Check your financial wellness
Lots of media coverage at the moment on interest rates and the increasing cost of living. It’s expanded my financial vocabulary to include “mortgage cliff” (a steep rise in interest rates when low fixed rate terms expire), “mortgage prisoners” (those locked into mortgages exceeding the value of their property) and, more helpfully, “financial wellness”. This article defines financial wellness as “effectively managing your economic life”. It encompasses how well you’re able to meet your financial obligations, control your finances and feel secure about your future financial obligations. It makes an interesting case for employer-sponsored financial wellness programs that, like workplace physical fitness and mental health programs, can benefit both staff and businesses through increased productivity, loyalty and retention.
But how financially well is your business? This article in American Express talks about what that state is, and I particularly like their 3 key questions business owners should ask themselves:
- How am I managing my business expenses?
- Is my accounting system set up properly and do I understand its output?
- Do I know important accounting terms?
It’s basically about being financially literate and in my experience, creative managers and business owners who understand the numbers have a competitive advantage over their competitors. I guess whether you’re thinking about your personal or business finances, the basics are: get informed, make the changes you need to and plan ahead.