25 Tips to Achieve Financial Wellness in 2023

Use a Budget

Your goal is to develop a budget based on your monthly income, expenses, and savings and to live within your means. Should a shortfall occur, try to adjust your budget rather than rely on a credit card. If your budget cannot be adjusted, your emergency savings will need to be tapped to cover expenses. Your budget may need to be adjusted in order to refill your emergency savings.

Be Aware of How You Spend Your Money

Review your purchases. Make adjustments if you notice expenditures not aligned with your budget. For example, if you are spending money on daily coffee or eating out more than cooking at home, you may be happy in the short term, but high expense luxury products can prevent you from reaching the financial goals you wish to achieve. Making small changes can help you save money while still allowing you to enjoy your favorite latte periodically.

Automate Your Savings

A common phrase in personal finance is to "always pay yourself first". That means before any expenses, set aside money for retirement and savings. An easy way to do this is to set up an automatic deposit or transfer it into a separate account. Talk to a TDECU credit union representative for information about account-to-account transfers. Set a savings goal, and treat it like any other bill by making regular monthly payments towards it.

Build Your Savings

Emergencies are inevitable. They are the “rainy day” or emergency funds you hear people talking about. Your savings account gives you some financial security and is the helping hand you are looking for when the need arises. A good rule of thumb is to have six months of income stashed in your savings. As we said in Tip #3, start by automating your savings and let it build over time.

Plan for Major Purchases

Big purchases have hefty price tags. If you plan to take a trip or buy a large-ticket item like a washer/dryer or a new car, adjust your budget to build your savings specifically for the item you have your sights set on. This is separate from your regular savings you are building for emergencies.  If you can’t see a way to cover it with your current salary, consider taking a side hustle and working until you have enough money to cover the item, or reduce your monthly spending.

Save Early for Retirement

Saving for retirement requires planning on your part. Just like Tip #3 suggests, make funding your retirement savings automated. Even a small contribution has the potential to grow into a large nest egg−the key is allowing your money to grow over time. If your employer offers a 401(k) plan, take advantage of it along with employer contributions. Another advantage of your 401(k) is the pre-tax savings on your earnings.

Handle Credit With Care

Use credit wisely. This means not overusing it and paying off credit card balances each month to avoid carrying any credit card debt. An excellent tip for accomplishing this is to set a monthly limit and stick to it.

Your credit score is another critical part of your financial well-being. Late payments, too much debt, or high balances negatively affect your credit score. Regularly request and monitor your free credit report from annualcreditreport.com. Good credit will give you better purchasing power and loan rates from lenders. 

Keep Financial Records

Develop a system for keeping your financial records in order. Items like receipts, medical bills, pay stubs, student loan records, tax records, banking and insurance information, and any other documentation relevant to your financial situation should be stored securely but easily accessible.

Ask for Advice

Financial planning is not reserved for wealthy individuals managing investments. Some financial advisors and planners specialize in money management, debt and credit counseling, and budgeting. The National Foundation for Credit Counseling is one resource for financial education programs that can help toward achieving financial wellness. Not all services are free, but almost all are affordable and budget-friendly.

Use a spending tracker to determine how you are currently spending your money

Before making changes to your budget, you should understand how you currently use your money. There are lots of apps and tools to help you track how you spend your money. Many banks also include tools to help you track the spending from your checking account. With a close eye on your spending, it won’t snowball out of control.

Set up an emergency fund

Accidents and emergencies happen, and they can easily derail your budgeting and planning. It’s important to have a savings account specifically for emergencies that is separate from your regular savings account. Most experts recommend having at least 3 months, and ideally 6 months, of expenses in order to cover most emergencies.

Refinance loans if your credit score improves

Your credit score may have improved if you have already made financial changes to decrease debt. Low credit scores often mean you have a higher interest rate when taking out personal loans, car loans, or opening a credit card.

Use a debt reduction strategy if you have high-interest debt

There are two general schools of thought on tackling debt. Some people prefer to pay off the highest interest rate debt first, saving them the most money in the long run. Others prefer to start with the lowest debt amount so that they can see the positive impacts of paying down debt faster. The best strategy for you is the strategy that you can best stick to.

Set up banking alerts for checking account usage and withdrawals

Alerts are healthy reminders of the financial decisions that you are making. It helps you track when, where, and how you spend your money. These notifications can also help alert you to any fraudulent activity on your account since you would be notified of any withdrawals.

Protect your identity online

Fraud and identity theft can cause severe damage to your financial well-being. Ensure you protect important information like your credit and bank logins, account information, social security card, and even your phone number. Make sure to report any suspicious charges immediately and replace credit and debit cards that are lost or stolen.

Check your credit report annually for errors

Get in the habit of checking your credit report at least once a year. It’s free to check your credit report once a year and allows you to check for anything unusual. This could be an account already paid off, showing a balance, incorrect balance amounts, or an unknown balance being attributed to your report.

Protect what you have

Insurance is an important way to protect your current way of life. Replacing your car or belongings can put a serious dent in your financial plans. Purchasing personal property insurance from a reputable company is one of the most important financial wellness tips you will receive. If you wreck a car you took out a loan to buy, for example, and didn’t purchase insurance, you could be left with no vehicle, medical bills, and a loan you still need to pay off!

Negotiate for better rates and terms

Contacting your credit card company sometimes works to improve your APR or increase credit limits. Lowering your APR will lower interest fees, while increasing your credit limits will help reduce your credit usage, positively impacting your credit score.

Build your financial literacy

Education is key to making smarter financial decisions. Make sure you understand opportunity costs, retirement planning, compound interest, interest rates, credit, and more so that you can be confident that you are making sound financial choices. TDECU has a free mortgage glossary with some key terms.

Consider using cash to help with any budgeting issues

Many people find that using a cash system helps them stick to their budget. Instead of using debit or credit cards for groceries and shopping, they use cash instead. Feeling the cash leave your hand can be a tactile reminder of the money that is being spent rather than swiping a card.

Set financial goals

Buying a home or being able to retire at a certain age are great goals to have. You are more likely to succeed in sticking to a budget if you plan for a specific goal or outcome. Make a list of short and long-term financial goals to keep you motivated. Use it as a roadmap and adjust it as your financial situation changes.

Put extra money you receive into savings

It’s tempting to upgrade your lifestyle when you receive a big raise, bonus, or tax refund, but the best thing you can do for your financial well-being is to save or invest the extra money you receive. Starting a rainy day fund, using it towards a home, or putting it towards retirement are all good options.

Keep credit usage below 30%

Credit usage directly impacts your credit score. A high credit score could mean lower interest rates and fees on loans, mortgages, and credit cards. Monitor your credit card utilization so your credit score is in good shape when you need a loan.

Rebalance your investment portfolio each year

Changes in the stock market or your personal goals can impact how you invest. Review your investment portfolio annually and update it to reflect your current financial situation. TDECU wealth advisors can help you manage your investment portfolio.

Consider the opportunity cost of your purchases

One of the most impactful lessons learned from financial literacy is understanding opportunity costs. Every financial decision you make means there is something else you can’t do with the money spent. Money spent on a vacation is money that isn’t invested or put towards savings or debt. However, the opportunity to go on vacation may be worth it because you return to work rejuvenated, and the break helps with your mental health. Decisions make or break your financial health.