The fallout of COVID-19 continues with far-reaching impact beyond concerns about health. A PwC 2021 Employee Financial Wellness Survey found that many people in the US are experiencing deep financial strain, with 63% of those interviewed said their financial strain has increased during the pandemic.
Financial strain is the effect of having poor financial wellness. Financial wellness is your overall financial health. According to the Consumer Financial Protection Bureau, financial wellness is a state where you have control over your daily and monthly spending, have the ability to handle a financial emergency, are on track to meet your financial goals, and have the financial freedom to enjoy your life. Financial wellness looks different for everyone and may change as you get older.
So why should this matter to you? Because studies have shown that financial strain leads to mental and physical health problems. According to Mayo Clinic, unmanaged stress can lead to high blood pressure, heart disease, obesity, and diabetes. It can also lead to behavior and mental health problems such as depression, anxiety, insomnia, or damaging coping mechanisms such as alcohol or drug use.
Having strong financial health, like any other area of health, requires you to build healthy habits. There are several steps you can take to build those habits, including:
- Understand where you are starting from. Begin by writing down all your expenses over a month to establish your baseline. An app like Mint is a great place to get started.
- Create a budget to manage your spending. Spending within your means is a key component of financial wellness and you won’t get there without a budget.
- Manage your debt. Carrying debt can feel overwhelming. Try using the Debt Snowball Method to pay off your debts one at a time, starting with the smallest one first.
- Create an emergency savings account. If unexpected expenses come up, you do not want to fall into debt to deal with them. Having an emergency savings account equal to three to six months of expenses should cover you in most emergencies.
- Save for your retirement by investing in your employer’s 401(k) plan. By saving a small amount directly from your paycheck each pay period, your savings will build up in no time! Many employers also have a matching program to help you reach your goals even faster.
- Take advantage of resources and tools. Many Employer Resource Programs offer tips on how to increase your financial wellness. If you need more help, consider working with a financial advisor.
Remember, financial wellness is a journey, not a destination. And it is one that will change as your life changes and your priorities shift. Following the strategies above will help you take that first step along your journey.
Tara, the Director of Tax for Vitality Group, is a travel lover, aspiring yogi, and a Halloween fanatic. When she isn’t traveling the world with her husband, you can find her out hiking the Fox River trail, spending time with friends and family, or in her favorite yoga class.