Our finances play a huge role in our lives. So even if we’re physically fit and doing great emotionally, if our financial health is out of whack, everything will be off kilter. Fortunately, there are steps you can take right away to improve your financial wellness. Read on to learn more.
- Create and Stick to a Budget
One of the first things you should do is figure out how much money you bring in every month and where you’re spending it. Then make a realistic budget and consistently track your daily spending. There are many budgeting apps and programs that make this easier.
- Build an Emergency Fund
The next step is to begin building a savings fund for emergencies. It’s widely recommended that your emergency fund should have enough in it to cover three to six months of expenses. If that goal initially seems too steep, start by saving a month’s worth of bills.
- Pay off Your Debts
You can’t achieve financial wellness with mountains of debt in the background. After listing all your debts by interest rate so you know where you stand, use the snowball method and commit to paying off your smaller debts first. After you’ve gained some momentum, go after the larger ones.
- Be Careful with Credit and Loans
To avoid racking up debt in the first place, be selective about what credit cards and loans you take out. This will help you maintain a good credit score, in addition to serving as a preventative measure against taking on more debt than you can handle.
- Keep Tabs on Your Credit Score
It’s important that your credit score is good so you qualify for lower interest rates and fees when you do need a loan or credit card. To ensure this, check your credit report every year for errors and get them fixed.
- Pay Attention to Due Dates
Another way to boost your credit score is to pay your bills on time. Doing this will also help you avoid late fees and other penalties. To increase your odds of never missing a due date (and to more easily plan for the future), record all of them on your calendar.
- Turn on Account Alerts
Late fees aren’t the only kind of penalty you want to avoid. Overdraft fees are another. To steer clear of these, set up low-balance alerts on all your checking accounts so you get notified before your balance goes negative.
- Automate Your Savings
Have you ever heard the saying pay yourself first? If you automate your savings, you’ll do just that and build up a significant amount of money over time. The beauty of automatically transferring money into your savings account is that you won’t have to think about it. It’ll get saved before you can spend it!
- Save Early for Retirement
The secret to building a nice retirement nest egg is to start early. Consider automating these contributions too, and definitely take advantage of any employer contributions, matches, or 401(k)s (which allows for pre-tax savings).
- Set SMART Financial Goals
Perhaps even before you follow any of the above steps, come up with several short- and long-term financial goals that are SMART (specific, measurable, achievable, relevant, and time-bound). If you’re not sure where to start, meet with a financial advisor who can help you develop a financial plan and goals so you stay motivated and moving in the right direction.
Anyone can significantly improve their financial wellness if they put their mind to it and follow the ten tips above. Trust us, it’ll be worth the effort when one day you finally feel financially secure and free!