There are so many things to know when it comes to financial wellness. It’s also important to remember that financial wellness is not the same for everybody because everyone is in different circumstances.
The cost of living (house, car, food, insurance, etc) has a minimum buy-in that differs depending on where you live. So, knowing that, we should do our best to maximize the top-line or money that we earn. Realistically, there are only so many ways that we can do that. We go to work every day, put on as happy a face as we can, and hope that our reward at the end of the year for a job well done is not a subscription to the jelly of the month club. The first thing to investigate is whether what you are being paid is fair market value. Sometimes, this can just require a simple search on a website like salary.com, while other times it may require reaching out to local recruiters who have a pulse on these numbers. If after doing research you find that you are making notably less than you have the potential to (10% or greater), it is worth considering whether or not going to your boss makes sense to push for more money. It is worth doing research on the best way to go about this before approaching them.
Another thing to keep in mind regarding your income is whether or not you are fully utilizing your workplace benefits. Are you maxing out your 401k match if your company offers one? Are there benefits provided through your health plan, such as gym discounts? If you have a benefits site to visit, log in and navigate around to find any benefits you may not be using. You may also be able to reach out to your human resources manager for a quick chat on this topic.
It can also be a good idea to recommend that your spouse, if they work, take the above actions as well. If you find that your income does not fully cover your living expenses or that there is not enough left over to save, check in with your spouse, if they are not working, to see if there is a job that they could pick up that they think would be reasonable.
Housing is most people’s most significant expense, so it bears paying the most attention to before making any major decisions. You don’t want to buy/rent a property that you can afford by a small margin. The standard for home/gross income ratio is 30%. In order to maximize your financial wellness, you should choose a property that meets your needs and that is in a neighborhood that you and your family are happy and comfortable in that is below the 30% of gross (before taxes) income threshold. As you save money, you can make decisions as to whether or not to make certain upgrades to the house that make it more desirable for your family to stay in. This gives you financial flexibility and can reduce financial related anxiety, which is a major cause of distress for up to half of households. We really never know if we will always be gainfully employed, so it is good to prepare for lean times when you are doing well. For most people, the feeling of financial preparedness will supersede the perceived benefit of having a bigger, more upgraded place.
The next major cost item for many people is automobile(s). Financially, it makes the most sense to purchase a car and hold it for ten or more years. Past the first four years of owning a car, the money saved is significant. But if you are going to do this, you need to do it with a car that is both reliable and that you can see yourself in for many years. It is worth purchasing a copy of consumer reports to see how they rate the reliability of the different car brands. And when it comes to insurance, make sure your shop around every year or so. It doesn’t take long these days. The insurance company knows what car you want to quote out with very little data and it can save you hundreds every year.
Another major household item to consider are utilities. Tens of millions of people have cut the cord with cable, realizing up to $1,000 in savings per year. It is understandable that many people love the myriad of new shows that they can watch with cable, but I is amazing the amount of content that is available on streaming devices for little or no money. It is an option worth looking into if you feel you can part with cable. Electricity can be another major bill, especially if you live in a region with extreme heat and/or cold. The first thing to do is to find any areas of the house where air is getting out. Seal them off with temporary sealer, which you can find at most hardware stores. Also make sure that you are not using unnecessary heating/cooling when you are not at home. There are probably more regular charges on our credit cards then there ever have been, with subscription based services on the rise. Every 6 months or so, do a cleanse to make sure that all of the services your paying for are truly being used.
An item to consider is maximizing your credit card rewards, which can be related to vacation spending. A card such as the Citi Double Cash Rewards card is good to have because it gives you 2% back on everything (most card offer 1%). Beyond that, there are a myriad of cards that offer bonus points for grocery, restaurant and gasoline spend. A convenient way to compare credit cards is to go directly to the major credit card issuer websites, including Citi, Chase, American Express and Capital One. When exploring these sites, you may see cards that give you rewards for specific brands you frequent, such as airlines or hotels.
Finally, when it comes to charitable contributions, depending on your individual tax situation, it may make sense to make multiple years of donations into a single year. This is because for the past couple of years, the standard deduction has been raised. This means that many people who used to be able to write off charitable contributions may no longer be able to do so. However, if you group multiple years donations into one, you can still take the write-off and give to the charities that you care about.
The above are just a few items to think about when considering financial wellness. If you have any questions about this topic, please feel free to reach out to me at firstname.lastname@example.org.