Boost Your Financial Health: 10 Essential Tips

Financial health is a comprehensive measure of your overall money situation. It includes everything from managing your monthly bills to saving for retirement. When you are financially healthy, you feel secure in your ability to afford expenses, handle financial hiccups, and achieve your money goals. Here are ten ways to start improving your financial health now.

Create a Budget

Think of a budget as the foundation of a healthy financial life. It’s a plan for directing your income toward all your financial needs and goals, from paying monthly bills to saving for retirement. A budget helps you live within your means and provides clarity about what is most important to you. For example, you might decide to cook more at home and skip frequent retail purchases to save for a large vacation. A solid budget is the foundation on which you can confidently base those decisions.

Track Your Spending

Creating a budget is a forward-thinking move, but sticking to it requires day-to-day commitment. Small decisions, like what to have for lunch or whether to buy concert tickets, can make or break your budget. The most effective approach is to use a budgeting app to track and categorize your spending. If you overspend at the grocery store, you can adjust by reducing spending in other areas, such as online shopping.

Automate Saving

One of the most repeated pieces of financial advice is to pay yourself first. Saving money before spending it is key to consistently working toward your financial goals. To start saving automatically, see if your employer allows you to split your direct deposit into a checking account and a high-yield savings account. Also, direct a portion of your pay toward long-term savings, such as a 401(k) or an IRA.

Create a Plan for Debt

Using debt to your advantage and avoiding bad debt are crucial. Avoid high-interest debt and try not to rely on debt to cover expenses. It can make sense to use a credit card for everyday spending and pay off the balance each month to take advantage of rewards. For existing debts, make a plan to manage them effectively. Paying off high-interest debts is an important investment in your financial future. Check your credit report to see a clear picture of all your debts and set priorities accordingly.

Look for Ways to Cut Expenses

Reducing your overhead and lifestyle costs increases your disposable income, allowing you to save more toward your goals. Look for ways to cut back on both essential and discretionary expenses. Reducing discretionary spending, such as entertainment and dining out, often involves staying committed to your goals and finding budget-friendly alternatives. For essential expenses, try strategies like shopping sales, couponing, negotiating monthly bills, or saving on housing costs by getting a roommate or moving to a less expensive place.

Invest More of Your Income

Regular retirement investing through a 401(k) or IRA allows you to set and forget your contributions. However, you should still periodically check your retirement savings. One strategy is to increase your retirement contributions by a set percentage each year. As your income increases, those extra percentage points of deferred income won’t be missed but will significantly impact your retirement savings. Consider deferring an extra percentage point or two now to find a balance between enjoying the present and saving for the future.

Review Your Insurance

Check your insurance policies to ensure you have the best coverage for your needs and see if you could save money with a different policy. You may save money by bundling different types of insurance under one provider. Use comparison tools to look for the best price for car insurance and other policies.

Create a Financial Plan

A comprehensive financial plan is a long-term guide for directing your income toward building the life you want. Financial planning involves setting financial goals, aligning your budget to meet them, understanding your risk tolerance, and tailoring your investments accordingly. Consider meeting with a financial planner if you have questions about financial planning, such as rebalancing your portfolio or balancing different goals like getting married, having kids, saving for a home, or retiring early.

Build Your Emergency Fund

An emergency fund is crucial for covering unforeseen expenses like car repairs or tax bills. If you don’t have an emergency fund, start one now. Aim to keep three to six months of basic expenses in your emergency fund. If your emergency fund has more money than you need, consider putting the excess into an IRA or another financial goal.

Stay Up to Date on Financial News

Your financial picture is impacted by larger economic trends, such as fluctuations in interest rates or changes to tax laws. Staying informed about current financial news can help you tailor your priorities to the current money climate. For example, you might prioritize boosting your emergency fund, increasing investments, or paying off debt based on expert recommendations.

At O1ne Mortgage, we understand the importance of financial health and are here to help you achieve your goals. Whether you need assistance with budgeting, saving, or managing debt, our team of experts is ready to guide you. Call us at 213-732-3074 for any mortgage service needs. Let us help you build a secure financial future.