Financial Self-Care: 5 Tips to Boost Your Money Wellness

Financial self-care is about ensuring your financial practices contribute to your overall well-being. Often, self-care is associated with relaxation activities like reading a book or taking a spa day, but financial self-care is about ensuring your financial practices contribute to your overall well-being.

Reflect on Past Financial Habits

The discussion begins with the importance of reflecting on your past financial habits and understanding how early money lessons impact your current financial behavior. Kim emphasizes the need to identify and change any negative patterns that may have been ingrained since childhood.

Set Realistic and Aspirational Financial Goals

Next, they explore setting realistic and aspirational financial goals. Kim shares insights on how visualizing big dreams, like owning an expensive home, can motivate you to create actionable steps toward achieving those goals. This process involves regular check-ins and adjustments to your financial plans.

Track Spending

Tracking spending is another crucial aspect of financial self-care. With the help of budgeting apps, you can monitor your expenditures, receive alerts when you exceed your spending limits, and make informed decisions about your purchases. This practice helps keep your finances in check and reduces unnecessary spending.

Save Money and Build an Emergency Fund

The episode also addresses the challenge of saving money and building an emergency fund. Kim offers practical tips on prioritizing savings by cutting back on non-essential expenses like subscriptions and takeout orders. Building up your savings can provide a sense of financial security and peace of mind.

Maximize Employee Benefits

Lastly, they discuss the importance of maximizing employee benefits. Many jobs offer benefits that can significantly impact your financial health, such as flexible spending accounts, disability and life insurance, and childcare expenses. Kim advises listeners to check with their HR departments to ensure they are taking full advantage of these benefits.

Financial Wellness: A Key to Happiness

By implementing these tips, you can achieve a more relaxed and content financial life. Studies have shown that happiness does correlate with income, and the link comes down to the choices that it opens to you. Going further, an ASIC-commissioned study found that people experiencing financial difficulties are twice as likely to encounter mental health issues and that supporting recovery in financial wellbeing can also improve mental health.

Financial Independence: A Key to Financial Wellness

There is a range of steps you can take to support your financial well-being, at any stage of life. While factors like whether you have caring responsibilities or a mortgage might change the steps you should consider, other things are universal regardless of circumstances.

Budgeting and Emergency Funds

If you are single, be it young or mid-life, Kazmierczak recommends your next focus after goals and budget should be on addressing any debts you have and have an emergency fund. “If you were to lose your job today, how long could you survive before you had nothing left to meet your basic living needs? What’s your back-up plan?” she says.

Investing for the Future

From an investment perspective, “there’s more out there than just a high interest saving account.” “Consider a mix of stocks, fixed interest and real estate. This can be achieved with less than you think. Technology can make financial management easier,” Kazmierczak says.

Caring for Others

Whether you care for young children, elderly relatives or other loved ones, there’s no question it can affect your finances.

Money with Kids

When it comes to parents of young children, Kazmierczak encourages putting anything you can away – “something is always better than nothing. This is where the power of compounding can help.” “Know what the costs are likely to be and how much, if any support or subsidy can be obtained,” she says, pointing to the government-funded Child Care Subsidy and kids vouchers. Those planning to have children should consider access to the government-funded Paid Parental Leave payments for up to 22 weeks. She also suggests the idea of ‘buckets’ of spend.

Caring for Others (elderly relatives, unwell partners, etc.)

It’s a reality that the sandwich generation knows all too well - the mental, physical and financial challenges of caring for their elderly relatives. It’s also one that certain steps can alleviate the struggle.

Investing when you have caring responsibilities

Many in these circumstances don’t have time to monitor their investments so Kazmierczak suggests it can be helpful to set up regular withdrawals into savings or high-interest accounts. For some, passive investments could be an option. She adds that you can find ‘pre-made’ diversified options that can help ensure your investments are spread across asset classes like stocks, fixed interest and real estate.

Approaching Retirement

When you are nearing retirement, you should be starting to consider how much you will need to live on. “The bottom line is that you should know what your income needs will be, to then determine how much capital is required to pay that income. If there is any outstanding high-interest debt, try to eliminate it as best you can,” says Kazmierczak.

This period is also an opportunity to focus on boosting your superannuation. You might want to look into employment strategies like salary sacrificing or check your eligibility for other contribution options, such as partner co-contributions or the government co-contribution for lower-income earners with low super balances. Be sure to check the contribution rules at ato.gov.au.

Prioritize Financial Literacy

Kazmierczak wishes Australians would prioritize financial literacy as it is a critical component to improving your finances. “But more importantly, it helps us achieve financial independence and reduce stress about money.” It sounds a lot like creating choice and happiness, doesn’t it? There’s no better time than now.

Conclusion

Taking steps to improve your financial well-being can lead to a more relaxed and fulfilling life. Remember to reflect on your financial habits, set realistic goals, track your spending, and prioritize savings. By maximizing your employee benefits and staying informed about financial literacy, you can create a brighter financial future for yourself.