Financial wellness is the active pursuit of your best life through financial planning and goal setting. To actively pursue your goals, you’ll need tips and tricks to help you with your financial wellness journey. Read along for some really specific financial wellness tactics.
Here are my 16 favorite tactics to help improve your financial wellbeing.
Make automation your friend
Automate as much of your finances as possible. This frees up your mental bandwidth and also lessens the risk of financial mismanagement.
- Set up direct deposit with a primary financial institution such as a bank, credit union, or an alternative like Chime or Aspiration.
- Contribute to your company 401(k) to automate investing for your retirement.
- Use auto-transfer rules for payday to send money into your savings accounts(rainy day and emergency funds or vacation and holiday clubs).
- Set up automatic bill payment of the minimum amounts due for all your bills.
Save money as you spend
Whenever possible save money whenever you’re spending. This tactic helps you spend less on your purchases or forces you to save as you spend.
- Use coupons and discount codes when shopping online. Why spend more than you have to when you’re trying to build up your savings accounts. Tools such as Rakuten make it easy to shop at your favorite online stores and automatically receive cashback.
- Use grocery rebate apps. Get back some of the money you’ve spent at the supermarket by submitting your receipts to get rebates. Best apps to use include ibotta but you can check our best list for cashback apps.
- Use apps that round up your purchases and saves or invests the difference. Acorns app is well known for its round-up features used to help you micro-invest.
Spend less on monthly expenses
My system focuses on four action plan areas: reduce, negotiate, eliminate, and consolidate. I want you to think about all your monthly bills and create a list of them. This will help you visualize and proceed to use the spend less action plan.
- Reduce the total cost of your monthly expenses by 10%. Speak with your current service providers and ask for ways to reduce your monthly bills. Tell them you’re looking to reduce your expenses by 10% and if there are any new programs that can lower your cell phone bill, cable bill, utilities, auto insurance and more. You can even try getting your landlord to lower your monthly rent if you’ve been a long-time renter with a good rental history with them.
- Negotiate with new providers. If you can’t reduce your current bills, then it’s time to shop around for a new provider. Find the competitors of your current supplier and ask what offers they have to win your business. This works well for cellphone service, cable service, and auto insurance policies.
- Eliminate everything that adds no value. Don’t reduce or negotiate but eliminate the service or subscription. Consider cutting out cable altogether or streaming services. Consider removing expensive monthly warranty expenses. And if you have the means eliminate all your debts to reduce your total monthly expenses. This will help with your cash flow.
- Consolidate your debts. Monthly debt payments can take a significant part of your monthly paycheck. Take advantage of lower interest rates and smaller payments by consolidating your unsecured credit cards or refinancing your existing loans. It may be prudent to refinance student loans, auto loans, and mortgages to take advantage of low fixed rates.
Lower your cost of living
To achieve your goals, it may be necessary to lower your cost of living. These include your housing, transportation, healthcare, and food expense. If you focus on the big expenses, you’ll have a bigger impact on your bottom line.
- Consider refinancing your mortgage, negotiating your rent or moving to a less expensive part location.
- Think about downsizing your vehicle which can eliminate your car payment and lower your auto insurance.
- Assess your healthcare costs and options. If you’re married, determine the difference in cost and benefits by choosing your spouse’s insurance over yours. Or does it make sense to separately carry health insurance?
- Plan your food shopping in advance. Set a budget and stick with it and keep an eye out for your favorite food when it goes on sale and stack up.
Monitor your credit
It’s important to monitor your credit and track your score to lessen the stress of any surprises. Having an accurate credit report ensures you’ll get the best terms and competitive rates. Keeping track of your credit score helps you eyeball any potential issues found in your credit report.
- Download and use a credit monitoring service. Credit Karma and Credit Sesame are two great options and can be used at the same time. Both will provide a credit report card and a free credit score along with educational content to help you learn about credit.
- Identity theft is a must. You can lessen the stress of identity theft by enrolling in an identity theft protection program. Good thing Credit Sesame offers users free ID theft protection services.
- Opt-out of prescreened marketing offers. Creditors perform soft credit inquiries to prequalify you for credit offers that you may receive via courier mail. Reduce the marketing noise and information shared with 3rd party lenders and opt-out.
Track your spending
There seems to be confusion around budgeting and spend tracking apps that are widely available. Budgeting is the process of analyzing your income and expenses and a system to allocate money towards your goals. There are apps like YNAB that are actual budgeting tools. But for most people, a spend tracking app can be the tool to keep them from overspending.
