Did you know that January is financial wellness month? Yes, it’s a real thing, and it’s not a coincidence that it falls on the month immediately following the holiday season. January is a good time to do a “health check” on your finances, get grounded for the new year, and adjust your budget and spending habits. Have you done that this year?
We’re not just talking about consolidating credit card debt or making plans to pay off medical bills. Those are temporary fixes. True financial wellness is achieved with healthy financial behaviors and setting a goal to become financially secure. Try the following:
- Revisit Your Annual Budget
Financial wellness begins and ends with your spending habits. The first step to adjusting those is to create an annual budget and list all your expenses. Group them into two categories: essential and non-essential. Eliminate as many of the non-essential expenses as you can. That money is needed elsewhere.
- Increase Your Retirement Contributions
The IRS annual limit for 401(k) contributions went up to $20,500 this year. If you were maxed out last year, you need to make the adjustment for the new year. If you’re contributing less than the maximum, increase your contribution percentage and get as close as possible. That money is tax-deferred. You’ll need it when you retire.
- Automate Your Savings Deposits
Waiting for the “right time” to make a savings deposit never works. If you have the money in hand, you’ll find something to spend it on. There are applications for iPhones and Androids that can automate your savings deposits for you. Use one of them. Set it up to take a small amount from every paycheck and deposit it into savings.
- Review Your Investment Portfolio
The stock market is on a wild ride right now. After one of the longest bull runs in history, it’s starting to backslide. Technology is changing. E-currency is a force to be reckoned with. It’s time to do a full review of your investment portfolio and make some changes. Hire a professional financial advisor if you’re not comfortable doing it yourself.
- Pay Off High-Interest Debt
Yes, we’re talking about credit card debt. Those high interest rates are sapping your financial strength and preventing you from being financially secure. Pay them off and stop using them if you can. When it comes to in-store or online purchases, adopt the mindset of not buying it if you can’t afford to pay cash for it. Use the debit card instead.
- Make Extra Mortgage Payments
If you own a home, schedule extra mortgage payments on a monthly or quarterly basis. If your interest rate is high, refinance before the Fed raises rates later this year. Owning your home outright is one of the best things you can do for yourself before retiring. Do whatever you need to do to achieve this goal so you can enjoy your golden years.
- Donate to a Worthy Charity or Non-Profit
Putting money back into the community is a financially healthy exercise. Find a worthy charity or non-profit that focuses on something you’re passionate about. Budget to make regular donations to their cause. The karmic effect alone will make you more productive and you’ll be making someone else’s life better.
The Bottom Line: Financial Health is Multi-Faceted
This is the formula for financial wellness. Revisit your budget, increase your retirement contributions, automate your savings, review your investment portfolio, pay off the credit cards, make extra mortgage payments, and donate to a worthy charity. If you do all these things, your financial health will improve.