Financial Wellness Tips: 7 Simple Ways to Improve Your Finances in 2021

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Financial Wellness Tips to Help You Live a Richer Life

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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?

calculator and money

In a nutshell, financial wellness means learning how to successfully manage your money

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. 

Related post:

7 Positive Ways to Manage Financial Stress In Hard Times

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

making a 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. 

⇒Read my in-depth Billshark review to learn how it can help you save money!

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!)

Related post:

60+ Sinking Funds Categories That Can Help You Build a Better Budget

2. Set Clear Financial Goals

Goal-setting is a huge part of achieving financial wellness.

Why?

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:

Your financial goals can be big or small, depending on where you are money-wise. 

So grab a notebook or bullet journal and start brainstorming. And check out these tips for crushing your goals!

3. Create a Plan to Pay Off Debt

get out of 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. 

⇒Read my complete Tally app review to learn how it can help you get out of debt!

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:

150+ Frugal Living Tips That Can Help You Save a Ton of Money

220+ Realistic Ways to Save Money on a Tight Budget (on Almost Everything!)

How to Easily Lower Your Cell Phone Bill to Save Money Every Month

5. Invest for the Future

woman investing money

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. 

Two of my favorite tools for making investing easier as a beginner are Acorns and M1 Finance

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. 

⇒Sign up for Acorns now and get a $5 bonus!

⇒Open an account with M1 Finance and start investing!

6. Improve Your Credit Score

Your credit scores are an important part of the financial wellness picture. 

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

start a blog

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:

Or if you’ve got awesome organizational skills, you could:

And if you like kids, you might try:

These are just some of the possibilities for making more money. 

For more ideas, be sure to check out these posts:

25 Creative Ways to Make Money From Home (Without a Job!)

How to Make $2000 a Month From Home With Flexible Side Hustles

25 Legitimate Ways to Make an Extra $1000 a Month Online (and Offline)

 

piggy bank financial wellness

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!

Financial Wellness Tips to Improve Your Money Health

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