What does financial wellness mean to you? It can mean many things to different people, but being financially sound is a state of being. Do you pay your bills on time? Are you able to weather unexpected financial emergencies should they arise? Do you have a plan for retirement or are you putting money away for your kid’s college fund?
Financial wellness means having a healthy financial life and not living beyond your means. Below are a few ways to help you begin practicing financial wellness for the new year.
- Set and commit to a budget - Being able to track your spending will allow you to see where you can save and where your money is going.
- Have an emergency fund - Emergency savings can differ for each person based on their monthly expenses and income. A general guideline is to save enough to cover three to six months of expenses.
- Save money consistently - Getting into the habit of paying yourself first can make a significant impact in the long run. Being able to contribute to your employer’s 401k plan is a great way to start saving. Set up automatic withdrawals from your paycheck to save money without having to remember to do it.
- Save now for education with a 529 Plan - Never too early to start saving for a college savings plan for your children, and it will grow tax-free.
- Pay off debts in small bites - If you have a lot of debt, start by paying off the smaller expenses first. Think about consolidating debt with a lower interest rate.
- Track the due date of your bills - Paying your bills on time helps you plan ahead and avoid late fees.
- Set up alerts in your checking account - By setting up alerts, it will help you to avoid late fees when your balance is getting low.
- Don't over apply for credit and loans - Only apply for credit or loans that you need. Having too many could affect your score in a negative way.
You can determine your financial well-being by visiting the Consumer Financial Protection Bureau. By answering a few questions, you can see where you rank and take steps to improve it.