We all know how to look after our physical wellbeing, but have you considered your financial wellbeing? How do you determine your overall financial wellness?
First you must look at your level of debt. Are you constantly relying on overdrafts and credit cards for day to day life? This may be a red flag. Obviously the less debt you have acquired, the financially better off you will be.
Next take a look at bill payments. Are you on time paying bills, or are you constantly missing due dates? Often missing bill payments is a signal that you are not coping financially. It’s imperative that you plan ahead, write down when various bills and direct debits are due and plan your income expenditure around this. Budgeting is key here.
How financially confident are you? Are you confident in making financial decisions that will benefit your financial wellness?
Do you have an emergency fund and savings for a rainy day? A good rule of thumb is to have 3-6 months income in a savings account earmarked for a financial emergency. This would affect your financial wellness if you are just scraping by every month, and do not have an emergency fund to fall back on.
Do you have a clear written financial plan? Are you just coasting by payslip by payslip with no clear plan in place?
A recent survey, conducted by Red C Live and Irish life used these headings to determine individuals financial wellness based on a point system. People were allocated points between 0 and 100, those lower on the points scale were deemed to be struggling financially, while those with higher points were thriving.
A startling 31% of people were deemed to be struggling financially. People aged over 65 years were generally thriving, with more people aged 35-54 were struggling or just getting by. Interstingly, people who have a financial adviser have an average financial wellness score of 73.
In our opinion, there are more aspects to consider when thinking about your overall financial wellbeing. Insurance cover and retirement funding should also be included when determining your wellness score. How would you fare if you became unwell and unable to work? Do you have income protection? What if one of the income earners in your family passed away unexpectedly, how would you cope financially? What will your financial wellness look like in retirement?
Where do you think you fall on the financial wellness scale? We as advisers, would be delighted to help you improve your financial wellness. Please get in touch if there is anything we can help you with.