Financial Wellness

financial wellnessFirst of all, let’s define exactly what financial wellness is; ‘Getting out of debt and securing your financial future’.

Now obviously that is a very general description, but that pretty much sums it up. Really the key to securing your financial future is getting out of debt. But the million dollar question is “how exactly do you get out of debt anyway?”

How to Achieve Financial Wellness

Now when it comes to financial education or financial advice, financial advisors will lead you to believe that managing your money is a very complicated matter and that you need a professional financial advisor to guide you along the way. My response to that is B%&#… Pardon my language. The reason why financial consultants tell you that managing and investing your hard earned money is complicated is because they want to sell you one of their financial products or services. The truth of the matter is managing your money is nothing more than just basic common sense. Here are four basic steps you can utilize to generate wealth and secure your financial future:

The first step is to plan a monthly budget. Very simply add up all your monthly expenses and subtract it from your income and calculate how much money you have left over at the end of the month. If you have more money coming in than going out, then you have a positive cash flow. At this stage you should be saving and investing the extra money coming in each month. You should also be using this extra income to pay down your debt. On the other hand if you have more money going out than coming in (negative cash flow), then that probably means you have a lot of debt and you need to reduce your debt. At this point you need to conduct a financial audit of your finances to determine why your expenses are greater than your income. This leads us into our second step, which is creating an emergency fund.

Creating an emergency fund is imperative when implementing a financial plan. This should be about six months going out. If you lose your job, or lose your business, you should have six months of cash reserves (no credit card usage allowed) on hand to pay all your bills for six months.

The next step in the process is to create and implement a wellness program. Why create a wellness program you ask? As indicated, I began the process of implementing a wellness program back in December of 2003, and although it is difficult to quantify, I have probably saved myself thousands of dollars in potential medical and health care cost. This is because preventive care or preventive health care is the key to saving money in my opinion. And unfortunately we live in a society in which mainstream medicine puts more emphasis on treatment (the sickness industry as it is called), than they do on disease prevention and wellness. My wellness program proves that being healthy is the new wealthy!

The next step is a two part process. The first part is to reduce your expenses. When you reduce your monthly expenses this allows you to start paying down your debt. Reducing your monthly expenses can include such things as buying generic products when grocery shopping, buying in bulk and reducing non-essential expenses like entertainment (going out to dinner for example). Once you begin reducing your monthly expenses, you can then begin to focus on reducing your debt. Getting out of debt and becoming debt free is probably the most challenging of all the steps. What I would recommend you do is (this is what I did to reduce my debt) take your smallest debt (like a department store credit card) and pay that off first. What this will do is get you motivated to tackle your other bigger debts like your car payment and then your mortgage. It is also like a snowball effect because once you get your smaller debts paid off first it will snowball into getting your other, bigger debts paid off.

Once you start reducing your debt load, your monthly positive cash flow will start to increase (more money coming in than going out), which in turn will allow you to start to saving and investing your money for early retirement.

And now that you have a positive cash flow coming in, you can now start to build your wealth…

How to Build Wealth

The key component to building wealth is self-discipline (e.g. delayed gratification) and investing your money wisely. Some of the top financial experts are now preaching the advantages of living debt free, and how it is a key component to building your wealth. To learn more about how to build wealth in today’s economy then click on the following web link How to Build Wealth

If you want more information on how to achieve financial wellness in today’s economy then fill out the form below with your name, email address, and the country you live in!



Return to Home Page