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25 Tips to Achieve Financial Wellness in 2021

    

Health and wellness programs have grown in popularity as people embrace the idea of a better quality of life. The same can be said about financial wellness. According to WealthManagement.com, an April 2016 survey revealed 90% of 250 companies surveyed were investing in financial wellness programs for their employees. But, what if your employer doesn’t offer this resource? We have outlined 25 tips to help you build better spending habits, increase your net worth, and find financial wellness on your own.

Financial Wellness | TDECU

  1. Use a Budget

    Your goal is to develop a budget based on your monthly income, expenses and savings, and then live within your means. Should a shortfall occur, choose to adjust your budget rather than rely on a credit card. If your budget cannot be adjusted, your emergency savings will need to be tapped to cover the expense. Work hard to get back on track the following month.

  2. Be Aware of How You Spend Your Money

    Review your purchases. Make adjustments if you notice expenditures not aligned with your budget. For example, if you are spending money on daily coffee or you are eating out more than cooking at home, you may be happy in the short term, but your financial health may suffer in the long term. Making small changes can help you save money while still periodically enjoying your favorite latte.

  3. Automate Your Savings

    Always pay yourself first. An easy way to do this is to set up an automatic deposit or transfer into a separate account. Talk to a TDECU credit union representative for information about account-to-account transfers. Set a savings goal, and treat it like any other bill by making regular monthly payments toward it.

  4. Build Your Savings

    Emergencies are inevitable. They are the “rainy day” or emergency funds you hear people talking about. Your savings account gives you some financial security and is the helping hand you are looking for when the need arises. A good rule of thumb is to have a minimum of six months of income stashed in your savings. As we said in Tip #3, start by automating your savings and let it build over time.

  5. Plan for Major Purchases

    Big purchases have hefty price tags. If you plan to take a trip or buy a large-ticket item like a washer/dryer or a new car, adjust your budget to build your savings specifically for the item you have your sights set on. This is separate from your regular savings you are building for emergencies.  If you can’t see a way to cover it with your current salary, consider taking a side hustle (check out LinkedIn for job openings) and working until you have enough money to cover the item.

  6. Save Early for Retirement

    Saving for retirement requires planning on your part. Just like Tip #3 suggests, make funding your retirement savings automated as well. Even a small contribution has the potential to grow into a large nest egg−the key is allowing your money to grow over time. If your employer offers a 401(k) plan, take advantage of it along with any employer contributions. Another advantage of your 401(k) is the pre-tax savings on your earnings. Doubly smart! It is never too early — or too late — to ensure your secure financial future.

  7. Handle Credit With Care

    Use credit wisely. This means not overusing it, and paying off credit card balances each month with a goal of not carrying any credit card debt. A great tip for accomplishing this is to set a monthly limit and stick to it.

    Your credit score is another critical part of your financial well-being. Things like late payments, too much debt or high balances negatively affect your credit score. Regularly request and monitor your free credit report from annualcreditreport.com. Good credit will give you better purchasing power, and better loan rates from lenders. 

  8. Keep Financial Records

    Develop a system for keeping your financial records in order. Items like receipts, medical bills, pay stubs, student loan records, tax records, banking and insurance information, and any other documentation that is relevant to your financial situation should be stored securely but easily accessible. Programs like Quicken   and online tools such as Mint.com are designed to help you manage financial records with ease

  9. Ask for Advice

    Financial planning is not reserved for wealthy individuals managing investments. There are financial advisors and planners who specialize in money management, debt and credit counseling and budgeting. The National Foundation for Credit Counseling is one resource for financial education programs that can help toward achieving financial wellness. Not all services are free, but almost all are affordable and budget-friendly.

  10. Use a spending tracker to determine how you are currently spending your money

    Before you can make changes to your budget, you should understand how you currently use your money. There are lots of apps and tools to help you track how you spend your money. Many banks also include tools to help you track the spending from your checking account. With a close eye on your spending, it won’t snowball out of control.

  11. Set up an emergency fund

    Accidents and emergencies happen and they can easily derail your budgeting and planning. It’s important to have a savings account specifically for emergencies that is separate from your regular savings account.

  12. Refinance loans if your credit score improves

    If you have already made financial changes to decrease debt your credit score may have been improved. Low credit scores often mean you have a higher interest rate when taking out personal loans, car loans, or opening a credit card.

  13. Use a debt reduction strategy if you have high-interest debt

    There are two general schools of thought for tackling debt. Some people prefer to pay off the highest interest rate debt first which saves you the most money in the long run. Others prefer to start with the lowest debt amount so that they can see the positive impacts of paying down debt faster. The best strategy for you is the strategy that you can stick to.

  14. Set up banking alerts for checking account usage and withdrawals

    Alerts are healthy reminders of the financial decisions that you are making. It helps you track when, where, and how you spend your money. These notifications can also help alert you to any fraudulent activity on your account since you would be notified of any withdrawals.

  15. Protect your identity online

    Fraud and identity theft can cause severe damage to your financial well-being. Make sure that you protect important information like your credit and bank logins, account information, social security card, and even your phone number. Make sure to report any suspicious charges immediately and replace credit and debit cards that are lost or stolen.

  16. Check your credit report annually for errors

    Get in the habit of checking your credit report every year. It’s free to check your credit report, and it gives you the chance to check for anything unusual. This could be an account that has already been paid off showing a balance, balance amounts being incorrect or an unknown balance being attributed to your report.

  17. Protect what you have

    Insurance is an important way to protect your current way of life. Replacing your car or belongings can put a serious dent in your financial plans. Purchasing personal property insurance from a reputable company is one of the most important financial wellness tips you will receive. If you wreck a car you took out a loan to buy, for example, and didn’t purchase insurance you could be left with no car, medical bills and a loan you still need to pay off!

  18. Negotiate for better rates and terms

    Contacting your credit card company sometimes works to improve your APR or increase credit limits. Lowering your APR will lower interest fees while increasing your credit limits will help lower your credit usage which impacts your credit score.

  19. Build your financial literacy

    Education is key to making smarter financial decisions. Make sure you understand opportunity costs, retirement planning, compound interest, interest rates, credit and more so that you can be confident that you are making sound financial choices.

  20. Consider using cash to help with any budgeting issues

    Many people find that using a cash system helps them stick to their budget. Instead of using debit or credit cards for groceries and shopping, they use cash instead.

  21. Set financial goals

    Buying a home or being able to retire at a certain age are great goals to have. You are more likely to have success sticking to a budget if you are planning for a specific goal or outcome. Make a list of short and long-term financial goals to keep you motivated. Use it as a roadmap and adjust it as your financial situation changes.

  22. Put extra money you receive into savings

    It’s tempting to upgrade your lifestyle when you receive a big raise or receive your tax refund but the best thing you can do for your financial well-being is to save or invest the extra money you receive.

  23. Keep credit usage below 30%

    Credit usage directly impacts your credit score. A low credit score could mean higher interest rates and fees on loans, mortgages, and credit cards. Make sure to monitor your credit card utilization so that your credit score is in good shape when you need a loan.

  24. Rebalance your investment portfolio each year

    Changes in the stock market or your personal goals can impact the way you invest. Make sure to review your investment portfolio every year and update it to reflect your current financial situation.

  25. Consider the opportunity cost of your purchases

    One of the most impactful lessons learned from financial literacy is understanding opportunity costs. Every financial decision you make means there is something else you can’t do with the money spent. Money spent on a vacation is money that isn’t invested or put towards savings or debt. However, the opportunity to go on vacation may be worth it because you come back to work rejuvenated and the break helps with your mental health.

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