Ten Ways to Boost Your Financial Wellbeing

(And Banish Financial Stress)

Experiencing financial stress is common, but it doesn’t have to be a part of your life. If you’re looking for ways to get better at managing your finances, we’ve got your back.

Here are ten great ways to boost your financial wellbeing:

  1. Take stock of your financial health
    Whether you’re just starting off on your journey towards financial wellbeing or need a quick refresher in managing your money better, the first thing you need to do is take stock of your finances. Check your bank balance, how much debt you have, how many credit cards you have, any investments you’ve made, your credit rating or credit score, etc. Once you know the exact status of your financial health — whether poor, average, or good — then you can plan to fix it, improve it, or maintain it.

  2. Define your priorities
    People often manage their finances in the same way as others around them do, without really questioning their own financial beliefs. For example, if your parents have always been conscious about saving for a rainy day, you may do the same. Or, if your close social circle is full of spenders, it’s likely you tend to go overboard on your spending too. To achieve financial wellbeing, you need to know what you want. Is building your savings more important than growing your wealth? Or are you at a stage when you can afford to take on a few financial risks? Perhaps, being debt-free as soon as possible is at the top of your list. Either way, you need to define your priorities. Remember, as you go through the different phases of life, you will have to keep revisiting and redefining your priorities. It’s always a good idea to speak to an advisor who will be able to guide you and help you make sound financial choices based on your unique situation at every phase.

  3. Plan for the future
    We know life can be uncertain but living like every day is your last is not the best financial advice. When it comes to managing your finances it’s important to plan - even years or decades into the future. This may seem daunting, but it’s the only way to prevent financial stress and ensure your financial wellbeing into the future. Looking at the big picture will help you gain the right perspective to make better decisions about how you build your savings, spend your money, the debt you take on, and any investments you make.

  4. Set specific goals
    Without a goal, a plan is just a wish. Whether it is related to building your savings, reducing your debt, or growing your wealth — setting specific goals gives you direction and a way to measure your success. While setting goals, divide them into bigger goals such as buying your own house, paying back all your debt, going on an international vacation, etc. Then break each goal into smaller (yearly, quarterly, monthly, weekly, or even daily) goals. This way, just a small step each day, week, or month, has a compound effect and you will easily be able to meet your bigger goals without feeling overwhelmed. On the mental health side, the sense of achievement when you meet even the smallest goals does wonders for your self-esteem and self-confidence, making it easier to deal with financial stressors.

  5. Master the art of budgeting
    Budgeting is not everyone’s cup of tea. However, learning how to budget well can make a world of difference to your financial wellbeing. If you can, make your budget as detailed as possible. The goal of any budget is to channel all your sources of income between your necessities and your luxuries. Necessities include your living expenses like rent, food and utilities, debt repayment, and your savings (yes, savings are necessary!). Luxuries would include things you want or enjoy but don’t really need like entertainment, clothes, a new gadget, etc. A balanced budget is one that covers all your necessities and allows you to indulge in some luxuries too.

  6. Track your expenses
    Like budgeting, tracking your expenses may seem like a chore, but it’s a must because it has a big impact on your financial wellbeing. Do you ever find yourself wondering just where all your money went? With the ease of cards and online payments, we don’t even realize how or where we’re spending our hard-earned cash. Tracking your expenses helps you to know exactly how you spent each penny, allowing you to analyse your spending habits. Expense tracking also helps you pinpoint exactly where you’re spending too much, so you can cut back on unnecessary expenses and become financially wiser. For example, did you know some people pay their banks as much as $360 every year — when they could just get a No-Fee Bank Account at Innovation and spend $0 in banking fees?  What would you buy with that extra $360? Or would you save it?

  7. Save, save, save
    If you want to establish, maintain, or improve your financial wellbeing you simply have to make sure you’re building your savings. It can be hard sometimes to discipline yourself and put money into savings rather than spend it, but it must be done. You can have separate types of savings. They could be goal-based, such as saving up to buy a car or to travel abroad, or it could be general savings in the form of an emergency fund (more on that below).

    There are three rules that can help you build your savings. One is that you should have enough in your savings to fund at least a year of your usual living expenses. Calculate how much money you would need to maintain your current lifestyle for a year without any income — that is the amount you should have in your savings. If you have a budget and track your expenses, this will be easy to calculate. Don’t panic if you don’t have that much saved up, set it as your goal and work towards it. The next rule will actually help you do just that. The second rule is at least 30% of your income should go directly into savings. So, say you make $900 a week, then at least $300 of that should go into your savings. The third rule is that you should always pay yourself first. It’s also called the ‘save first, spend second’ rule. This means that as soon as you get your salary or any other income, the first thing to do is put a portion (30% is a good measure) into savings. Only then should you make any other payments or purchases.

  8. Set up and maintain an emergency fund
    Your emergency fund acts as a safety net against any curveballs life may throw at you. If you lose your job or fall ill or your business goes bust, or there’s a global pandemic — all of these sound dramatic and unlikely, but as COVID-19 has proved to us, anything can happen. The point we’re trying to make is that in the case of any number of small tragedies, your emergency fund can help you to tide over the difficult times. When you build your savings, denote a portion as your emergency fund. Make it a point to first establish that fund, and only then set aside money for any purchase-based savings. If you do happen to use the money in your emergency fund, make it a priority to replenish it as soon as possible.

  9. Do your research before taking on debt
    Money makes the world go round. Credit cards, loans, mortgages, lines of credit — all of these are great financial products that will help you get the things you need and want. However, before you take on any debt, make sure you do your research. Always read the fine print and ensure you fully understand the terms and conditions.  For example, say you’re looking for a mortgage. On doing some research you may find that your bank offers mortgages at a high interest rate, while another lending institution offers a low-interest rate mortgage. As part of your research, it’s a good idea to speak to an expert. In this case, you should speak to a mortgage specialist.  Many banks or lending institutions even have special incentives or offers. For example, right now at Innovation, we’re offering up to $3,000 cashback on mortgages for first-time homebuyers. When you do your research, you will be able to take advantage of some fantastic deals you would never have come across if you only went with your known options.

  10. Keep an eye on your credit rating
    One of the biggest factors that can affect your financial wellbeing and cause financial stress is your credit rating. Your credit rating or credit score is based on your history as a borrower. If you pay your debt in time, your credit score will be high. If you have a history of defaulting on payments, it will reflect in your credit score, making it low. When you want to get a loan or a mortgage, lenders first check your credit score. If you have a good credit rating (high credit score), they will gladly give you a loan. You will also be able to enjoy favourable terms on your loan like low interest rates and flexible payments. So, how do you make sure your score stays high? Always make your credit card, loan, or mortgage payments on time, and don’t miss even a single payment. One way to ensure your payments are on time and always made is to set up an automatic debit from your bank account.

So, there you have it. We hope you found this list of ways to boost your financial wellbeing helpful and will follow these tips to keep financial stress at bay and get better at managing your finances. If you ever need any financial advice or assistance, don’t hesitate to call or chat with us. At Innovation, we’re there for you whenever you need us.