Give Your Finances a Good Look: 5 Tips to Reach Financial Wellness

When you think of wellness, you probably think of the physical and mental aspects: getting enough steps in a day, eating healthy, yoga, and meditation. But there’s another side of wellness that we often forget about — financial.

According to Everyday Health’s United States of Stress survey, finances are the most common source of stress among men and women. One of the best ways to alleviate that stress is to know where you’re at financially and set goals for where you want to be.

Here are some financial goals you could have for the new year:

• Pay off debt (be specific with how much!)
• Start and save $X in an emergency fund
• Pay off the car
• Save X% of each paycheck for retirement

Once you have your goals outlined, now you can dig into the specific steps to help you reach financial wellness!

Tip 1: Increase your financial literacy

One of the best things you can do for yourself, and your family, is to learn about personal finance! Maybe you’re a wiz when it comes to saving money but aren’t sure how to invest. Maybe you have no debt and want to start your own business but aren’t sure how to get a business loan.

Nowadays, there are many resources – books, YouTube videos, and podcasts – that can teach you the basics of saving, borrowing, and investing.

And don’t forget — as your friendly hometown bank, we’re also a resource for you! You can always stop by to talk about how we can help turn your dreams into reality with our accounts, loans, and other offerings.

Tip 2: Track your spending

For many adults, spending can be the reason they can’t hit their financial goals. If you are spending more than you make, that can dig you into a deeper debt hole.

The solution is to track your spending. You can do this using an app, a spreadsheet, or if you want to really dive in, you can do it the old-fashioned way using a pen and paper. No matter what method you choose — be sure to do this often (once a week or once a month!) so you stay on top of your spending and know where you can cut costs.

Tip 3: Increase retirement savings contributions

Everyone wants to retire and relax one day, and the key is to start saving for retirement now! For the new year, consider increasing your contributions to your retirement account by one or two percent. As the year goes on, consider increasing your contributions whenever a positive life event (that increases your income) happens like a promotion, a raise, or getting married.

Are you looking to open a retirement savings account? At Farmers & Merchants Bank, we offer Individual Retirement Accounts (IRAs) so stop by and see us to open your account today.

Tip 4: Check your credit report and score

How often do you check your credit score? How about your credit report?

Most adults check their credit score before they take out a loan to buy a home, lease a car, or start a business. However, it’s important to check your score regularly to know if you’re making progress on paying down debt and improving it month after month.

As for your credit report, you can get a free credit report once every 12 months through Annual Credit Report. It’s up to you when you want to pull and review your report — right away at the start of a new year or if you know you have to make a large purchase later on, you may choose to wait.

Either way, make sure you’re checking both and tracking your progress!

Tip 5: Create a net worth statement

A net worth statement shows your financial position at a given point in time. Think of it as a “financial snapshot” that shows the dollar value of what you own (assets) and what you owe (liabilities or debts).

After creating a net worth statement, you can have clearer understanding of your financial well-being and even compare it year-to-year to see how your net worth increases or decreases

The formula for calculating net worth is Assets – Liabilities = Net Worth.

Remember — financial wellness is just one part of overall wellness. The more you can learn about personal finance and understand where your money is going, the easier it’ll be to achieve all your goals.

As your friendly hometown bank, we’re always here to answer any questions and help you on your journey to financial wellness.