- Download a spend tracker app. These apps will categorize your spending and give you fancy graphs and charts that will increase your awareness. Personal Capital does a great job and it’s free to use the personal financial management tool. You can also look at other budgeting and spend tracking apps in the financial marketplace.
- Get a financial assistant. Help is a text away with an artificially intelligent chatbot that you can message about your account balances and spending habits. And alert you of any activity that seems out of place from your history.
Rethink savings account options
Some people rely on a regular savings account because they want to keep their money close. But while it’s smart to keep some of your cash liquid, consider moving the majority of your savings into a high-yield online savings account, or open a certificate of deposit if you can afford “not” to touch the money for a couple years.
These savings solutions offer higher interest rates than a regular savings account, which can result in bigger returns. Plus, your money isn’t as easily accessible with an online savings account and certificate of deposit. This helps limit the number of unnecessary withdrawals.
Make an extra mortgage payment
When a friend purchased their first home 5 years ago, they didn’t realize the financial impact of making one extra payment a year. When I started writing mortgage articles I learned how one extra principal payment a year could reduce a 30-year mortgage term by seven to eight years.
You can start paying more toward your mortgage this month. This reduces how much interest you pay over the life of the loan, helps build equity sooner, and pays off the mortgage faster.
Pay off your credit card debt every month
While the ability to pay overtime is a convenient feature, don’t get into the habit of carrying a balance from month-to-month. It’s tempting to use a credit card for impulse shopping, an amazing vacation, and other luxuries. But the longer you carry a balance, the more interest you’ll pay.
Paying off your credit card balance every month might seem impossible. However, resolving to only charge what you can afford and keeping your balance in check will make it easier to pay off the balance in full. This is the easiest way to avoid massive debt.
- Keep your credit card balances low, you’ll improve your credit score. A good credit score helps you qualify for loans and you’re more likely to receive favorable interest rates.
Prioritize student loan repayment
Federal student loans are flexible and accommodating, and you’re not required to start making payments until after you graduate. But this doesn’t mean you have to wait until after you receive your degree to start paying down the student loan balance.
Many federal student loans begin accruing interest from the moment funds are disbursed to your college or university. Interest charges can add up quickly and significantly increase your final balance. You might not earn enough to make large student loan payments while in school, but if you can pay a little each month to knock down the balance, that’s less money you’ll owe once you graduate.
Increase retirement contributions
You may not give your retirement accounts a second thought. The money may come directly out of your paycheck or bank account at regular intervals, and you may feel that you’re contributing enough. But there’s no way to predict your future needs after retirement, so there’s no harm in increasing how much you contribute to these accounts.
Now maybe the time to give your retirement account a little boost. Set a goal of increasing your contributions this year, especially if you’re receiving an employee match with your 401(K).
- Review how much you’re currently contributing and increase the contribution.The extra funds can increase the growth rate of your retirement account, helping you retire well.
Give your savings a raise
While you’re in the mindset of increasing your retirement contribution, this may also be a good time to give yourself a raise. If you’re paying yourself first by depositing money into a personal savings account each pay period for a rainy day, set a goal to increase these deposits.
- Saving an extra $50 to your savings account every other week, you’ll save an extra $1,300 a year.
Ask for a raise
The best way to increase income quickly is to make more in the job you already have. Ask your boss for a pay raise to help you meet your financial goals. The key to getting a raise is to be prepared when asking and that can mean a few months of planning.
- Career Tips to Become More Valuable in Your Profession and Employers
- What to Do When Your Boss Says No to a Pay Raise
Get a side hustle
Make some extra cash to support your financial goals. Everyone should have multiple sources of income along with building additional streams of income. The more income streams you have the more financially secure you’ll be and prepared to weather economic challenges. When it comes to income diversification is the key.
- Get a part-time job with a steady paycheck with all income used specifically for financial goals. Part-time side gigs can be driving others, delivering packages, babysitting, or walking dogs.
- Use your skills or extra space to supplement your income with creative side hustles.
Buy a used car instead
Buying a brand new car is a good feeling, and there’s no better smell than a new car smell. But if truth be told, a new car is a luxury and not a necessity. I’m not suggesting you go out and purchase a car that’s 10 or 15 years old. However, most cars between one and three years old feature many sought-after amenities, and in most cases, you can’t even tell the car is used.
Keep good records
Have a system to keep track of all your financial records. This will make it easier for you or someone you trust to access. It’s much easier to find important documents and records when they are centrally located and accessible online.
- Consider having documents scanned and stored in an online vault.
- Scan your receipts and invoices with tax or expense tracking software to access for tax preparation needs.
Want to learn more about improving your relationship with money? Read my top financial wellness tips for personal success.