Money is a major factor in your wellbeing, so today, we’re cutting the stress and improving your quality of life with the best financial wellness tips.
These things protect you, help you get ahead, and allow you a great night’s sleep, every night.
Financial Wellness Definition
First, what does financial wellness even mean?
We’re bombarded with messages daily that tell us we’ll be happier and more successful if we just had more stuff. But studies show that hoarding money, chasing after status, and collecting possessions do real damage to our well-being (source).
What we’re discussing today is a mix of both smart financial decisions and money habits that support wellness.
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First, ask yourself these questions:
- Can I handle a large financial shock? (layoff, big home repair, etc.)
- Am I on track to meet financial goals?
- Do I understand where my money is coming from and where it’s going?
- Am I constantly strapped for cash, or do I have the freedom to live my life on my terms?
Now, find out great ways to improve your financial wellbeing.
Best Tips to Achieve Financial Wellness
Some of these financial wellness tips play offense, and some play defense. A good financial wellness plan includes both!
Ease Your Financial Stresses
Debt and financial burdens commonly affect your mental health. So, the first tips for financial wellness include helping you take that weight off of your shoulders.
1. Know Where You Are
In order to clear your financial issues, take inventory of where you are with your money.
- How much money is coming in, and from where?
- How much money is going out, and to where?
Now, total your debts and your savings. Get the entire picture so that you have a clear place to start from.
2. Chip Away At Your Debt
Next, choose a debt reduction strategy. There are two great ones
The Avalanche method: Start with your highest interest rate debt first. Then, pay debts down from highest to lowest interest rates.
Great if you think you’ll stay motivated and want to save the most money.
The Snowball method: Start with your smallest debt. By paying this off quickly (regardless of interest rate), you’re giving yourself a huge psychological boost. It builds momentum to pay off other debts.
Great if you think you’ll need a little help staying motivated! (In the end, the most important factor is that you follow through)
See if there’s any money that you can use to immediately pay down these debts. (This will feel amazing!) Then, make a plan to chip away consistently.
3. Use a Budget
Now that you have the big picture, make a budget that works for you. The most popular is the 50 30 20 budgeting method. With this budget, you spend 50% of your take-home pay on needs, 30% on wants, and 20% on debts/savings.
The 70 20 10 budget rule is also a great method for paying down debt!
4. Give Yourself Grace
Beating yourself up over your financial situation or a bad purchase won’t attribute to your financial wellbeing. Self-compassion will. Remember that we all make mistakes. It’s what we learn from them that matters.
5. Make Bill Paying Automatic
Or at least put them on the calendar. Never forget a bill again by having a system in place that alerts you (or pays automatically) when your bills come due.
6. Negotiate Your Debts (Or Refinance)
If your credit score improves or interest rates go down, adjusting your rates can ease a large burden. Scrutinize every debt you have. This can go for everything from a home refinance to negotiating credit card rates.
7. Set Reminders To Check Balances
Checking account overdrafts can sneak up on you. So, set a reminder to monitor your balances at the same time that you check up on your budget.
8. Work Through marital Issues Around Money
Money issues between couples are common, and they account for an enormous amount of stress and conflict. Work hard to talk these out, and remember to schedule in times to look at your finances together.
If you leave these issues unattended for years, it may result in a costly divorce. Divorce is notoriously stressful, and also extremely hard on your finances.
Curb Your Spending Mistakes
87% of U.S. shoppers make impulse buys, and more than 50% of grocery items are sold because of impulses (Science Direct) Here are a few ways you can minimize this!
9. Use the 24 hour Rule
When you see something you want to buy, wait 24 hours before you buy it. Leave it in the online cart or put it back on the shelf for a short time.
When you return a day later or on your next shopping trip, you’ll know for sure whether you want the item.
10. Shop Around
Use the rule of 3. For any large purchase you make, find three good options to compare. This will keep you from impulse buying something that is really just convenient.
- Looking for car insurance? Find 3. Then, go with the best one.
- Need a new tv? Instead of picking the first one you see, compare between similar models
11. Do An Audit Of Your Expenses
Call this the “leaky bucket” check. We just combed through our own expenses and realized that there were two online subscriptions we had been paying for months without using.
12. Opportunity Cost
For every yes you say to something, you are saying no to something else.
This goes for activities, and it also goes for money. If you say yes to the vacation, you’re saying no to college funds. This may be completely fine, but understand that every decision you make comes with a cost on the other side.
13. Make Your Quality of Life a Factor
Look at your spending through the lens of time spent working.
If you buy a new $50,000 SUV, how many hours will you have to work to pay it off? If you put it on debt, this could come out to a very long time. Is it worth it now?
The same goes for those sweet pair of shoes. They may be worth an hour or two of your work time, or they may not.
Financial stress tends to get piled on at the worst times in your life. Your car breaks down, your child unexpectedly needs braces, or your partner gets laid off. These are stressful times, but you can take the sting out of them by being prepared.
