10 Actions That Help You Pursue Financial Wellness

Establishing financial wellness is a personal, ever-changing state of being that enables one to exercise choice while feeling in control of finances.

The individual determines financial wellness, which often includes working toward financial goals by completing specific actions. Some actions are time-sensitive, but others can occur anytime throughout the year. Here are ten actions that may help keep your finances on track as you pursue financial wellness:

1. Reviewing your monthly budget

Reviewing all money in and out each month enables you to save more and reduce your outstanding debt. Now is a great time to cut out what you don’t need, such as subscriptions and memberships you may not use. Updating your monthly budget periodically throughout the year can help you monitor your spending and saving as you pursue financial wellness.

2. Increasing retirement savings contributions

Make it a goal to increase your 401(k), IRA, or Roth IRA contributions so you are working toward maximizing your contributions. You can set your contributions to automatically increase at any time during the calendar year to help ensure you’re closer to your retirement savings goal as you approach retirement. Increased savings in retirement is great for financial wellness.

3. Evaluating your emergency fund

An emergency savings of six month’s-worth of living expenses saved in a cash account can help prevent premature liquidation of assets. Six to twelve months of cash reserves are recommended for high-income earners or self-employed people.

4. Reviewing your investments

While risk/reward is part of an investment strategy, taxes, and interest rates can impact portfolio performance. Schedule a meeting with a financial professional to examine how your investments performed last year and develop a strategy for your unique situation.

5. Reviewing your life insurance policies

A yearly review of your life insurance policy is essential. In order to ensure the death benefit is enough to pay off your debt. It will also help provide financial resources for your beneficiaries for a set period. While employed, maximize your employer’s term life insurance coverage. However, you may also want to consider private life insurance so that if you leave your employer, you have coverage at a death benefit amount appropriate for you. Life insurance through an employer may not be enough coverage for your situation, so meet with your financial professional for a life insurance policy review. Life insurance and the freedom it brings is a great way step toward financial wellness.

6. Evaluating your will and estate plan

Wills and estate plan documents are essential to pass your assets as you intended upon death. If you have changed your mind about how you want your assets divided or who should receive them, now is the time to update these essential documents.

7. Reviewing your retirement savings goals

Are you on track toward your retirement savings goals? It’s essential to review how much you saved, determine how much more you can contribute, review investment performance, and adjust your strategies.

Suppose you are retired and spending down your retirement nest egg. In that case, it’s essential to determine how long your retirement savings may last based on today’s inflation rate, current interest rates, market performance, and other relevant factors. Reviewing goals is a key factor on the road to financial wellness.

8. Evaluate other insurance coverage

Evaluate your different types of insurance coverage, such as property/casualty, disability, long-term care insurance, and so on. Once you review these crucial policies with your insurance and financial professionals, you can determine if you have enough insurance for your situation.

9. Preparing for taxes

A tax planning meeting can help offset taxes later by making strategic tax-saving decisions now. Financial and tax professionals can help determine which strategies may help lower your taxable income. You can compare last year’s earnings and income against this year’s and previous year’s tax documents as a starting point; W2s, 1099’s, investment statements, charitable giving receipts, mortgage interest statements (form 1098), and other documentation on deductible items.

10. Giving to charity

For many, financial wellness includes giving to charity to benefit others. You can make a difference in your community and society and even save on your taxes by giving through these ways:

• Donor-Advised Funds: A donor-advised fund allows you to donate cash or investment strategies, which are non-refundable to a non-profit organization.
• Charitable Trusts: Consider incorporating charitable lead trusts (CLTs) or charitable remainder trusts (CRTs) into your giving strategy. Consult your legal and financial professionals if you plan to include securities in your trust.
• Life insurance: Life insurance dividends can be gifted now, or the death benefit to one or more charities as part of your estate plan.

Complete this list on your way to financial wellness

By completing this list of actions, you can work toward financial wellness throughout the year. Your financial professional can help you monitor your progress throughout the year and make appropriate recommendations.

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