perform a service to receive compensation.

Both passive and active earning have their pros and cons, it really depends on how you acquire your funds and if that task is repeatable month over month. 

Grow Your Money

Growing your funds is quite different than earning. Many do this through saving and investing. For example, saving can be done automatically like saving a part (or percentage) of your income each payday. 

This leads to investing such as through retirement accounts, 401K’s, IRAs, or through dividend stocks to name a few. There are many ways to grow your income but foundationally remembering these aspects are most important:

  1. Be consistent
  2. Be intentional
  3. Be committed

Smart Borrowing

Borrowing is utilizing certain forms of finance, such as credit, and can benefit you in the long run when establishing credit and gaining financial history. To borrow effectively you need to avoid overspending while also building up a good payment history. This means:

  • Only borrowing what you can afford
  • Making payments prior to the due date
  • Not opening too many credit lines
  • Not closing any outstanding credit lines

Borrowing can also mean taking out loans such as auto loans or home loans to establish and build credit. In the end, borrowing can mean taking on responsibility but can yield exceptional rewards for your financial health.

Protect Your Money

Protecting your money is no laughing matter and should not be taken lightly. Insurance is one major factor to carefully consider for securing and protecting your assets. Insurance allows you to have peace of mind in that you pay a premium and receive protection or possibly reimbursement for your financial losses.  Some other ways to protect your funds include:

  1. Creating solid passwords for your financial accounts
  2. Only financing with FDIC accredited banking services
  3. Using your own personal computer with encryption for your financial management

Key Takeaways

Financial wellness doesn’t just happen, it’s a conscious effort that has to be reinforced with smart decisions. These include:

  1. Having a solid budget in place
  2. Monitoring your money to prevent overspending
  3. Smart investments to help grow your funds
  4. Protecting your money through credible institutions and insurance

For more expertise on financial wellness continue to follow the Barnum Report and visit our website at Barnum Financial Group.com.