6 Tips to Achieve Financial Wellness
It’s no secret 2020 has been a year of uncertainty. From jobs, to health, to our normal day-to-day, nothing has - or will be the same. Now more than ever we want to have a sense of wellness in every aspect of our lives – especially financially. And no matter what your current situation is, there are ways to make strides toward financial wellness, if you’re willing to do the work.
Know where your money is going.
Before you gain an understanding of how to handle your finances, it’s important to have a clear snapshot of your money and where it’s going. That was one of the first things I had to understand when making a plan to tackle my debt. For this, one big misconception is that you need to pay attention to the big expenses like rent, mortgages, or car payments. However, notating smaller, habitual purchases like food and gas is very important. It’s the little things that add up and make a big difference.
Develop and stick to a budget.
Now that you know where your money is going, it’s time to develop a budget, and most importantly – stick to it. In doing so, remember a budget is not meant to restrict – it’s simply telling your money where it’s going to go. For this, rather than relying on technology like apps, I strongly suggest using pen and paper. We are more likely to retain things if write them down.
Click here to find out more about my budgeting journal
Pay yourself first.
When budgeting, it’s highly crucial to pay yourself. Yes, dwindling down debt is important, but so is making sure you have something set-aside for a rainy day. Luckily, if you struggle with saving there are ways to do so without really knowing you’re doing it. The easiest way is to allocate a specific dollar amount to your savings account with each direct deposit you get. If you don’t get a direct deposit, you can still set up an automated draft through your bank. Just remember if you must pull your money out of savings (because life), have a plan to replace it - and execute it!
Take advantage of employer 401K match programs.
Employer 401K match programs are a major asset to your future financial wellness, and current state of mind. However, you’d be surprised by how many people are leaving free money on the table. Taking action for retirement early – especially during your high earning years – is essential to making sure you have a comfortable retirement. And lets face it, our generation can’t bank on social security. So, despite how far away the end of your workdays may seem, the time secure your retirement bag – is now.
Plan for major purchases and events.
There comes a time in life where you’ll be forced to make major purchases. In times like these, we often reach for our credit cards or opt to finance. Rather than creating a situation that can result in interest, try and plan for a major buy. Now, what determines a major purchase is subjective. For me, it was new furniture for my apartment. While financing was an option, building space in my budget to pay for it out right was not only fulfilling, it ultimately saved me money in the long run.
Keep credit utilization under 30%
Your financial wellness relies greatly on your credit usage. It’s necessary to have a certain level of financial discipline to effectively use credit cards (which is a topic for another day), and keeping your credit utilization under 30 percent is at the top of the list. Anything over that 30 percent negatively impacts your credit score. Remember, your credit card is not supplemental income; so don’t treat it as such.
Taking these steps can feel uncomfortable in the beginning, but the rewards will be worth it. Need help getting started? Click here to find out more about my Financial Wellness Toolkit Course.