5 Money Habits for Financial Wellness

Financial wellness is a general measure of how well you’re able to stay on top of your finances today and how confident you feel about your ability to meet your financial goals of tomorrow.

When it comes to improving your overall financial well-being, there are many approaches you could take. But a good place to start is by building smart money habits. Here are five to consider.

1. Write down your financial goals and make a plan

According to the Consumer Financial Protection Bureau, financial wellness is determined, in part, by the extent to which people feel that they are on track to meet their financial goals.

When it comes to setting goals, it helps to write them down and be specific. You’ll want to clearly lay out what it is you want to achieve and why that’s important to you. Next, to help improve your chances of reaching your goal, put together a plan with timelines, so that you can work toward your goal in a tangible and measurable way. 

Without some type of plan or roadmap to guide you, it can be easy to fall off track and lose motivation.

And a plan doesn’t have to be complicated. For example, if your goal is to build an emergency fund, your plan could start with something as basic as creating a budget to help you identify areas where there may be opportunities to save a little more each month. Any extra money you’re able to uncover in your budget can be reallocated toward your emergency fund.

Read more: Set a savings goal and reach it in 5 steps

2. Pay yourself first: Automate your savings

Saving as much and as often as you can is another way that could improve your financial well-being. For instance, having a solid emergency fund can help provide some peace of mind when dealing with unexpected expenses.

One smart way to help boost your savings is to automate your finances. By putting your savings on autopilot, you won’t have to remember to pay yourself first whenever payday comes around. Not only could this help you save consistently, but it could also help you stay on track for your goals. 

Don’t forget you can automate contributions to your retirement accounts as well. Many account providers allow you to set up recurring contributions. You just need to decide the frequency and the amount of your contributions. By automating your retirement savings, you’ll be surprised at how quickly you could grow your nest egg. 

If you’re not sure how much you're able to set aside each month for your goals, consider connecting with a financial advisor who can help you crunch the numbers and see what makes the most sense.

3. Be mindful of your spending

When it comes to financial wellness, it’s also a good idea to pay attention to how you spend money. Constant overspending, for example, can create stress and become a serious hurdle to reaching our financial goals.

That’s why having a budget and the discipline to stick to it each month can be a great way to help you stay on top of your money management.

If you’re looking to reduce spending, take a look at your monthly expenses and see if there are areas where you can make adjustments. For instance, are there certain recurring purchases or subscriptions you could do without?

And these adjustments don’t have to be big, dramatic cuts, nor do you have to take on a minimalist lifestyle (unless you want to). Remember, even small changes in your spending habits could make a big difference in your savings over time.

It’s also important to revisit your saving and spending plans each year, as your financial situation is always subject to change depending on what’s going on in your life (e.g., a new job, moving to a new city, or birth of a child, etc.). 

4. Pay off credit card balances in full

Using credit responsibly is another important consideration in your journey toward financial wellness. While credit cards can be convenient, they can also cause a lot of stress if you don’t pay your statement balances off in full and on time each month.

Debt from high-interest credit cards can impact your ability to build your savings. The more you have to put toward debt or interest payments each month, the less you’re able to put toward your other financial goals.

Interest payments aren’t the only thing to be wary of. Making your payments on time is also critical. Late payments or defaults can put a dent in your credit score, which could limit your ability to borrow at competitive rates down the road if you ever want to make a big purchase, like a home or take out a personal loan.

5. Get financially smart

Financial literacy goes hand in hand with financial wellness, and having a strong foundational knowledge of personal finance topics is essential.

Because in order to achieve your goals, whatever they may be, it's important to know how to make good financial decisions. But how can you decide what's right for you if you don't have an understanding of your options?

Let’s take investing as an example. Investing is an important component of personal finance, but to start investing (and do so with confidence), you have to first understand what you’re getting into.

For example, you may want to look into the different advantages and disadvantages to investing in things like stocks, ETFs, and bonds. What are the potential rewards and risks? And what are the different roles they could play in your portfolio?

If you're still somewhat new to investing, consider speaking with a financial advisor who can help you understand your options and how they may be a part of your overall financial plan.

You’ll face a number of choices, too, when it comes to your savings. You may want to know the difference between putting your money into a high-yield savings account or a certificate of deposit account, as well as how they could work together to help bring you one step closer to your goals.

Bottom line: Having a good understanding of personal finance can help you make smart, confident decisions when it comes to managing your money. The financial world is constantly evolving because there’s constant innovation. So it’s a good idea to stay on top of the latest topics and themes.

Visit the Marcus resources hub for explainers on a variety of financial topics as well as timely market insights to help you stay ahead of the curve.