Financial Wellness 101

Obtaining financial wellness means creating a healthy financial environment in which you prepare for the future and live well in the present. Financial wellness does not mean having financial wealth. Instead, it simply means evaluating your finances in a practical way and living within your means. In order to create financial wellness in your life, follow the below tips:

Track your spending

Before determining what spending to cut or add, you must understand where your money is going. Therefore, tracking your expenses and income for at least three months is crucial. To track your expenses and income, write down every single purchase for three months and every dollar earned. At the end of the three-month period, you will have a very clear picture of where your money is going. Consequently, it will reveal some areas in which you overspend and could use some discipline.

Create a budget

A good budget is a budget that you can actually stick with. There is no reason to create a budget doomed to fail as this will just lead to frustration. Instead, be realistic, and only set realistic goals. For example, on the first month you attempt to stick to a budget, do not expect yourself to come away with an extra $1,000. Instead, attempt to find an extra $100. The most important aspect of a budget is a listing of all your regular bills and the creation of a savings goal. Be sure to include a miscellaneous category for all unforeseen circumstances that are sure to come up.

Stop using credit

Many people are having financial problems because they are in debt. When debt consumes more than its rightful percentage of your income, you end up in a very bad situation financially. The first step in eliminating debt is the cessation of creating more. Stop using credit cards. Cut them up if you must. If you feel you must have a credit card for emergencies, then keep one card, but freeze it in ice. This will force you to go home and thaw your card before making a purchase cutting down on impulse buys.

Pay off debt

Eliminating debt is the first step in living a financially healthy life. In order to eliminate debt, use the snowball method. With this method, you determine what debt is the smallest debt, and begin to pay extra on that debt. When you get that debt paid off, roll what you were paying on the first debt into the second debt paying it off. After paying off the second debt, use what you were paying for the first and second debts, and pay the third debt off. As you can see, it is somewhat like how you build a snowball. You start small and roll until it becomes a very large debt-smashing ball.

Living a life of financial wellness is crucial to your physical and mental health. Chaos and turmoil caused by financial issues is unhealthy and can lead to all sorts of problems. The above tips are the first steps you can take to begin your journey towards financial wellness.