14. Get Enough Insurance
Not having enough insurance will torpedo your mental health during a time of need. So, make sure you have enough car, home, and life insurance (along with anything else you might need) to never have to face that day.
15. Have An Emergency Fund
Unexpected things happen to everyone, and often when you least expect it. The best way to protect yourself from stress when having to buy a new dishwasher or taking work leave is to have a fully funded emergency fund.
16. Prevent Identity Theft
My husband recently got his information stolen and it was a lot of work (and an entire year) to get it straightened out. Here are great tips for protecting your information:
- Be defensive with personal information
- Shred or tear up documents that have personal information
- Never give out your social security number unless you are 100% certain of the company you are talking to and why they need it.
17. Check Your Credit Report
I also once had a friend who didn’t know a medical bill had been outstanding for years. This completely ruined his credit score when he wanted to buy a house. And he wasn’t even aware of it until he was ready to buy!
Set a reminder annually, and give your scores a quick check.
Plan For Your Future Success
Next, these financial wellness tips move into planning for your bright, beautiful future. One where you’re both wealthy and happy.
18. Make Savings Automatic
The best way to make sure you’re saving for the future is to do it automatically! Set up direct deposits to hit your savings accounts, investing accounts, etc. every month.
It’s the modern-day version of paying yourself first.
19. Set Mid & Long Term Financial Smart Goals (That Factor In Quality of Life)
To set yourself up for the right path, envision where you’d like for your life to go. Are you hoping to make regular trips to the beach? Or retire so you can be with grandkids often? Turn these dreams into specific long term financial goals.
*Try these great tools to help you with long-term vision:
20. Set Short financial Wellness Goals
Next, take your 5-20 year goals and break them down into 6-month to 1-year goals. Doing so will turn your big dreams into doable chunks. And before you know it, you’ll be well on your way to the life of your dreams.
21. Set Up An Account For the Kids
If you’re hoping your kids will pursue an education, starting a 529 or custodial account now can give you incredible peace of mind later. Find out more and compare and contrast plans at savingforcollege.com.
*See these great money books for kids to help educate them on finance too!
22. Start A Sinking Fund
Sinking fund categories are amazing because they help you prepare for recurring expenses. Unlike an emergency fund, these aren’t surprises. But they can be hard to plan for in the monthly budget. In my home, we use most of the categories in the image above.
Related: Free Sinking Fund Printable Tracker (and calculator)
23. Save For Retirement (The Earlier The Better)
When you hit retirement age, a lot of factors are outside of your control (how the market is doing etc.) Instead of spending all of your time fretting later, save now. Let your money compound over time, and then breathe easy when it’s time to call it quits on your work.
24. Compare Your Month To Month Spending
Next, once you get a budget set, this step shouldn’t take much time. And yet, it can be a huge help when sticking to a plan for years at a time.
At the end of every month, take a quick peek at how your months stack up against each other. You’ll be able to detect issues or slip ups much earlier.
25. Rebalance Your Portfolio Once a Year
Because the market can be a finicky beast, asset classes within your portfolio will also get out of whack over time. If gold does extremely well, suddenly your portfolio is made up of a lot of gold. You may not want to be so heavy on one or two things, so check out your portfolio once a year to see if something needs a shift.
*Most brokerages make this easy with tools and features within their websites.
26. See A Financial Planner
If the future looks fuzzy, or you feel like you’re in over your head with money stuff, a financial planner is a great option. These people are trained to help you create a road map.
Even one consultation can give you an incredible sense of calm. (Just be careful that they aren’t selling anything on the side)
27. Squirrel Away Money When You Can
Next, while saving consistently is key, tucking away small windfalls can also add up tremendously over time.
So, save part of your tax refund, that unexpected Christmas money, or great grandma’s inheritance. While it may not be as fun as a huge splurge, it will put a smile on your face in the years to come (and can be a deciding factor in getting ahead financially)
Unique Tips For Financial Wellness
Finally, these financial wellness tips help you think outside the box. They foster great wellbeing as well as money success.
28. Give To Others
Due to the many studies showing a connection between materialism and decreased wellbeing, it’s safe to say that giving away some of your money will make you happier!
Who would you love to help?
29. Watch & Learn From Others
We can gain incredible insight into watching and talking to those around us.
- Who do you admire when it comes to financial success and peace of mind?
- And whom do you not want to be like?
It’s ok to use these as standards for your own life.
And once you find those great examples, ask questions! These people love giving their tips and tricks, and the mentoring will propel you toward your goals at a rate you couldn’t imagine.
30. Focus on Experiences
A happy life is full of beautiful moments.
So, when in doubt, spend your money on a family vacation or a sweet experience instead of a cool new toy. The joy will remain for years as you relive your favorite memories with your grandkids.
To Consider With Financial Wellness Tips
What are the tips on this list that contribute to your financial wellness most? Leave a comment and let me know!
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