Was your New Year’s Resolution this year to improve your financial wellness?
Now here we are halfway through the year and you are still living paycheck to paycheck, stressed about money, and losing sleep over it?
It’s not too late to start adapting your money habits so you can improve your financial health. Improving your financial health will help you feel less stressed, and in turn, improve your sleep.
Because, let’s face it, who doesn’t want or need more sleep?
You probably noticed that I am using the words “health” and “wellness” interchangeably. According to Dictionary.com, health is “the general condition of the body or mind with reference to soundness and vigor.”
Wellness is “the quality or state of being healthy in body and mind, especially as the result of deliberate effort.”
Given these definitions, I think the terms good financial health and financial wellness are close enough to be used interchangeably.
I would like to point out the second part of the definition of wellness, which is “especially as a result of deliberate effort.”
Any kind of wellness cannot be achieved without being intentional. Financial wellness is no exception. Achieving good financial health takes purposeful and well-thought-out actions.
In short, the definition of financial wellness is the ability to effectively manage your finances over time. You should be able to pay your bills, save money, handle potential unexpected expenses, and be on track toward meeting your long-term financial goals.
A good indicator of financial wellness is when one feels a sense of financial security. The person doesn’t become stressed about money or lose sleep at night over anxiety caused by money.
They are at peace with their finances. Doesn’t that sound nice?
If you are not at peace with your finances, please keep reading. I am going to give you some tips you can use to help you feel more secure and get you started down that path to financial wellness so you can feel at peace too!
So let’s get started!
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9 Tips to Improve Your Financial Wellness So You Sleep Better at Night
1. Educate Yourself
The first thing you have to do is educate yourself on the basics of money management. Some great things to start learning about are:
- how to create a simple budget
- how to start an emergency fund
- how to save money on household expenses
- how to invest for retirement
- how to protect your family
You can learn about these personal finance topics through different finance blogs like this one.
It would be helpful for you to read several different blogs on these topics because you can get many different ideas on how to manage your money. Plus, not all finance blogs cover all areas of finance.
You could also learn the old-fashioned way and pick out a book to read about personal finance. That’s what I did.
Back in 2004 when we bought our first home, the bills started rolling in and our paychecks were disappearing way too quickly every month.
I realized I needed to educate myself about personal finance as quickly as possible. So I read the book Smart Couples Finish Rich by David Bach.
That book literally changed my life. I give credit to that book for helping us get to where we are today financially. I highly recommend it if you and your partner are starting your lives together in debt.
Educating yourself on personal finance is a crucial step toward achieving financial wellness. Whether you find a finance blog that resonates with you or you choose to read a book on investing, any knowledge you gain is going to help you improve your finances.
2. Develop Short Term and Long Term Goals
After you learn a bit about the basics of managing your money, it’s time to write down your short-term and long-term goals.
This is very important. Please don’t skip this step.
You will want to focus on one or two long-term financial goals at a time. If you have too many long-term goals, you will get overwhelmed.
The long-term goals tend to be fairly easy to come up with because people tend to focus on what they want their end result to be.
Then you want to create a few short-term goals. These are the goals that are going to keep you motivated on your path to financial wellness! You want to make them specific and attainable so you set yourself up for success.
If you would like help creating your personalized goals, you can check out my post on How to Set Financial Goals and Avoid Failure and download my free goal writing worksheet to fill out as you read the post.
3. Create a Budget
If you don’t have a budget, you should create one to help you get control of your money. If you do have one, maybe try revisiting it to see if there are any expenses you could trim back.
What you don’t want to do is create a budget and then never look at it again. Budgets are made to be constantly reviewed, analyzed, and modified to meet your needs.
For example, say one of your short-term goals is to save an extra $50 a month so that by the end of the year you have $600 to use toward holiday gifts and meals.
You would need to review your budget to find the extra $50 a month somewhere by cutting back on other things.
If this is not possible, you could find a way to increase your monthly income, whether it is by putting in some overtime at work or starting a side hustle.
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4. Save Money
Putting money away for the future is a huge part of financial wellness. I am referring to both saving for retirement and saving money in an emergency fund.
I’m sure you heard it before, the sooner you start saving for retirement the better. If you have access to a 401K or another kind of retirement savings account at work, you should start contributing to it ASAP.
If you don’t, you will want to look into opening a retirement account, such as a traditional IRA or Roth IRA, elsewhere.
Saving money in an emergency fund is also incredibly important when working toward financial wellness. The money you put in this savings account should strictly be earmarked for unexpected expenses that are not able to be paid out of your monthly income.
This will prevent you from increasing your credit card balance unnecessarily, which leads me to the next tip for achieving financial wellness.
5. Pay Down Consumer Debt
Credit cards, car payments, personal loans, medical bills, and student loans are all types of consumer debt that you should focus on paying down.
I did not include mortgages here, even though they are considered consumer debt because there are so many mixed opinions about paying down a mortgage if your interest rate is extremely low.
