So how can you get your financial wellness on track? This five-step financial wellness guide may help you assess your financial health and offers a checklist to help you get started towards your financial goals.
1. Pay down debt
If you’re dealing with debt, you’re not alone. Many Americans have some form of debt. This may include student loans, mortgages, car loans, and credit cards. But debt doesn’t have to be alarming. And you can often work low-interest debt such as a home mortgage or federal student loans into a reasonable budget.
Higher-interest revolving debt may cause additional stress if you’re also facing late payment fees. A first step toward improving your financial health could be to create a plan to pay down your higher-interest debt. There are many strategies for paying off debt, and you’ll want to explore the ones that work best for you. For instance, using a personal loan to consolidate your debt may lower your overall interest rate and simplify your monthly payments.
Helpful resources for paying down debt:
2. Budget for short-term financial goals
Budgets do more than just track your spending. They could offer a roadmap for what’s financially possible. Start with a solid understanding of where your money goes each month by comparing your income to your spending. You may find that you’re spending more than you think on daily coffee runs, monthly subscriptions, or transportation-related expenses.
Look for ways to save. Maybe you could negotiate a better rate on your car insurance, brew your own coffee, or cancel subscriptions you don’t use. Then you can earmark your savings for short-term goals like planning a vacation or saving for a destination wedding.
Helpful resources for budgeting sort term goals:
3. Plan for bigger expenses
Your financial life might include large expenses like medical procedures, planned leaves of absence from a job, or a home remodel. By preparing for these bigger expenses, you may be able to work them into your budget instead of having them disrupt it.
Think about what big bills might be coming your way and explore ways to fund your needs and dreams. For example, a personal loan might help you complete a much-awaited home remodel. A small side gig could provide extra funds to make it easier for a parent to stay home with children. And a health savings account may speed up your savings for a planned medical procedure. The key is anticipating the big expense and creating a plan for tackling it.
Helpful resources for planning for big expenses:
4. Create an emergency fund
Part of financial wellness is the ability to manage unexpected financial hits. These could include car repairs, sudden home repairs, or dental emergencies. Creating a financial safety net may help ensure that surprise events don’t become financial catastrophes.
For example, an emergency fund can provide cover for smaller emergencies. Various insurance products like major medical, auto, home, and life insurance may offer protection against unexpected financial events.
Helpful resources for planning for unexpected expenses:
5. Save for the future
Once you’ve determined your budget, planned for large expenses, and established an emergency fund, you could start thinking about saving for your long-term financial goals. This is the last critical step of financial wellness because regular savings over the years could help you prepare for retirement or pay for your children’s higher education.
Take advantage of employer-sponsored retirement savings, and save enough to earn matching funds, if they’re offered. Accounts such as 401(k) plans for retirement, and 529 plans for college savings allow you to save pre-tax dollars, which may also fast-track your savings. Be sure to consult with a professional about any investments.
Helpful resources for saving for the future:
It’s time to get financially well
There’s no better time than now to start a journey toward financial wellness. If you follow these five steps in this financial wellness guide, you may feel more in control of your finances, could reduce stress and anxiety, and make real progress toward your financial goals.
