As we shed the turbulent year of 2022, most of us are busy drawing up a list of New Year’s Resolutions to carry into the bold, bright year of 2023. One thing we should definitely include in there is a promise to maintain our financial and mental health.
Financial health is a measure of how well your family can manage its daily expenses and withstand medical and financial shocks. It’s also a measure of your ability to pursue new opportunities like further education and moving up in your career.
Unsurprisingly, poor financial health can directly lead to poor mental health. Worrying about paying off our debt, the size of our salaries and the success of other people relative to our own are sources of stress that we don’t need.
In fact, research has shown that financial health is a key predictor of overall health, more so than level of income. It can lead to stress and mental health consequences, which in turn affect our productivity and our ability to focus, creating a downward spiral.
But hey! The end of the year is supposed to be a time of optimism. Let’s plan ways to avoid common pitfalls and ensure our families get the best out of tomorrow.
Here are a few resolutions we can make for ourselves:
1. Create an emergency fund
Unexpected events like illness, sudden layoffs at the workplace and other emergencies can really rock the boat of your financial stability. Medical emergencies in particular can cause serious disruption and affect everything down to food and basic necessities. Build up a buffer for yourself and your loved ones by saving about 3-6 months’ worth of income. At the very least, it will buy you time and some breathing room to figure out how to handle the problem.
2. Consider your insurance plan
Get to know your insurance coverage and learn what your policy will protect you against. Insurance is a great way to relive your stress about your ability to cover unforeseen emergencies.
3. Make investment plans
Have you ever heard the saying: “Make your money work for you?”
Investing your wealth into stocks and securities is one way to make your wealth grow even while you sleep.
A more beginner-friendly option for investing is a mutual fund. In mutual funds, a company groups several individuals together and places their investments into many different securities, stocks and bonds. This method lessens risk by diversifying assets and minimizing potential losses. The mutual fund is handled by a professional fund manager who oversees the entirety of everyone’s investments, so you won’t have to make the more nuanced decisions.
Mutual funds are also easier to liquidate, e.g., sell off to other people compared to other investments.
4. Pay off your debt
Some debts have a very small interest rate and we take them on thinking that we can handle the additional burden. But even small interest rates will gradually erode your wealth, and every month you let the debt lie, the more it will subtract from funds that could be used to better ends. Do your best to create a repayment plan and pay that pesky debt off once and for all.
5. Align your financial goals with your personal goals
We all need something to strive towards. Just making money and saving it up might not be enough incentive to keep us going. That’s why we need to tie in our financial goals with concrete things. Saving up for that new gaming laptop, or that nice home espresso machine? Incorporate your personal dreams into the mix to give your financial planning the extra oomph it needs to get going.
6. Make a personal budget and follow it religiously
Ultimately, all this change starts with you. Your personal expenditures and day-to-day savings are what will fuel the rest of these measures. A detailed personal budget that lets you save up for tomorrow is the key, since whatever is left over at the end of each day is what you will use to repay debts, make emergency funds, and do all the things we’ve just mentioned. To quote Mahatma Gandhi: “You must be the change you wish to see in the world.”
We here at Lista are only too happy to help with all this. Get a handle on your personal savings goals today with our detailed budgeting feature. Be the change you want to be, and Happy New Year!