Financial wellness consists of finding an equilibrium within the diverse aspects of your relationship with finances. This includes understanding financial processes related to savings, income, and debt, while utilizing resources to achieve long-term goals towards future financial objectives. Financial wellness also includes learning to live within your means, making informed financial decisions and investments, and setting short and long-term goals. Learning and developing financially smart habits will help to achieve your future goals.
Here are 7 steps that can facilitate your financial wellness:
Make sure to understand your paycheck: How often it comes (Pay Calendar) and the withholdings you set up (How To Change Tax Info). When you experience an increase in pay – celebrate – then live off your previous budget for a while to achieve your financial goals.
It can be a painful word to some but necessary to achieve your goals. Budgeting for your known expenses, combined with understanding your income, will reduce the need for loans and other programs that cost you more money.
Store up an emergency fund for those unplanned expenses. There’s nothing worse than a tire blow out or school pictures that spring up and blow your budget putting you back in a cycle of borrowing. Experts suggest starting with building $1,000 emergency fund
Once you have an emergency fund and you’re in the budget rhythm start paying off your debt. Some experts say start with the debt with the lowest amount and keep going to achieve a ‘snowball’ affect. Others say start with the highest percentage rate. Either way, get started.
Start that rainy-day fund! Depending on your life stage this could be a kid’s college account, saving for a car, or a down payment on a house. Making your savings automatic makes it even easier – look for ways to have it automated from your account to keep yourself accountable.
If previous financial choices have impacted your credit score, time heals all. Work the plan above and make sure to pull your free yearly credit reports to keep track of it but don’t obsess over it.