Many people say it is better to invest money in your retirement account instead of paying down your mortgage. Other financial experts recommend paying off all debt, including your mortgage.
That’s a whole other topic I’m not going to get into right now, but I plan to write about in the future…
There are two main strategies for paying down consumer debt. The first is the debt snowball method.
This is where you start with the debt that you owe the least amount on. You pay the minimum plus whatever extra money you can afford to pay on it. At the same time, you continue to pay the minimum on all of your other debts.
When you pay that one off, you take the money you were paying on that and put it towards the next smallest debt. Continue to pay the minimums on the others of course. Continue in that pattern until you are debt free.
The other method is the debt avalanche method. This is when you begin paying down the debt with the highest interest rate first, while paying minimums on all the other debts.
Once that is paid off, you take all that money you were paying on the first one and put it on the debt with the next highest interest rate. Keep paying those minimums on the others. You continue in that way until everything is paid off.
Many people advocate that the debt snowball method is preferable, mainly due to being able to pay some of your smaller bills off more quickly.
The theory is that it will keep you motivated and focused on paying down your debt because you will see and feel your successes more quickly.
The debt avalanche method may save you money in the long run because you are tackling the debt with the highest interest rate first. However, it may take you longer to pay off the individual debts because of the higher interest rates.
The method that you decide to use for paying down your debt is a matter of personal preference. You should choose whichever one you think will keep you the most motivated and focused so you can accomplish your goals.
6. Spend Carefully
Being mindful about what you are spending your money on will really help you to stay within your budget. Here are a few tips for practicing mindful spending:
- Avoid those impulse buys! If you did not go into a store specifically to purchase the item you are getting ready to throw into your cart or take to the checkout desk, don’t buy it.
- If there is something you really would like to buy, sleep on it for at least a day (longer if possible) and then reevaluate if you still really want it.
- If you still feel you have to have the item ask yourself this: Is buying this item going to bring me long term happiness?
If the answer is yes and you are planning to purchase the item, do some research to find out if the store you are going to buy it from has the lowest price on it.
Check for store coupons or discounts. I personally like to sign up for store emails just to get the discounts they offer for signing up. You can always unsubscribe from the emails afterward if you want!
7. Plan for Large Expenses
If you know of a large expense coming up, try to plan for it. Some possible large expenses could be:
- Your car not passing inspection without new tires or brakes
- An elective medical procedure when you haven’t met your deductible yet
- Your furnace is on its last legs
- A major household appliance needs to be replaced
- You need a new car
- You are saving for a down payment on a home
- A new baby
A personal example of two large expenses we had to save for was the birth of our children.
Not only were the medical bills crazy expensive because of my health insurance, but I wanted to stay home with them beyond my 6 weeks of short-term disability. Under FMLA I was entitled to 12 weeks off after the birth of a child and I desperately wanted to take advantage of that.
So here is what we did to budget and plan for our childbirth costs to give you some ideas on what you could do to plan for your large expenses:
- Watched our spending very closely
- Went through our budget with a fine-tooth comb to cut back where we could (didn’t go out to eat, shopped around to lower our cell phone bills, meal planned to save money, shopped discount grocery stores, bought in bulk)
- Saved every extra penny we could, including any money we received for holidays or birthday gifts
- Saved our income tax return
I also started hoarding my paid time off at work by not taking any planned days off. This allowed me to have a “paycheck” during the second half of the 12 weeks when my short term disability benefit stopped.
Using paid time off the second half of my maternity leave was a huge help because I still had to keep paying for my health insurance premiums, even though I was on FMLA and not getting a real paycheck.
You could also make saving for large expenses easier by making extra money. You could try picking up more hours at work if you are able, selling your stuff, or starting a side hustle.
8. Protect Your Family’s Future with Life Insurance and Estate Planning
I know this is a tough topic to think about, but I can guarantee you will rest easier at night knowing that if something happened to you, your family will be taken care of.
Buying life insurance and setting up a will and trust are two very important things to do when trying to achieve financial wellness.
This is not something to procrastinate on. It’s very easy to keep pushing something like this back because of being busy with other things. You think, “I’ll set up an appointment next week.” Then next week turns into next month.
Don’t do it!
9. Seek Out Help if You are Feeling Overwhelmed
My last tip for achieving financial wellness is to get help if you need it. If you find that you are at your wit’s end, stressed, and overwhelmed, maybe it’s time to find professional help.
Talk to friends or coworkers to get recommendations for a financial advisor that can get you started down the right path to financial wellness.
Financial wellness is something everyone can achieve. It is important to start being intentional with your money and stay focused on your financial goals while you are working to improve your financial health.
It is also important to keep in mind that financial wellness, like any other kind of wellness, takes time to achieve. You have to be patient with yourself and realize that achieving financial wellness is not going to happen overnight.
However, with hard work, dedication, and time, you can achieve financial wellness, live the life you have always wanted, and of course, sleep better at night!
What other tips do you have to work toward financial wellness? I would love to hear them. Please leave a comment and let me know.