Financial Wellness Tips to Help You Live a Richer Life
Learn the best ways to improve your financial situation now!
Are you ready to have your best year ever financially?
January is Financial Wellness Month so if you’re reading this around the new year, it’s a perfect time to check in with your finances and see how you’re doing.
And even if you’re reading this at any other time of year, you can still benefit from learning the smartest ways to improve your financial health!
What Is Financial Wellness?
So that includes things like:
- Knowing how to make a budget
- Getting into the habit of saving money
- Avoiding debt if possible
- Being responsible with spending
When you’re focused on improving your financial health, you spend a lot less time stressing over money.
And it becomes so much easier to reach your big money goals!
Why Is Financial Wellness Important?
Nearly 80% of Americans say they feel stressed about their finances. Two of the biggest sources of stress are a rising cost of living and debt.
Achieving a sense of wellness when it comes to your finances can help you avoid that kind of stress.
And that’s a good thing for more than just your money. Because high levels of financial stress can also affect your mental, emotional and physical health.
As someone who used to not be able to sleep at night because I was too busy thinking about how I’d pay the bills, I know this to be true.
Focusing on wellness with your finances can help you feel more in control of your money.
And when a major crisis like a pandemic comes along, it can help you be more prepared so you don’t feel like you’re drowning.
How Do You Achieve Financial Wellness?
Improving your financial health is something you do little by little, day by day.
It’s not a destination you can reach overnight. And it doesn’t involve any get rich quick schemes.
What it does involve is planning, patience and commitment.
If you want to achieve financial wellbeing, you have to be in it for the long haul. And whether you’re starting in Financial Wellness Month or Financial Literacy Month or any other time, the key is to just start.
And to help you do that, I’ve rounded up some of the best tips you can put into action right now to boost financial health!
1. Review Your Budget
A budget is your friend when you want to improve your financial wellbeing.
Your budget is your roadmap for what you’ll do with your money each month.
At a minimum, a budget should include a breakdown of:
- What you’ll spend on essentials (i.e. housing, food, utilities, etc.)
- What you’ll spend on nonessentials (i.e. clothing, recreation, etc.)
- Amounts you pay toward debt, if any
- Amounts you save, if any
Your budget may also include a separate category for giving or you may include that as an essential expense.
It’s helpful to review and update your budget year over year to see how your income and expenses have changed.
This past year, for example, none of my budget went to travel like it normally does. But more of my budget went to shopping online.
As you focus on financial wellness, go over your budget line by line to see where you might be overspending and where you could find extra money to save.
And if you need a simple way to cut your bills, give Billshark a try.
Billshark reviews your spending for you to find expenses you could reduce or eliminate. It’s a stress-free way to cut out money-wasters in your budget.
And when planning your budget, make sure you’re using a system that works for you.
Using a paper budget planner is a great option if you like to get hands-on. Or you could try a simple budget worksheet. (Snag one free at the end of this post!)
2. Set Clear Financial Goals
Goal-setting is a huge part of achieving financial wellness.
Because when you have clear goals for what you want to do with your money, you’re giving yourself:
- A plan to follow for achieving them
- Motivation to see them through
It seems like a simple thing but setting money goals is a powerful way to improve financial health.
When setting financial goals for the year, here are some tips that I’ve found to be helpful:
- Stick with just three goals so you don’t feel overwhelmed by what you’re trying to achieve
- Make your goals S.M.A.R.T.–Specific, Measurable, Achievable, Relevant and Time-Boun
- Break your big goals down into smaller mini-goals
- Create action steps for each mini-goal
- Break those action steps down by quarter
Now what kind of financial goals should you be setting?
Think about what would help you feel like you’re living a richer life.
For example, that could be:
- Saving $10,000 in an emergency fund
- Paying off all of your credit cards or student loan debt
- Starting a profitable home business so you can quit your day job
Your financial goals can be big or small, depending on where you are money-wise.
3. Create a Plan to Pay Off Debt
Debt can be a real downer when you’re trying to get ahead financially.
The average American household has nearly $42,000 in debt, not including mortgage debt.
Some of it’s credit cards, some of it’s student loans and some of it is other types of debt. But it all adds up to a big financial thorn in your side.
So if you’re ready to get on the financial wellness train, getting rid of that debt needs to be a priority.
There are different approaches you can take to paying down debt and I know it can be hard if you have a low income.
So my preferred method is to use the debt snowball method outlined in “The Total Money Makeover”.
This method involves:
- Listing your debts from lowest balance to highest
- Paying as much money as you can toward the debt with the lowest balance until
- Paying the minimums due on all other debts
- Rolling over your payment from the first debt on the list to the next one once it’s paid off
The debt snowball doesn’t necessarily save you money on interest. But it can help you keep your motivation going when you’re struggling to pay down debt.
If you want to pay off credit card debt fast and save money on interest, I recommend checking out the Tally app.
