Table of Contents
- 1. Track Your Spending
- 2. Make a Budget
- 3. Reduce Your Spending to Live Within Your Means
- 4. Cut Credit Card Debt
- 5. Find Ways to Earn More
- 6. Build an Emergency Fund
- 7. Have a Retirement Plan
- 8. Draft a Legal Will
- 9. Get Insured
- 10. Ask for Help If You Hit a Wall
- Start Applying the Best Financial Wellness Tips
Not being able to pay for your basic needs is stressful and can cause diseases such as depression and anxiety. Financial wellness refers to the health of your finances and the lack of financial stress due to effective money management.
To live a happy, healthy, and successful life, you have to be in control of your finances. Financial wellness also requires you to have contingencies in place if you get hit by life’s ups and downs. Keep reading for our top 10 essential financial wellness tips to lead a successful life.
1. Track Your Spending
One of the most important financial wellness tips is to track your spending. Many people find it a nuisance to track where their money goes. However, this often leads to why they end up in debt and with zero savings.
Visibility over your spending can help you plan and budget effectively. It may surprise you how much you spend on unnecessary items and impulse buying. With modern phone applications, it is now easy to track your spending, so you don’t have any excuses not to do so.
2. Make a Budget
Budgeting is one of the best-known financial well-being tips. Budgets can help you achieve financial goals such as clearing debt, buying a house, retiring early, or even traveling the world. To create an effective budget that works for you, the first step would be to know how much you earn every month.
The next step would be to know how much you spend every month. If your current earnings don’t cover your basic needs, then you must increase the amount you earn. You can also limit your spending to match your earnings. If you are looking for a way to reduce your spending, then the next step is for you.
3. Reduce Your Spending to Live Within Your Means
The main cause of household debt is living beyond one’s means. Financial wellness requires us to be aware of how much we earn to limit our spending on our income. Go through each line item of your monthly spending and think of ways in which you can cut out the spending or find a cheaper alternative. If you usually use your tax refund for something like a vacation, use an online tax calculator to estimate your refund so that you can book accordingly.
You may need to make major sacrifices to reduce your expenses. These could include taking in a roommate to share your rent and utilities or even moving back home with your parents.
Other less drastic changes could include things like unsubscribing from entertainment platforms. You could also use public transport or a bicycle, carry packed lunch instead of eating out, etc.
4. Cut Credit Card Debt
One of the main causes of financial stress amongst Americans is high-interest credit card debt. The statistics are alarming. More than 189 million Americans have credit cards with the average cardholder having 4 credit cards. Additionally, each American home with a credit card has at least $8398 in credit card debt.
This costs the households a lot of money in interest and late payment fees. The first step to financial wellness is to stop all credit card purchases and pay off the existing debts. If you don’t have the discipline to stop your cards you can contact a credit card bureau to freeze your credit.
5. Find Ways to Earn More
The best way to improve your financial wellness is to make more money. This could be as easy as asking for a raise at your job if you are delivering great value for your employer. Investigate what you would need to do to earn more.
You can also start a side hustle in your free time to bring in extra cash every month. The internet has many freelancing opportunities for anyone with an internet connection. You can also start a successful online business selling things through platforms like Amazon.
6. Build an Emergency Fund
It is important to have an emergency savings fund that allows you to meet your expenses for at least three to six months without working. You may unexpectedly lose your job and need cash to pay for your basic living expenses until you get another source of income.
Many people end up homeless when they lose their jobs because they didn’t have an emergency fund to see them through the hard times
7. Have a Retirement Plan
A retirement fund should be part of any financial wellness program. We get a limited number of productive years to earn a lot of money. During this time, we should set aside at least 20 percent into retirement accounts such as 401k’s and IRA’s.
Many employers match contributions so it’s best to pay as much as you can. The younger you are the better it is for you to start saving for retirement as compound savings multiply with time.
8. Draft a Legal Will
Estate planning is not just for the old and rich. Everyone should have a testament that defines how they would like their assets divided following their death. Your estate planning can also include details on the financial and medical decisions that should be made on your behalf in case you are mentally incapacitated
9. Get Insured
Insurance is another necessity for financial wellness and peace of mind. There are all types of insurances for different types of situations. But everyone should strive to have health insurance, medical insurance, and travel insurance.
Having good medical insurance in place could be a savior from financial ruin as people have gone bankrupt from unexpected medical bills.
10. Ask for Help If You Hit a Wall
Sometimes despite your best efforts, you may end up at a loss for what to do to achieve your financial wellness goals. In such a scenario, the best financial wellness tip is to seek advice. You can get help from financially savvy friends, certified financial advisors, or companies like PayActiv that provide financial wellness tools.
Remember to do your due diligence before approaching anyone for financial advice. Some advisors get paid to sell products so they will not have your best interest at heart. Also, don’t take advice from anyone in a situation you wouldn’t want to be in.
Start Applying the Best Financial Wellness Tips
To improve your financial wellness, you must improve your relationship with money. Rather than avoiding financial matters, you need to come up with strategies to earn enough money to meet your daily needs while saving enough for emergencies and retirement.
Follow the above financial wellness tips to improve your financial wellness and you could soon be enjoying stress-free finances. For more top tips on financial literacy read the rest of our blog.