How to stay financially healthy | Financial Wellbeing - HSBC Bank USA (2024)
Forming healthy financial habits takes time and effort. In fact, research by behavioral scientists (European Journal of Social Psychology) suggests that it takes more than 2 months - 66 days to be exact - for a new habit to form and before a behavior becomes automatic.
Keep track of your monthly income and expenses and find ways to free up funds to cover your expenses if you need to. Set a budget for how you will spend the money you earn.
Get into the habit of dividing up your expenses into needs, wants and savings or debts. If it’s appropriate, aim to spend 50% of your income after tax on needs, 30% on wants and 20% on savings and debts each month.
If you're not saving as much as you'd like, or find it hard to cover your costs each month, look for ways to reduce your outgoings. Also, think about how you might increase your household income.
Aim to borrow only what you can reasonably afford to pay back. Take steps to manage debt that you have already, for example, cut back to free up capital, approaching your lender for support, or consolidating debts.
Start saving for your retirement as early as you can. The younger you start, the bigger your retirement fund. Remember that compound interest quickly mounts up, which is the interest earned on previously earned interest.
If you can, take out insurance to protect you from risk that you would not be able to cover yourself, like losing your household’s main income through illness or injury.
Online financial fraud is on the rise, so take steps to avoid becoming a victim of cybercrime. Remember the saying if something sounds too good to be true then it probably is.
Aim to build up enough savings to cover at least 3 months of essential expenses, in case of emergency. Aim to borrow only what you can reasonably afford to pay back. Take steps to manage debt that you have already, for example, cut back to free up capital, approaching your lender for support, or consolidating debts.
Financial Wellness Program Ideas for Your Employees
This can include a retirement savings account — such as a 401(k) — and tax-free health care accounts, such as a health savings account (HSA) or flexible spending account (FSA).
It's about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered. People who experience financial wellbeing are less stressed about money.
(2020, p. 1596) found that FWB has three dimensions: meeting expenses and having some money left over, being in control, and feeling financially secure.
One of the most significant problems with personal financial well-being is debt. Debt can be crippling, causing stress and anxiety that impact one's mental health. The debt burden can also lead to physical health problems, such as high blood pressure and heart disease.
The most common signs of a financially stable person include having little to no debt, being able to make and stick to a budget, having a healthy amount of money in savings, and having a good credit score.
Creating a budget is the first step to developing a workable spending plan. It will help you manage your expenses and keep you on the right path to achieve your financial goals. Before you can create a budget, you need to know what you spend in an average month.
The most fundamental steps toward financial wellness include establishing a budget, managing cash flow and debt, building your emergency savings, and putting some automation in place with your savings.
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