Tally helps you pay off your credit cards in less time while helping you pay less in interest charges.
4. Build Saving Into Your Budget
Saving money is critical for improving financial wellbeing but it doesn’t come easy for everyone.
You might struggle to save if you’re living on a tight budget. Or you may never have learned the saving habit as a child so it’s hard to adopt it as an adult.
When it comes to saving money, there are two ways to approach it:
- Saving for the short-term
- Setting money aside for the long-term
Short-term savings is money you save that you’ll likely need within the next few months or years.
For example, that includes:
- An emergency fund
- Vacation funds
- Savings for home improvement projects
- Money you put away to buy a new-to-you car
- “Fun” money
Only 16% of Americans say they’re comfortable with the amount of money they have in emergency savings.
If your emergency fund isn’t as big as you’d like it to be or it’s nonexistent, there are things you can do to change that.
First, go over your budget again.
I know, it seems tedious but you have to find some extra money somewhere that you can save. Even if it’s $10 a week, that’s something.
(And remember, Billshark can help you find the cash if you’re struggling to do it yourself.)
Next, consider doing a money-saving challenge to grow your rainy day fund.
For example, you could do a no-spend week or month where you don’t spend any money at all on non-essentials.
Or you could take the 52-week money challenge, which involves saving small amounts of money each week.
Then, automate your savings.
Automating deposits into a savings account is one of the easiest ways to grow your emergency fund.
I like saving with online banks because they pay higher interest rates and charge fewer fees than regular banks.
(If you need a recommendation for an online bank, be sure to check out CIT Bank. They offer a competitive APY with minimal fees.)
Still struggling to find ways to save money? Check out these posts for more frugal hacks:
5. Invest for the Future
Saving and investing seem the same but they’re actually very different.
When you save money, you’re typically putting it into a savings account or CD account.
When you invest money, you’re putting it into the stock market or other securities.
Investing comes with more risk than saving but it can also yield more rewards if your investments do well.
If you’ve never invested money before, it can be a little intimidating at first. Because you’re taking risks with your money and that may not be a comfortable feeling.
So what I suggest if you’re getting started is to ease into it.
Stick with investments that you’re comfortable with and invest only what you can afford to lose.
Steer clear of paying high fees to invest and automate your contributions so you don’t have to think about adding more money to your portfolio.
Acorns is a financial app that lets you invest your spare change.
You link your debit card to the app, then make purchases like normal. Acorn rounds those purchases up and invests them in low-cost exchange-traded funds.
It’s an easy way to build an investment portfolio on autopilot.
With M1 Finance, you can set up automated investments to buy stocks, ETFs and other securities.
The best thing about M1 Finance is that there are zero fees. That means you get to keep more of what your investments earn.
6. Improve Your Credit Score
A good credit score can make it easier to borrow money when you need to. And you’re more likely to qualify for the best rates.
Poor credit, on the other hand, can make qualifying for loans or credit cards tougher. And you may get stuck paying higher rates.
An easy way to keep tabs on your credit score and credit reports is to use a free credit monitoring service.
For example, I use Credit Karma to monitor my credit. They send me alerts any time there’s a change to my credit report.
In terms of how to improve your credit scores, here are some of the most important things to remember:
- Pay your bills early or on time each month
- Keep balances on credit cards low and don’t max them out
- Keep older credit accounts open
- Use different types of credit (i.e. loans, credit cards) if possible
- Hold off on applying for new credit unless you absolutely need to
Credit Karma has lots of great tips on how to build and improve credit.
So consider creating a free Credit Karma account if you’re ready to start working on your score!
7. Find Ways to Make More Money
If you want to become financially well, then finding ways to make more money is something you should seriously consider.
It wasn’t until I focused on growing my freelance writing income that I was able to start making real improvements in my financial situation.
You could make more money by asking for a raise at work or getting a part-time job. But you could also grow your income using the money-making skills you already have.
For example, if you’re good at writing or reading, you could:
- Become a freelance writer
- Start a money-making blog
- Get paid to proofread (Sign up for a FREE webinar to learn how!)
- Make money with online transcription jobs (This FREE mini-course covers the basics!)
- Become a scopist
Or if you’ve got awesome organizational skills, you could:
- Start a virtual assistant business (I highly recommend Fully Booked VA if you’re looking for an in-depth how-to course!)
- Make money as an online bookkeeper
- Declutter your home to make extra cash
And if you like kids, you might try:
- Teaching classes online at Outschool
- Becoming a virtual kids’ yoga teacher
- Making money teaching English with VIPKID
These are just some of the possibilities for making more money.
For more ideas, be sure to check out these posts:
What are you doing to achieve financial health?
Financial Wellness Month is a great time to think about what is (or isn’t) working for you when it comes to your money.
These tips can help you work on improving your financial wellbeing all year long!
Do you have a tip or idea for how to improve your finances? Head to the comments and tell me about it.
And don’t forget to pin and share this post!