Financial wellbeing is all about discovering financial security and independence. This means that once you reach this point, your finances are in a place where they are capable of sustaining your lifestyle. So, if you want to reach financial wellbeing then it can help to know what it takes to get there.
How Much Will You Need?
The first place to begin is to identify your short and long-term financial and lifestyle goals. Whether these include going on that exotic getaway, investing in property or something else. Once you have identified these goals, you can determine the amount you will need for them. If you want a definitive amount, then you will need to break down these goals and understand the impact they will have on your retirement savings needs. However, this will depend on your lifestyle when you plan to retire and once you are retired.
Setting a Savings Goal
Understanding the importance of each financial and lifestyle goal is crucial as this will enable you to prioritise them. Then you will need to consider how long you have left to save or invest in them. Retirement might be many years away, but those short-term goals could be close. Now you should identify what interest or capital gains you want to see from both investing and saving your money.
Consider your earnings, think about your expenses and then look at how much you could realistically save on a monthly basis. You should aim to have both a monthly and annual savings target and they should align everything to your overall total wealth solution.
Is My Emergency Fund Sufficient Enough?
Emergencies can often have an impact on your financial wellbeing. This can lead to stress which is why you should aim to have savings in place to cover emergencies. One of the main savings goals on your list should be emergency savings. You should aim to have a cash cushion that covers around 6 months of your living expenses.
Manage Your Expenses
Tracking your expenses will allow you to identify where they are going and understand how much you spend each month because if you don’t, then it will make it almost impossible to budget. Through tracking your expenses, you will have the scope to make better budgetary decisions. And with a budget plan, you will be able to manage your spending and identify any areas that need better control.
Investing – What Do I Invest in and Why Do I Need to Invest?
Having goals when it comes to building an investment portfolio is critical. These should be based around your risk tolerance, your timeframe and your asset class preferences based around your lifestyle and financial goals. Do you want to purchase more property? Would you prefer to invest in a business? Understanding how big a part you want to play when selecting and managing your investments can help you pick the right option that aligns with your investment goals. The investment products you choose will also be influenced by your investing preference. Also consider how experienced you are with investing and the amount of control you want over them. These considerations are vital when understanding what to invest in and why you should invest.
When you implement both personal and financial goals, you put yourself in a better position to save and invest. This will make it more realistic to meet your financial and lifestyle goals as it will provide you with the motivation required to reach them and manage them while you monitor and track each goal based on the timeframe and risk level. This is why, we believe having this level of visibility and clarity will often lead you to achieve financial wellbeing.
Need help visualising your financial future and helping you reach financial wellbeing? Our financial advisers can help you with just that and more. Contact us today to get started.
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