You might equate how well you’re doing financially with how much money you make, your credit score, or overall net worth. In reality, financial wellness is determined by factors that tell a much larger story about your overall relationship to money.
According to TIAA’s 2022 Financial Wellness Survey, 6 in 10 Americans report being stressed about their finances, including 75% of Gen Z and 74% of Millennials. And just 22% of Americans rate their financial wellness as high (a 9 or 10 out of 10), with Gen Z respondents having the least positive view, where only 12% rated their financial wellness as high.
Start with these tips for financial wellness below. Read on as we walk you through how to stay on top of your finances so you can plan and save for the future!
1. Know Your Budget
Small changes can make a big difference when you budget the right way!
Aligning your expenses to your income helps you to create a realistic picture of your cash flow on a daily, weekly, and monthly basis. A best practice here is to request a due date for your expenses that will support you in staying on track.
If there are certain weeks when money is especially tight, try contacting your recurring monthly expenses (such as your creditors and utility companies) to determine a due date that coincides better with your income.
With a due date more in line with your cash flow, remember to track your spending closely over several months. By looking at your spending in real-time and comparing it to the previous month, you’ll start to see places where you can make adjustments.
2. Build Your Savings
One of the best tips for financial wellness is to focus on more than just your current financial situation. Challenge yourself to set aside money for future you. Living paycheck-to-paycheck could lead to stress and financial ruin.
Experts suggest you save at least 20% of your income each month. Try breaking down your savings into three categories: savings for expenses within a year, expenses within the decade, and expenses for long-term goals.
Understanding these categories can give you the motivation to save consistently. Saving money early lets you work towards bigger goals like taking a vacation or buying a house. It also helps ensure that you have a comfortable retirement when the time comes.
3. Reduce Your Debt
It’s okay to splurge from time to time, especially when it contributes to your goals. But developing a healthy approach to spending and paying off debt is best for your overall financial wellness. Even though shopping has never been easier, always remember to live within your means.
Write down all the steps it could take you to become debt-free (or at least close to it!). Assign a time period to achieve each one and consider your goals every time you choose to spend money you don’t currently have. Leaders Credit Union also offers a money management tool with debt payoff calculators to help you prioritize paying off debt.
Debt consolidation loans and 0% intro APR balance transfers are excellent options to consider if you want to reduce debt. Depending on how much loan you take out, or your credit limit in the case of a balance transfer credit card, you could combine all of your existing debt into one monthly payment.
4. Grow Your Money
If your employer contributes toward your workplace savings, you should be contributing towards your 401(k) savings for retirement. The recommended contribution is around 10% of your earnings, however, be mindful of what works best within your monthly budget. Also, be sure to find out from your employer if they match your contributions.
If you’re self-employed or looking for another savings option, then an IRA would be your best bet — your contributions will earn interest and will be kept safe until retirement. Furthermore, financial professionals can also assist you in employing strategies to maximize your money, such as investing in stocks and bonds.
5. Use Financial Education Resources
Financial wellness includes financial literacy! Consider utilizing podcasts, books, articles, and shows that teach financial concepts. Exploring the variety of options afforded to you by your credit union or bank is a great place to start.
For a more hands-on approach, Leaders Credit Union offers financial wellness counseling with counselors who are trained specifically to help improve your financial wellness. We’ll show you how to monitor your finances and create a personal financial plan that accounts for your goals to guide you along your journey to achieving financial wellness.
Conclusion: Plan For Success
Take these financial wellness tips to plan for success! Achieving financial wellness is a lifelong process of getting into the habit of managing your money in a smart, healthy way.
Leaders Credit Union is here to help you make smart financial decisions. If you need assistance implementing any of these tips, we have a certified financial counselor who can help guide you towards financial health and also prepare for financial responsibilities that may lie ahead.