We all know the importance of physical wellness: making good food choices, getting in regular exercise, drinking plenty of water, quality sleep and keeping up with those annual doctor visits. Just like your physical wellness, financial wellness requires a plan and consistency. And just like physical wellness, it’s not about perfection. It’s the consistent habits that add up to your overall financial wellness. It’s important to ensure you develop a personal plan and continue to stay as consistent as possible on the main disciplines. For those just getting started on their financial wellness journey, here are some core building blocks to get started.
- Have a basic budget and stick to it. Budgets can run the spectrum of simple to complex. If you are new to this, start simple, even the 50/30/20 plan. 50% goes toward must have expenses (rent, insurance, transportation), 30% goes to your wants (dinners out, travel, manicures) and the remaining 20% goes to savings, and debt payments if you are still working on knocking these out. If this version doesn’t work for you, create your own. It does not have to be complex or even where you want to be in a year. Rather, the tracking and accountability is what’s key in making progress.
- Set Up Auto Savings. You need to be saving something. Whether its 1% of your income or $10 a month; it just has to be something. Get in the habit of auto saving from each paycheck. Link it to a savings or investment account so this happens every month without thinking about it. Its fine to start small, you first need to get in the habit and grow from here. Move from $10 to $20, 1% to 2%. It doesn’t matter how small the increments, just keep going. Pay off some debt or get a raise? These are the perfect opportunities to increase your auto savings. You are going to want to keep going until you are setting aside 10%, then 15% and maybe even 20% plus of your regular income.
- Have a system for regularly paying your bills. Auto pay often works best. If you are uncomfortable setting up an auto pay for the full balance, companies offer many options these days: pay a set dollar amount monthly, make smaller payments every other week or at least make the minimum payment automatically. If you still aren’t comfortable, you can certainly do this manually, but ensure you are in the habit of doing this at least monthly so you don’t get behind. Pick a date well in advance of due dates, schedule and stick to it monthly.
- If you have debt, have a debt plan. This will vary for everyone given their circumstance and the type of debt they have. Have a high interest credit card? Make a plan to pay this off ASAP. Have student loan debt with low interest rates and some corresponding tax deductions? You may want to pay this off over the next 5 or 10 (or more years) given your other circumstances. What is key is understanding the debt you have (the type, balance and interest rates) and having a specific plan to address the debt that fits in with your overall goals. Don’t ignore debt – it won’t go away on its own. Back to the fitness analogy, you just need to face facts and get on the scale. It’s only a starting point.
- Have regular financial check-ins and check-ups. This includes regularly logging into your bank and credit card accounts and checking balances, ensuring these align with your budget, and cutting back for a week or two if they don’t. This should generally be done at least weekly. Savings and debt accounts you can look at less frequently – likely monthly or quarterly. You don’t need to micromanage these but you want to be connected enough that you are measuring your progress. On an annual basis, you are going to want to check in on your longer term strategies such as retirement planning, updating your budget and checking in on your net worth.
- Make progress on your financial knowledge. As you progress in your financial journey, you are going to stretch beyond the basics. Like physical wellness, some areas will be easier and some more challenging. Its perfectly fine if you prefer one topic over another. Perhaps you love reading about the US stock market but cryptos are less than thrilling to you. This is fine, focus on the areas that interest you, once you have incorporated the basics. What’s important is that you deepen your knowledge and your relationship with your finances. You are going to want to progress from basic budgeting and debt/savings plans to more complex investment opportunities. Continue to invest in yourself and your financial education. Read more financial articles, pay attention to market highlights, don’t be afraid to have financial conversations with others. Over time you are working to grow your level of financial literacy to lay the foundation for your own personal success.
Incorporating these elements into your regular habits will provide a strong base for your financial wellness journey. You don’t have to aim for perfection. You don’t have to be where you want to be on each of the areas. What is important is that you start to incorporate these pieces into your routines and continue to grow from there.